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2007Strategy andBusinesses

Banco Itaú Holding Financeira S.A.Sustainability Report

Banco Itaú Holding Financeira ProfileItaú Holding

Banco Itaú

Banking Products and Services

Credit CardsAccount Holders

Fund and PortfolioManagement

Corporate Operations &Investment Banking

Taií - FIT, FIC (CBD),FAI (LASA) and Payroll Credit

Vehicles

Credit CardsNon-account Holders

Itaucred

Banco Itaú BBA

We are a financial institution that ...

has been in operations for over 60 years, is one of the largest in Brazil, has a net worth of R$29 billion and assets totaling R$295billion and achieved a market value of R$111 billion.

has a strong impact on economic, social and environmental scenarios based on the relationships we have with more than 65,000employees, 24 million customers, including account and non-account holders, 30,000 suppliers and over 60,000 shareholders.

operates nationwide, through our network of 3,528 branches and bank service posts; over 24,000 automatic teller machines andelectronic customer service stations located at places of business and the Taií network comprising 766 shops and 315 electronicservice stations.

has strengthened its international scope on a yearly basis, with units and operations in Argentina, Chile, China, England, Japan,Nassau, Portugal, the Cayman Islands, the United States and Uruguay.

is traded on the São Paulo (Brazil), Buenos Aires (Argentina) and New York (US) stock exchanges.

Our diversified operations...are primarily anchored on services based on specialized structures for the various client profiles, such as individuals, small andmedium size companies as well as micro-firms, the Government and institutional investors.

include business management services such as underwriting, custody, securities brokerage, credit cards, cooperative financingplans, insurance, premium bonds and private pension plans.

rank us as the largest wholesale bank in Brazil, through Itaú BBA, which operates in the corporate and investment sectorsproviding services to nearly 2,000 corporate groups in Brazil, many of which are among the largest in the country.

have earned us the title of leader in the Private Banking and high income (Itaú Personnalité) sector as well as the lower end of thesocial ladder, by means of Taií, which offers financing and credit cards to customers who, for the most part, do not have access tomore conventional financial services.

Our values are solid and...based on ethics, transparency, respect for human rights, compliance and diversity, wich underlie our relationships with ourstrategic publics, such as customers, government, employees, suppliers, shareholders and investors.

uphold continuous improvement in our operations assuring competitive positioning and good performance of our operations.

shared and renewed each day by our employees who embody the Modo Itaú de Fazer (The Itaú Way) and create a respectfuland motivating work environment which has resulted in our excellent products and services.

include social and environmental accountability, providing continuity to our commitment toward sustainable financial businessdevelopment.

We are acknowledged...as a sound and enduring institution, whose stock is included in the São Paulo Stock Exchange sustainability indexes, the ISE, aswell as in the New York Stock Exchange and the Dow Jones Sustainability World Index (DJSI) – we are the only Latin Americanbank to have been included in this index since its creation in 1999.

for building the most valuable Brazilian brand since 2002 according to the international consulting firm, Interbrand, attaining an estimated worth of R$8.076 billion in 2007.

for the over 50 awards received in 2007, the most important of which are listed below:

Best Latin American Bank – Euro money magazine;

Best Brazilian Bank – Euro money magazine (10th consecutive year);

Most Sustainable and Ethical Latin American Bank –Latin Finance and Consulting Management & Excellence magazine (3rd consecutive year);

Best company in the following categories:Banks (3rd consecutive year) and Social and Environmental Responsibility – Dinheiro magazine;

Sustainability reference company in Brazil – Guia Exame de Sustentabilidade 2007;

The Most Admired Companies in Brazil – 1st place in the categories:Retail Bank and Private Pension Plans – Carta Capitalmagazine and TNS InterScience.

Este relatório foi impresso em papel recicladocom tinta à base de extratos vegetais.

Praça Alfredo Egydio de Souza Aranha, 100 Torre Itaúsa – 04344 902 – São Paulo-SP – Brasil

www.itau.com.br

Strategy and BusinessesSustainability Report 2007

Insurance, Private PensionPlans and Premium Bonds




Banco Itaú





Taií - FIT, FIC (CBD),FAI (LASA) and Payroll Credit

Vehicles


Itaucred

Banco Itaú BBA


has been in operations for over 60 years, is one of the largest in Brazil, has a net worth of R$29 billion and assets totaling R$295billion and achieved a market value of R$111 billion.


operates nationwide, through our network of 3,528 branches and bank service posts; over 24,000 automatic teller machines andelectronic customer service stations located at places of business and the Taií network comprising 766 shops and 315 electronicservice stations.



Our diversified operations...are primarily anchored on services based on specialized structures for the various client profiles, such as individuals, small andmedium size companies as well as micro-firms, the Government and institutional investors.

include business management services such as underwriting, custody, securities brokerage, credit cards, cooperative financingplans, insurance, premium bonds and private pension plans.


have earned us the title of leader in the Private Banking and high income (Itaú Personnalité) sector as well as the lower end of thesocial ladder, by means of Taií, which offers financing and credit cards to customers who, for the most part, do not have access tomore conventional financial services.

Our values are solid and...based on ethics, transparency, respect for human rights, compliance and diversity, which underlie our relationships with ourstrategic publics, such as customers, government, employees, suppliers, shareholders and investors.

uphold continuous improvement in our operations assuring competitive positioning and good performance of our operations.


include social and environmental accountability, providing continuity to our commitment toward sustainable financial businessdevelopment.









The Most Admired Companies in Brazil – 1st place in the categories:Retail Bank and Private Pension Plans – Carta Capitalmagazine and TNS InterScience.



www.itau.com.br


Insurance, Private PensionPlans and Premium Bonds

Main indicators

December

A partnership between Banco Itaú andLopes Imobiliária is announced,providing Itaú exclusivity in offering realestate financing for a 20-year term andcreating a new company in which bothwill have equal interest.

The Brazilian Commodities and FuturesMarket (BM&F) realizes it Initial PublicOffering (IPO),whereby Itaú Holdingdivested 13.9 million shares that it held inthe company at a price of R$20.00 each.

January 2008

Banco Itaú enters into a partnership withDafra da Amazônia Indústria e Comérciode Motocicletas,belonging to the GrupoItavema,for exclusive financing of Daframotorcycles and working capital loans todealers.The agreement also calls for Itaúproducts and services to be offered to thecompanies' customers.Itaú will pay R$20 million for these exclusive rights fora 10-year term,which is renewable for an equal term.

Highlights2007 2006 2005 2004 2003 2002 Trend (%)

(1) (2006/2007)

Income – R$ million (2)

Gross Income from Financial Intermediation 15,476 12,530 11,157 10,200 9,224 7,250 23.5

Income from Insurance,Private Pension Plan and Capitalization 19,171 17,167 14,417 12,398 10,129 7,777 11.7

Personnel Expense, Administrative Expenses and Other Operating Expenses 14,033 15,213 10,366 9,868 9,064 8,890 (7.8)

Income From Operations 11,045 6,077 7,947 7,342 5,714 4,255 81.8

Consolidated Recurring Net Income 7,179 6,195 5,443 4,870 3,717 3,080 15.9

Consolidated Net Income 8,474 4,309 5,251 3,776 3,152 2,377 96.7

Income per Share in 2007,2006,2005 and 2004 – R$ (remaining years per 1,000 share lot)

Consolidated Recurring Net Income (3) 2.99 2.72 2.42 2.15 1.64 1.38 9.9

Consolidated Net Income (3) 3.53 1.89 2.34 1.67 1.39 1.07 86.6

Book Value 12.09 9.84 7.05 6.17 5.22 4.06 22.8

Interest on Own Capital/Dividends 1.06 0.82 0.84 0.61 0.49 0.37 29.2

Share Price PN (4) 46.26 38.54 28.05 19.93 14.42 8.57 20.0

Market Capitalization - R$ million (5) 110,888 92,270 61,935 45,153 32,850 19,074 20.2

Balance Sheet – R$ million

Total Assets 294,876 209,691 152,435 130,339 118,738 111,141 40.6

Total Loans (Including Endorsements and Sureties) 127,589 93,648 67,756 53,275 44,581 45,414 36.2

Unrestricted,Raised and Managed Own Resources 471,657 357,137 249,306 211,238 183,627 154,362 32.1

Subordinated Debts 11,375 4,566 4,584 4,765 4,814 5,707 149.1

Consolidated Shareholders' Equity 28,969 23,564 15,560 13,971 11,879 9,036 22.9

Reference Equity (6) 37,095 30,720 20,644 19,806 17,185 16,573 20.8

Financial Ratios (%)

Average Return on Equity - Recurring (7) 27.2 32.6 36.6 37.7 35.0 37.3 –

Average Return on Equity (7) 32.1 22.7 35.3 29.2 29.7 28.8 –

Return on Average Asset 3.2 2.4 3.6 3.0 2.8 2.6 –

Efficiency Ratio (8) 46.2 47.6 50.3 53.9 54.5 58.2 –

Solvency (Basel) Ratio (9) 17.9 17.2 17.0 20.6 19.8 18.4 –

Fixed Assets Ratio (9) 13.8 35.1 26.1 27.4 25.0 33.1 –

Relevant Data

Assets under Administration (R$ million) 217,377 179,808 120,287 99,753 81,102 59,167 20.9

Number of Employees 65,089 59,921 51,036 45,316 42,450 43,215 8.6

Number of Branches 2,764 2,603 2,391 2,282 2,321 2,314 6.2

Number of Itaú Service Outposts (PABs) 764 780 783 791 851 878 (2.1)

Number of Automatic Teller Machines 23,739 23,096 22,023 21,150 20,021 17,926 2.8

(1) Consolidation of Banco Itaú BBA only occurs in the Balance Sheet and does not affect results.

(2) A correct examination of the growth of income and expenses can be better viewed in the Management Discussion and Analysis Report,wherein the non-recurring items are segregated

and the exchange fluctuation of the investments abroad is distributed among the affected line items,together with the tax effect of the hedge of these investments.

(3) Calculated on the basis of the weighted average of the number of shares in circulation.

(4) Based on the average quote of the last day of the period.

(5) Calculated on the basis of the average quote of preferred shares on the last day of the period.

(6) Capital base calculated according to Brazilian Central Bank (BACEN) Resolution 2.837 issued May 30,2001 based on the consolidated financial statements.

(7) Represents the ratio of net profits for the year to average shareholders' equity [(Dec+Sept+June+March+Dec)/5].

(8) Beginning 2004,calculated according to international criteria defined in the Operations Management Analytical Report.

(9) Position on December 31.

February

Local authorities approve Itaú Holding's acquisition ofBankBoston operations in Chileand Uruguay.

May

Conclusion of acquisitions ofLatin America private bankingcustomer portfolios ofBankBoston International(BBI),of headquartered inMiami,and BankBoston TrustCompany Limited (BBT),headquartered in Nassau,byBanco Itaú Europa and itssubsidiary Banco Itaú EuropaLuxembourg.

June

Itaú Holding sells off part of itsshares (22.33% of total capital) thatit held in Serasa S.A.to ExperianGroup Limited, in a transaction thatgenerated R$490 million incompany profit in 2007 after taxes.Banco Itaú Europa concludes theacquisition of the Latin Americaninternational private banking clientassets serviced in Miami andMontevideo by ABN AMRO Bank N.V.

August

Itaú Holding divests ashareholding interest of 53.8million common shares ofRedecard S.A.,one of the leadingcompanies engaged in thepayment card industry in theBrazilian market,equal to 8.73%of its total share capital.This non operating event had a R$ 1.0 billion impact on Itaú's2007 income after taxes.

September

Itaú Holding is selected for theeighth consecutive year tocomprise the DJSI World, theNew York Stock Exchangesustainability index,whichincludes shares of 318companies which have the highest assessments in the world.

October

Itaú Holding announces the creation of Kinea,acompany specialized in alternative investmentmanagement,featuring operations involving multi-market (Hedge Funds) and Real Estate Equity funds.Kinea uses the infrastructure,know-how andtechnology of Banco Itaú and has its own premises,staff and operations.

The São Paulo Stock Exchange (Bovespa) realizes itsInitial Public Offering (IPO),at which time Itaú Holdingdivested 11.4 million shares of Bovespa at a price ofR$23.00 each.The transaction increased 2007 resultsby R$164 million (after taxes).Following thistransaction, Itaú Holding retained a 4% of interest inBovespa's share capital,which reflects a market valueof R$973 million.

November

Itaú Holding announces recordprofits of R$6.444 billion in thefirst nine months of the year andonce again outdistances theannual earnings of any otherpublicly traded Brazilian bank inthe last 20 years.

Itaú Holding is selected for thethird consecutive year to comprisethe São Paulo Stock Exchange ISEtheoretical portfolio,whichincludes shares of the 32companies that have achieved thehighest level of commitment tosustainability and socialresponsibility.

The transaction impacted 2007 results by R$150 million (after taxes) andafterward, Itaú Holding retained 2.3%of the share capital of BM&F,withmarket value equal to (on December31,2007) R$520 million.

The Itaú brand is, for the fifthconsecutive time,named the mostvaluable Brazilian brand in the country,by the international consulting firm,Interbrand,with a value of US$3.792billion (R$8.076 billion).

Main indicators

December

A partnership between Banco Itaú andLopes Imobiliária is announced,providing Itaú exclusivity in offering realestate financing for a 20-year term andcreating a new company in which bothwill have equal interest.

The Brazilian Commodities and FuturesMarket (BM&F) realizes it Initial PublicOffering (IPO),whereby Itaú Holdingdivested 13.9 million shares that it held inthe company at a price of R$20.00 each.

January 2008

Banco Itaú enters into a partnership withDafra da Amazônia Indústria e Comérciode Motocicletas,belonging to the GrupoItavema,for exclusive financing of Daframotorcycles and working capital loans todealers.The agreement also calls for Itaúproducts and services to be offered to thecompanies' customers.Itaú will pay R$20 million for these exclusive rights fora 10-year term,which is renewable for an equal term.

Highlights2007 2006 2005 2004 2003 2002 Trend (%)

(1) (2006/2007)

Income – R$ million (2)

Gross Income from Financial Intermediation 15,476 12,530 11,157 10,200 9,224 7,250 23.5

Income from Insurance,Private Pension Plan and Capitalization 19,171 17,167 14,417 12,398 10,129 7,777 11.7

Personnel Expense, Administrative Expenses and Other Operating Expenses 14,033 15,213 10,366 9,868 9,064 8,890 (7.8)

Income From Operations 11,045 6,077 7,947 7,342 5,714 4,255 81.8

Consolidated Recurring Net Income 7,179 6,195 5,443 4,870 3,717 3,080 15.9

Consolidated Net Income 8,474 4,309 5,251 3,776 3,152 2,377 96.7

Income per Share in 2007,2006,2005 and 2004 – R$ (remaining years per 1,000 share lot)

Consolidated Recurring Net Income (3) 2.99 2.72 2.42 2.15 1.64 1.38 9.9

Consolidated Net Income (3) 3.53 1.89 2.34 1.67 1.39 1.07 86.6

Book Value 12.09 9.84 7.05 6.17 5.22 4.06 22.8

Interest on Own Capital/Dividends 1.06 0.82 0.84 0.61 0.49 0.37 29.2

Share Price PN (4) 46.26 38.54 28.05 19.93 14.42 8.57 20.0

Market Capitalization - R$ million (5) 110,888 92,270 61,935 45,153 32,850 19,074 20.2

Balance Sheet – R$ million

Total Assets 294,876 209,691 152,435 130,339 118,738 111,141 40.6

Total Loans (Including Endorsements and Sureties) 127,589 93,648 67,756 53,275 44,581 45,414 36.2

Unrestricted,Raised and Managed Own Resources 471,657 357,137 249,306 211,238 183,627 154,362 32.1

Subordinated Debts 11,375 4,566 4,584 4,765 4,814 5,707 149.1

Consolidated Shareholders' Equity 28,969 23,564 15,560 13,971 11,879 9,036 22.9

Reference Equity (6) 37,095 30,720 20,644 19,806 17,185 16,573 20.8

Financial Ratios (%)

Average Return on Equity - Recurring (7) 27.2 32.6 36.6 37.7 35.0 37.3 –

Average Return on Equity (7) 32.1 22.7 35.3 29.2 29.7 28.8 –

Return on Average Asset 3.2 2.4 3.6 3.0 2.8 2.6 –

Efficiency Ratio (8) 46.2 47.6 50.3 53.9 54.5 58.2 –

Solvency (Basel) Ratio (9) 17.9 17.2 17.0 20.6 19.8 18.4 –

Fixed Assets Ratio (9) 13.8 35.1 26.1 27.4 25.0 33.1 –

Relevant Data

Assets under Administration (R$ million) 217,377 179,808 120,287 99,753 81,102 59,167 20.9

Number of Employees 65,089 59,921 51,036 45,316 42,450 43,215 8.6

Number of Branches 2,764 2,603 2,391 2,282 2,321 2,314 6.2

Number of Itaú Service Outposts (PABs) 764 780 783 791 851 878 (2.1)

Number of Automatic Teller Machines 23,739 23,096 22,023 21,150 20,021 17,926 2.8

(1) Consolidation of Banco Itaú BBA only occurs in the Balance Sheet and does not affect results.

(2) A correct examination of the growth of income and expenses can be better viewed in the Management Discussion and Analysis Report,wherein the non-recurring items are segregated

and the exchange fluctuation of the investments abroad is distributed among the affected line items,together with the tax effect of the hedge of these investments.

(3) Calculated on the basis of the weighted average of the number of shares in circulation.

(4) Based on the average quote of the last day of the period.

(5) Calculated on the basis of the average quote of preferred shares on the last day of the period.

(6) Capital base calculated according to Brazilian Central Bank (BACEN) Resolution 2.837 issued May 30,2001 based on the consolidated financial statements.

(7) Represents the ratio of net profits for the year to average shareholders' equity [(Dec+Sept+June+March+Dec)/5].

(8) Beginning 2004,calculated according to international criteria defined in the Operations Management Analytical Report.

(9) Position on December 31.

February

Local authorities approve Itaú Holding's acquisition ofBankBoston operations in Chileand Uruguay.

May

Conclusion of acquisitions ofLatin America private bankingcustomer portfolios ofBankBoston International(BBI),of headquartered inMiami,and BankBoston TrustCompany Limited (BBT),headquartered in Nassau,byBanco Itaú Europa and itssubsidiary Banco Itaú EuropaLuxembourg.

June

Itaú Holding sells off part of itsshares (22.33% of total capital) thatit held in Serasa S.A.to ExperianGroup Limited, in a transaction thatgenerated R$490 million incompany profit in 2007 after taxes.Banco Itaú Europa concludes theacquisition of the Latin Americaninternational private banking clientassets serviced in Miami andMontevideo by ABN AMRO Bank N.V.

August

Itaú Holding divests ashareholding interest of 53.8million common shares ofRedecard S.A.,one of the leadingcompanies engaged in thepayment card industry in theBrazilian market,equal to 8.73%of its total share capital.This non operating event had a R$ 1.0 billion impact on Itaú's2007 income after taxes.

September

Itaú Holding is selected for theeighth consecutive year tocomprise the DJSI World, theNew York Stock Exchangesustainability index,whichincludes shares of 318companies which have the highest assessments in the world.

October

Itaú Holding announces the creation of Kinea,acompany specialized in alternative investmentmanagement,featuring operations involving multi-market (Hedge Funds) and Real Estate Equity funds.Kinea uses the infrastructure,know-how andtechnology of Banco Itaú and has its own premises,staff and operations.

The São Paulo Stock Exchange (Bovespa) realizes itsInitial Public Offering (IPO),at which time Itaú Holdingdivested 11.4 million shares of Bovespa at a price ofR$23.00 each.The transaction increased 2007 resultsby R$164 million (after taxes).Following thistransaction, Itaú Holding retained a 4% a of interest inBovespa's share capital,which reflects a market valueof R$973 million.

November

Itaú Holding announces recordprofits of R$6.444 billion in thefirst nine months of the year andonce again outdistances theannual earnings of any otherpublicly traded Brazilian bank inthe last 20 years.

Itaú Holding is selected for thethird consecutive year to comprisethe São Paulo Stock Exchange ISEtheoretical portfolio,whichincludes shares of the 32companies that have achieved thehighest level of commitment tosustainability and socialresponsibility.

The transaction impacted 2007 results by R$150 million (after taxes) andafterward, Itaú Holding retained 2.3%of the share capital of BM&F,withmarket value equal to (on December31,2007) R$520 million.

The Itaú brand is, for the fifthconsecutive time,named the mostvaluable Brazilian brand in the country,by the international consulting firm,Interbrand,with a value of US$3.792billion (R$8.076 billion).

RatingsBanco Itaú and Itaú BBA

Itaú Itaú BBADomestic International Domestic International

Fitch Ratings

Short-Term – Foreign Currency - F3 - F3

Short-Term – Local Currency F1+(bra) F3 F1+(bra) F3

IDR (Issuer Default Ratings) Long-Term – Foreign Currency - BBB- - BBB-

IDR (Issuer Default Ratings) Long-Term – Local Currency AAA(bra) BBB AAA(bra) BBB

Individual - B/C - B/C

Support – Legal - 3 - 3

Standard & Poor’s

Short-Term – Foreign Currency - A-3 - A-3

Short-Term – Local Currency brA-1 A-3 brA-1 A-3

Long-Term – Foreign Currency - BBB- - BBB-

Long-Term – Local Currency brAAA BBB- brAAA BBB-

Moody’s

Financial Strength (BFSR) - B- - B-

Bank Deposits – Foreign Currency (LT/ST) - Ba2/NP - Ba2/NP

Bank Deposits – Local Currency (LT/ST) - A1/P-1 - A1/P-1

Deposits – Long-Term Aaa.br - Aaa.br -

Deposits –Short-Term BR-1 - BR-1 -

Long-Term Securities – Senior Foreign Currency (2) – Baa3 – Baa3

(1) Banco Itaú Holding Financeira ratings are the same as Banco Itaú and Banco Itaú BBA.(2) At Itaú BBA, refers to Medium Term Note Program (MTN) Program Securities.

Objectives presented at meeting with members of the Capital Market Analystsand Investment Professionals Association (APIMEC) in São Paulo in December 2007:

Expand credit offer.Credit growth to Individual Entities (PF) of 30%;Credit growth to Legal Entities (PJ) of 25% (except Itaú BBA).

Consolidate Taií operations.

Increase bank’s PF/PJ customer base.

Growth of income from services of 8%.

Continue to prioritize Investment Banking.

Continue to increase payroll and real estate credit.

Continue to maintain strong growth of insurance, pension plan and capitalization operations.

Promote organic growth abroad.

Maintain 2007 levels in the following indexes:Efficiency.Default.

2008 Strategic priorities

Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.

Introduction

Itaú has long presented public reports, and they have become an integral part of its reporting process to thecommunity. Its corporate culture promotes continuous improvement, and the Annual Report, published since1966, has undergone a number of changes in an effort to increase transparency and strive toward satisfying theaspirations of publics interested in the Bank’s operations.

The annual reports previously contained a chapter on the social and cultural efforts of the Organization but in1999, Itaú published its Social Report, which at that time was aligned to the guidelines proposed by the InstitutoEthos.Five years later in 2004, it began to incorporate the guidelines and indicators recommended by the GlobalReporting Initiative (GRI), an internationally renowned institution that proposes adopting certain reportingmethods and different measurements employed by the most sustainable organizations in the world.The mostnotable distinction this year is the inclusion of third generation GRI indicators, reformulated in the light of the newreality and prepared on the basis of public consultations conducted throughout the world.

The publication, from now on entitled the Sustainability Report, will be published in three volumes: the first one,Strategy and Businesses, outlines the panorama of Banco Itaú Holding Financeira S.A.’s operations the second,Relationships and Indicators, describes social and environmental practices and relationships with the variousstrategic publics; and the third volume includes a Management Discussion and Analysis of the Operations and theFinancial Statements for 2007.

In addition to the printed version, readers can also find more detailed information regarding policies andprograms in the Itaú Holding site.The on-line version of the Sustainability Report includes the full printed versionof the report and its attachments, as well as supplementary content.The selection of which information wasincluded in the printed version and that reserved only for the electronic version was decided on the basis of themateriality principle.The information regarded as relevant to the majority of stakeholders in the Organization wasdeemed priority and therefore published in the printed report, while the information determined to be importantto specific relationship groups or detailed content relevant to Itaú Holding strategy can only be found in the on-line publications.

The purpose of the collective printed and electronic versions of the Sustainability Report is to enable Itaú torespond fully to the readers’expectations in relation to the performance of Itaú Holding in the economic, socialand environmental areas.The information contained in both publications is related to Banco Itaú HoldingFinanceira S.A. (Itaú Holding) operations in 2007 and a description of Banco Itaú S.A. (Banco Itaú) and Banco Itaú BBA S.A. (Itaú BBA) operations in Brazil and abroad.

This report and the Quarterly Reports are available at the address:www.itauri.com.br. In the event of anyquestions, complaints, suggestions or if more copies are required, please contact the Investor Relations area by e-mail at: [email protected].

Enjoy reading!

All contents and images contained in this Annual Report are for the exclusive use of Banco Itaú Holding Financeira S.A.

3


2007 Strategy and BusinessesBanco Itaú Holding Financeira S.A.Sustainability Report

Banco Itaú Holding Financeira ProfileHighlights

Main indicators

2008 Priorities

Ratings

Introduction

Message from the Chairman of the Board of Directors 6

Message from the President 8

Competitive Advantages 10

Sustainable Value Bank 12

Social and environmental risk analysis 15Economic, social and environmental influence 17Vision, Principles and Values 19Global Commitments 20

Business Strategy 22

Scenario 23Challenges 242008 Priorities 25

5

Intangible Assets 26

Brand 27Share capital 28Technological capital 29

Corporate governance 30

Stock and ADR Performance 38

Management 46

Management model 47Ethics management 48Risk Management 52Cost Management 57

Businesses 58

Opening- general outlook 59Banco Itaú S.A. 62Itaucred Business 74Banco Itaú BBA 80International Presence 86

Management and Board of Directors 92

Corporate Information 94

Predicting local and international economic

scenarios in an ever-more dynamic world is a difficult

task that requires well-honed discipline, competence,

and knowledge. It is this challenge, pursued

consistently, that has been one of the pillars

sustaining Itaú Holding’s trajectory of ongoing value

generation.

The year of 2007 was marked by the return of

uncertainty related to world economic behavior as a

direct result of the crisis which began in the sub-

prime mortgages segment in the United States, with

important ramifications for the financial segment all

over the world.

Despite the uncertainty over the future effects of this

crisis, especially those related to the US economy, the

Brazilian economic scenario in 2007 was very

positive.The adjustments of its external accounts,

initiated some years ago, have shown that it is

possible to get through world financial crises without

the traumas the country suffered through in prior

crises. In other words, the Brazilian economy has

unquestionably demonstrated that it is far less

vulnerable than in the past.

In 2007,Brazil achieved historically low interest rates

which,coupled with heated domestic demand and a

visible increase in investments,enabled the country to

envisage sustained growth,with stable prices for the

coming years,higher total payrolls,more job creation

and firms migrating to the formal sector.The country

also underwent historic growth in the capitals market

and substantial growth in fixed income securities and

on the stock market, which, although somewhat

impacted by the crisis abroad, rebounded to turn in

record performance and volumes in 2007.

Rather than simply reaping the benefits of the

positive effects of this scenario from its banking

operations, Itaú Holding knew how to prepare for this

new situation. Its strategic positions in segments

such as consumer loans, via Itaucred, or the capital

market, through Itaú Corretora and Itaú BBA, were

testimony that the seeds sown in the past have

borne fine fruit, as will the investments we are

making in fields such as small and medium firms and

housing loans.

Itaú’s annual results attested to the effectiveness

of the strategy implemented. Itaú Holding net

profits for 2007 were R$8.5 billion, reflecting 32.1%

profitability on shareholders’equity and gains of

96.7% over 2006 profits.

During this period, Itaú Holding preferred shares rose

16.2%, while its common stock turned up 30.3%.

ADRs traded on the New York Stock Exchange (NYSE)

reported a 40.9% increase in price quotations.The

market value of Itaú ended 2007 with a 20.2%

increase to reach R$111 billion.

Message from the Chairman of the Board of Directors

6


Itaú Holding believes that the means by which it has

conducted its business and achieved results for over

60 years is an expression of its long-term vision.

This stance has been perceived by the market.

Standard & Poor’s (S&P) and Fitch Ratings upgraded

their Itaú Holding, Banco Itaú and Banco Itaú BBA

ratings to investment grade.Based on the new

ratings, securities issued abroad by the banks are

more highly valued, due to the acknowledgment of

their sound position and good risk performance.

In 2007, Itaú Holding was once again selected, for the

eighth consecutive year, to be part of the select

group of 318 worldwide companies that comprise

the Dow Jones Sustainability World Index (DJSI

World), maintaining its position as only Latin

American bank in the index since it was founded. Itaú

is also included in the new Bovespa ISE stock index

which is valid from December 2007 to November

2008. It has also been awarded AAA+ Sustainability,

Ethics, Social Corporate Accountability, Corporate

Governance and Transparency ratings for Latin

American banks by the Spanish consulting firm,

Management & Excellence (M&E).

These examples of recognition translate the market’s

perception that Itaú pursues excellent financial

performance, simultaneously striving to adopt best

practices for corporate governance and furthering

initiatives related to sustainable development of

business and society.

It must be emphasized that the performance

reached reflects the commitment of more than

65,000 employees and the credibility Itaú Holding

has built with its shareholders, customers and other

stakeholders. Its current position is the result of its

constant drive to improve on all operational fronts.

Our constant and sustained effort has soundly

prepared us to meet the challenges ahead.

I would like to thank everybody who has worked

with us in this endeavor.

Sincerely,7

Olavo Egydio Setubal

Chairman of the Board of Directors

In Brazil, 2007 was an exceptional year for banking

operations.A sustainable economic growth model

was fortified and inflation stabilized, enabling the

country to reduce interest rates, expand credit access

to the population which in turn boosted

consumption.This environment also was auspicious

for increased corporate investment and continued

growth of capitals markets.

Although there is much to be done; this scenario has

enabled Itaú Holding to grow its business through all

its business units.The first important landmark of the

year was the incorporation of the merged

BankBoston operations, the largest acquisition ever

undertaken by Itaú in its history.The union of

operations and expertise with Itaú Personnalité

operations targeted toward high income customers

reached record heights.Likewise, the small and

medium size company area, after careful redesign to

merge platforms, comprises one of the areas

presenting the largest growth potential for the next

few years. It should be stressed that the integration of

BankBoston attested to Itaú’s competence to

incorporate people into its culture in a process

notable for the high talent retention level.

The Private Banking sector also recorded significant

growth based on the incorporation of a number of

hefty international portfolios such as that of ABN

AMRO in Miami.Similar growth occurred in all

business related to the capitals market and Banco

Itaú BBA and Itaú Corretora are forearmed and in a

position to seize opportunities that have firmed up

especially over the last two years. It was possible to

compete in a highly competitive environment with

the largest global investment banks and in many

instances surpass them.

In the credit area,car financing merits special attention,

which grew substantially in 2007. Banco Itaú firmed

up plans from the past few years in this area to

incorporate a number of portfolios. One example of

this is credit card operations that expanded with the

consolidation of Redecard and Orbitall operations

acquired in the past.

Despite the incorporation of BankBoston, Itaú

Holding maintained in 2007 its organic growth

strategy and expanded its customer services by

opening new branches, making it the largest branch

network in the entire Brazilian market, and by

consolidating partnership models linked to the

finance units united under the Taií brand.

Additionally, new impulse was given to expansion of

the account holder base by implementing an

initiative demonstrating the importance of

integrating social commitment and efficient business

management.Therefore, in August a brand new

attitude in the domestic finance system was

announced by Banco Itaú calling for a sweeping

reduction in fees.The objective was achieved:while

breaking with the paradigms on the one hand, there

was on the other hand an increase in new current

accounts since that time, assuring continual growth

of results.Satisfaction studies conducted among

customers also showed that this move was in the

right direction.

Message from the CEO

8


It is worthwhile mentioning that the actions

implemented over the last few years to expand

businesses beyond the traditional banking processes,

have enabled Itaú Holding to reach nearly 24 million

customers, account and non-account holders.These

results have increased the capacity to generate value

and the extent of Itaú Holding’s economic and social

influence.

Aware of the significance of its operations, Itaú

Holding continually strives to improve its governance

and social and environmental practices, with the

understanding that the search for excellence must

permeate all of its areas of operation and influence.

Therefore we intensified in 2007 the initiatives that

on one hand called for easier access to our services

and installations for handicapped persons and on the

other hand contributed toward educating our

customers and the public in general about the use of

financial services.

In relation to our social investment strategy, we are

proud to announce the partnership between the

Fundação Itaú Social and the Ministry of Education to

implement the Brazilian Portuguese Language

Olympics and educational methodology and

structure of our program Escrevendo o Futuro

(Writing the Future).

9

Roberto Egydio Setubal

Chief Executive Officer

What can we expect in 2008? It will be a strong year

of organic growth for Itaú.Based on the solid capital

structure and a team of competent and motivated

workers, there is space to continue to transform

planning into reality.One example of a brand new

type of financing partnership has been entered into

with the largest real estate company in Brazil, Lopes,

which was firmed up at the close of 2007.The

agreement enables us to forecast significant growth

in real estate credit transactions, which should reach

by the end of 2008, a volume of roughly R$3.5 billion

as opposed to the R$2.3 billion recorded in 2007.

Real estate credit operations establish long-term

relations with customers because they can generate

contractual links for as long as 25 years.Owed to the

multiple service businesses offered by Itaú, business

perspectives also expand to include the products

and services offered.This is a good example of how

sustainability is pursued at Itaú Holding.We endeavor

to build enduring relationships that can only be

attained on the basis of achievement of results

supported by responsible practices and subsequent

fulfillment of the needs of all those involved. This has

been the approach used by Itaú Holding in its

operations for generations.

Sincerely,

In line with the consolidation of the Country’s economic growth and the business

opportunities generated on the basis of this scenario, Itaú Holding has, over the last

few years, expanded its profits, assets, shareholders’equity and loan operations at rates

surpassing 20%, to name a few indicators.

Itaú Holding is the leader in a number of Brazilian market sectors:credit cards, home

insurance, private banking, high income, car financing, asset custodial service and

others. It has consistently been one of the most profitable groups in the domestic

financial system, especially in terms of what is referred to banking profits, which

excludes, for example, operations related to insurance and private pension funds.This

generation of results, coupled with its sound capital base, has enabled Itaú to continue

reporting marked growth, which is expected to continue and repeat over the next few

years in all areas of engagement.

Its positioning is owed to its capacity to interpret market trends and develop processes

that enable it to provide scale and profitability to those business sectors in which it

operates.The broad spectrum of products and services also contributes toward

maximizing opportunities and encouraging the loyalty of its customer base, which

totals close to 24 million account and non-account holders.

Competitive Advantages

10


To enable Itaú to efficiently provide services to such a large contingent of customers, it

had implemented by the close of 2007 a network of 3,528 bank branches and service

outposts, not to mention nearly 65,000 employees, an increase of over 20,000 workers

added over just the last four years.All operations and the Itaú distribution base are

equipped with an advanced technological structure, in which investments are made

periodically to improve quality and security of operations. In 2007, these investments

totaled R$2 billion.This drive has always been an essential part of Itaú Holding business

strategy and a significant advantage in relation to its competitors.

Itaú Holding’s long-term commitment to and satisfaction of all those involved or

influenced by its operations also serve to shore up its operations. Its ethical and

responsible attitude pervades the entire value chain.At the same time Itaú Holding is

willing to continually improve its practices, which are at all times focused on generating

greater value in a sustainable manner.

Strategy,scale,capillarity,processes and technologylead to sustainable generation of value.

11

Itaú has been included in the Dow Jones Sustainability Index since it wascreated

Itaú Holding once again received international recognition in 2007 for its sustainability practices

and for the eighth consecutive year has been included in the most important global indicator for

investments linked to sustainability, the DJSI World. Itaú Holding is the only financial institution in

Latin America to have been included in the index since its inception in 1999.

Inclusion in the DJSI World signifies that the company is capable of creating value for its

shareholders over the long-term as well as seizing opportunities and managing risks related to

economic, environmental and social factors.There are altogether 318 companies from 24

countries that comprise this portfolio, only seven of which are Brazilian.

On the basis of a questionnaire and public information published in annual reports and websites,

2,500 of the largest corporations were evaluated according to market value by the Dow Jones

Global Index.The polling and selection process, audited by PricewaterhouseCoopers, includes 30

items that are analyzed in relation to economic, social and environmental performance of each

company. Each year the selection criteria are reviewed and updated.

12


Sustainable Value Bank

Society’s demand that banks serve as the conduitsfor sustainable development has encountered

synergy with the long-term thinking of Itaú.

13

“It’s not just today that Itaú has thought about

tomorrow.”

This is more than just a slogan launched in 2007, but

rather a statement that expresses the commitment

that an over 60 year old institution has made toward

stability and sustainability.Over the last decade,

companies throughout the world have started

paying attention to improving governance structures

and social and environmental practices.At Itaú

Holding, this external demand has found a fertile

field in which to grow, and it has never been driven

by immediate gain.

More recently, financial institutions have taken on a

key role in making sustainable development a reality.

After all banks are expected to steer funds toward

projects that promote management and

minimization of negative economic, social and

environmental impacts. Itaú Holding is aware that it

can positively influence people and organizations

with which it works to implement responsible

practices in their individual dealings and projects.

Ethical and transparent relations with interested

parties, preservation of environmental resources and

private social investments characterize social and

environmental accountability at Itaú Holding.This

action is guided by respect for other human beings,

compliance with the law and diversity as well as a

commitment to the quality of our products and

services.Since 2005, Itaú Holding has accelerated

development of structures capable of integrating the

concept of sustainability on all business fronts.

In 2007, this process gained sway with the creation of

three specific departments – Social and

Environmental Accountability and Social and

Environmental Risk and Micro Credit at Itaú and

Social and Environmental Risk Assessment at Itaú

BBA, which are responsible for proposing policies and

promoting synergy among the several initiatives

implemented by the Organization, focused primarily

on social and environmental issues directly related to

business.

Itaú decision making processes are the responsibility

of the Social and Environmental Accountability

Executive Committee, made up of directors from a

number of areas who are responsible for defining

and evaluating the social and environmental policies

of the Bank.The Social and Environmental

Accountability Commission, in turn, monitors and

evaluates the alignment of projects and suggestions

for Banco Itaú positioning in the face of the demands

made by the community as well as other activities.

In January 2008,The Executive Group approved the

creation of a Sustainability Committee comprising

Executive Group members and presided over by

Roberto Setubal.

Also at the beginning of 2008, the decision to set up

a Sustainability Monitoring Committee involving

members of Itaú Holding’s board was approved.

The entire sustainability structure in all business

areas will also renew and strengthen the

commitment that will permeate the entire group.

Itaú Holding will introduce in 2008 its Sustainability

Policy.This document will impact all other Itaú

Holding policies and will be based on a wide range

of commitments and procedures validated formally

by all areas starting with the Board of Directors. In

parallel, a Sustainability Management System will be

developed as a tool to monitor the level of progress

made in the areas in light of the practices and

commitments which have been assumed.

14



Support to expansion of micro finance

In 2007, Itaú devoted nearly R$12 million toward

Informed Productive Micro Credit.The Bank is

working toward creating the conditions necessary

to enable this initiative to gain scale and effectively

fulfill its role as an instrument of social

transformation. In this regard, Itaú believes that the

Public Interest Civil Society Organizations (OSCIPs)

are an important credit access channel for those

persons who cannot secure loans through the

formal channels and therefore represent a source

of support to enterprising initiatives from the low

income population.

Itaú held, in August 2007, the Itaú Micro Finance

Seminar, which gathered together public policy

makers, regulatory agency representatives, micro

credit operators, community members and other

Brazilian and foreign bank representatives to

encourage discussion of this topic.

Social and environmental risk analysis

At the end of 2007, Itaú Holding introduced its new

Social and Environmental Risk Policy for corporate

lending procedures.As an entirely new initiative, its

final format was reached after external consultation

with strategic publics on the lines of AA1000

(see details of the consultation in the“Dialogue and

Mobilization”chapter of the“Relationships and

Indicators”volume of this report).

In 2004, Itaú was one of the first to adopt the Equator

Principles and adhered to the revised version of the

agreement in 2006. Its new corporate policy was

developed based on its ownmethodology for

appraising social and environmental risk and

therefore represents further evolution for lending

programs.See its main objectives below:

Establish guidelines and instruments to assess the

social and environmental risks in credit analyses.

Provide support for internal sustainable

development programs and actions and

strengthen guidelines for training courses of

professionals in the commercial and corporate

customers credit areas.

Contribute toward improving social and

environmental practices of corporate customers.

15

Implementation of this methodology’s tools results in

a social and environmental customer ranking ranging

from high tomedium and low risks.The rating serves

as a guideline for the decisions regarding credit limits

of authority which is conducted in a constructive

manner and strives to encourage the customer to

improve social and environmental practices.The

analyses reports are valid for one year.

The new policy applies to all Itaú BBA customers and

Banco Itaú customers with credit involvement of

R$ 5million or more. Itaú Buen Ayre, Itaú Chile, Itaú

Uruguay,and Itaú Europa will be developing their

own processes for analysis over a two-year period in

order to reflect the specifics of each institution.The

process of incorporating the new policies will include

specific training sessions for the collaborators

involved in the branches and the administrative units.

IIn 2007, six projects related to the Equator Principles

were analyzed and approved in the ambit of Itaú

BBA; two were categorized as“A”and four as“B”, from a

volume of investment of R$4.1 billion (Itau’s share

being R$349.9 million).

16



Onlending

Automatic BNDES transactíons, in which the Bank is

engaged in onlending funds for infrastructure and

increasing production capacity, potential borrowers

of these funds must present environmental licenses

required by law to enable the transaction to be

finalized.

Compared to 2006, there was an increase of 202% in

the value of fund onlending from the BNDES, also

reflecting in an increase of 111% in the number of

projects benefiting from them.

Automatic BNDES Transactions

2005 2006 2007

Total amount financed (in millions of R$) 157 116 350

Number of financed projects 73 90 190

A social and environmental risk analysis is also

conducted in relation to loans financed from funds

raised from the Inter-American Investment

Corporation (IIC), which totaled US$150 million

between 2005 and 2006.These funds are earmarked

to finance small and medium size companies in

automatic leasing operations.

Customers extended financing are monitored to

assess their good standing every two months, by

means of applying a social and environmental risk

assessment based on the IIC requirements.A specific

social and environmental questionnaire is also

forwarded to a group of pre-selected customers

annually, which not only serves to supplement the

risk assessment, but to propagate the importance of

social and environmental accountability among the

corporate milieu as well.Previously limited to the

State of São Paulo, in 2007, the questionnaire was

used in all regions of the country, which has

enhanced propagation of responsible conduct.

Banco Itaú in 2007 raised new funds from the IIC, in

the amount of R$200 million.The funds will be used

to finance low cost housing at amounts of up to

R$100,000 per family.

Learn more:

To learn more about the social andenvironmental risk analysis and othersocial and environmental accountabilitypractices at Itaú Holding visit the sitehttp://www.itau.com.br/socioambiental/

See also:

Social and environmental accountability practices

Learn more about the major social and

environmental accountability programs in the

section Relationships and Indicators in this report.

Banco Itaú is the site for the Ecuador Principles seminar

In May 2007, Banco Itaú was the venue for the

“I Bank Seminar on Social and Environmental Risk

Analysis”, bringing together 54 participants from

13 banks in addition to four representatives from

other community sectors.

Based on the Ecuador Principles and the

International Finance Corporation. (IFC) Standards,

the purpose of the seminar was to enhance the

technical knowledge of finance and insurance

market professionals who are directly or indirectly

involved in the analysis of social and environmental

risk.Opportunities and new challenges were

discussed at the event to expand these responsible

practices.

Fifteen Banco Itaú, Banco Itaú BBA and Itaú

Seguros representatives took part in the seminar,

which was the initiative of the Sustainable Finance

Technical Chamber (CTFin) of the Brazilian

Corporate Council for Sustainable Development

(CEBDS) and sponsored by the IFC as well as the

Equator Principles forum itself.The content was

developed by the Sustainable Finance

Consultancy.

17

Economic, social and environmental influence

Itaú Holding is the second largest private enterprise

group in the country and has a network comprising

more than 4,000 points of sale and services located

throughout the country, reflecting a structure

responsible for

4.7 million interactions daily with its public through its

various business units.Currently there are over 65,000

employees and 60,000 shareholders in addition to

30,000 suppliers.These numbers help depict the

economic, social and environmental influence that its

operations have on Brazilian society.

Throughout its history, Itaú has always been dedicated

to expanding its influence to collaborate in the

development of those with whom it has worked.

Recently, based on the advancement of practices and

understanding of the scope of social and

environmental accountability, it has begun promoting a

number of actions to more efficiently use this ability to

become involved with the community. In this regard it

has extended its Micro Credit Policy, promoted various

courses, seminars and presentations related to social

and environmental accountability and efforts to

provide guidelines toward the conscientious use of

financial services, especially current accounts and

credit. In May last year, for example, it brought former

US Vice President and 2007 Nobel Peace Prize winner

Al Gore to Brazil to alert the public about the dangers

of global warming.Present at the event were

business and political leaders, including former

Brazilian President Fernando Henrique Cardoso and

the current Brazilian Vice President José Alencar, as

well as ministers, governors, mayors, banking

executives and entrepreneurs.All together the event

drew nearly 1,000 opinion makers.

Itaú Holding invested over R$180 million in programs

and initiatives associated with social and

environmental accountability.There are 25 large scale

projects that have been developed by the Fundação

Itaú Social and over 165 partnerships and forms of

support to different institutions.

133 new branches in 2007

Itaú opened more new branches in Brazil in 2007

than any other bank; 133 new branches located in

a number of locations throughout the country,

helping to strengthen the company's organic

strategic growth planning based on solid

investments toward expanding its own distribution

network.

Itaú's organic growth was due to the economy

performing well with higher total payrolls for all

sections of the population. Its commitment to

development in Brazil was seen in its practice of

investing to stimulate economic and social

development in selected regions through direct or

indirect job creation or by expanding its banking

services in these regions.

This drive is not exclusive to 2007; over the past

four years, Itaú has added a total of 500 new

branches, which attests to our confidence in the

progress of the Brazilian economy. In line with its

action plan, Itaú is now preparing in advance to

meet future demands.

18



Vision, Principles and Values

Itaú Holding operations are fully targeted toward

achieving the Itaú Vision:

“To be the industry´s best performing bank, built to

last, renowned for being sound and ethical, and

distinguished by highly motivated teams committed

to customer satisfaction, to the community and to

generating competitive advantages.”

This long-term proposal is the measure for all

strategies and actions.The Organization believes that

the sustainability of its business depends on the real

commitment on the part of its leaders and

employees toward the continuous improvement of

its operations.This can only be achieved by sharing

the principles of the code of conduct stated in our

Itaú Way (Modo Itaú de Fazer), which is a compilation

of types of employee conduct and relationships:

PerformanceWe work together to make the Bank a

performance leader.

Human Values We work to the highest standards of ethics and

social responsibility, obeying the law, and

respecting individual human rights.

FeedbackWe develop, prepare and guide our people by

providing them necessary support so they can

help us achieve better results and grow within the

Organization

MotivationWe encourage an open and motivating

environment to generate high quality decision

making by advancing the exchange of ideas and

contributions at all levels of the organization.

TeamworkWe employ a participative team structure, which

ensures quick and efficient decision making.

Continuous Improvement We always strive to improve every activity we

undertake.

Customer satisfaction We are committed to sustainable development of

our business operations, as well as the satisfaction

of our customers.

Celebration

We trust in each other, celebrating and sharing our

successful results.

19

Inspired by its Vision, Principles and Values, Itaú

Holding is aligned with global commitments shared

with those entities which best represent community

needs.The most notable are listed below:

Latin American Sustainable Finance Forum

(LASFF) – aimed at supporting sustainable finance

in the region, based on the dissemination and

systematization of knowledge acquired and

development of new technologies.

UNEP-FI – global partnership between the United

Nations Environmental Program and the finance

sector, the mission of which is to identify, promote

and implement the best financial operations

sustainability practices.As a signatory of the

UNEP-FI, Itaú Holding receives benefits such as

research, training, publications and access to a

qualified network of spokespersons.

Brazilian Global Pact Committee – Itaú Holding is

now a member of a group of Brazilian companies

designated to guide, facilitate and encourage

signatories and other interested parties to

develop programs related to the 10 basic

principles defended by the Pact in the areas of

labor relations, defense of the environment and

combating corruption.

Institute of Social and Ethical Accountability –

membership in this landmark organization

located in England enables Itaú Holding to

increase its access to available sustainable

development knowledge and assistance, as well

as inclusion in a global network of organizations

committed to this topic.

Development Objectives for the Millennium –

Itaú Holding strives to contribute toward helping

Brazil comply with the Development Objectives

for the Millennium (see box) which have been

formally established in the Millennium

Declaration, an initiative of the United Nations

(UN).The 189 signatory countries have committed

to achieving minimal conditions for sustainable

development by 2015.

Global Commitments

20



Millennium Development Objectives

Group Actions

1. Eradicate hunger and poverty Fundação Itaú Social,Banco Itaú and Banco Itaú BBA social investments,the Itaú Criança (Itaú Children) program .

2. Quality basic education for all Fundação Itaú Social,Banco Itaú and Banco Itaú BBA social investments, Itaú Children program.

3. Sexual equality and women's Personnel Management Policy,Corporate Diversity Policyrights

4. Reduce child mortality rate Itaú Children program

5. Improved Prenatal health Women's Health Program

6. Prevention of AIDS,malaria Sexually Transmitted Disease/AIDS Prevention Program,Time for Health Program and other diseases

7. Quality of life and respect for Time for Health Program,Planting Spring Campaign,campaigns for the rational use of the environment natural resources,social and environmental criteria for lending.

8. Everyone working toward Adhesion to the Equator Principles,social and environmental criteria for lending,development the Microcredit Support Program,commercialization of socially

responsible products.

21

22

BusinessStrategy


Scenario

Itaú projects organic growth of itsbusinesses,despite possible

macroeconomic instability in 2008.

23

A strengthened economic growth scenario and price

stability open up highly positive prospects for the

banking industry in Brazil over the next few years.

Despite the external uncertainties linked to the

decided cooler US economy, which could result in

periods of greater market volatility, the Brazilian

economy should stay on the path it has forged over

the last few years including additional decreases in

basic interest rates, increased investments and

subsequent increase in economic activity levels on a

domestic scale.

This scenario should enable Itaú Holding to continue

steering its strategic planning toward growth in a

number of business areas in which it is engaged,

providing continuity to, for example, increased credit

offer to individuals and companies, an area that

requires constant improvement of the credit models

used and in the measurement and calculation

technology implemented to gauge the risks

involved.

If on the one hand this positive scenario heralds

good news for growth of Itaú Holding business it also

signals on the other hand stiffer competition from

the leading domestic financial system agents.

Formation of a new larger scale competitor in this

market, reflected by the merger of the local bank

operations of Santander and ABN AMRO, is one of the

new challenges to be faced in 2008, since the real

effects on the system will only begin to be felt in

2009.

Itaú Holding believes that it is prepared to meet the

challenges posed by this scenario.A good example

of this is the fact that results have been maintained

even in an environment of lower interest rates, which

can be explained by the remarkable growth of

business volumes and improved performance in

nearly all fronts in which we are engaged.

24

Business Strategy


Challenges

25

In the last two years, we have concentrated a good

portion of our efforts on complex processes of

consolidation, as in the cases of BankBoston, Orbitall

and Credicard.The strategic focus of Itaú Holding in

2008 will be organic growth and expansion of all

business areas, some of which include small and

medium size businesses, real estate credit, payroll

credit, insurance and international loan operations,

especially in Chile and Uruguay.

The small and medium size corporate area is one

area in which Itaú Holding has ambitious plans for

expansion, either by increasing the scope of potential

clients resulting from the economic growth

environment or based on the expertise and

customer base that has been incorporated from the

acquisition of BankBoston, which resulted in a new

management model for this segment. Investments in

the small and medium size corporate area will

therefore be substantial over the next few years.

Itaú Holding’s strategic plans in the credit area

include increasing its share of the real estate credit

segment, which will play an important role in bank

operations over the next few years, as will payroll

credit, for which a specific department was created in

2007.Direct consumer finance operations have also

graduated from the structuring phase and, based on

increased knowledge and scale, will tend to take off

in 2008.

Expectations are also optimistic for the Treasury area,

despite the prospective global market scenario

calling for scattered instances of greater volatility

owed to the uncertainties mostly from the US

economy.The same outlook holds true for

Investment banking under Itaú BBA, which is

currently the leading domestic institution involved in

the heated dispute for operations with large scale

corporations.

2008 Priorities

26


Intangible Assets

Brand

The value of Itaú can also be perceived in itscapacity to retain and develop knowledge based on

the strength and reputation of its brand.

27

The market value of the Itaú Holding brand has

grown at an average rate of 22.4% per year over the

last decade.This indicator is the result of the coherent

posture and good relationship Itaú has with its

several publics in addition to the solid and modern

reputation it enjoys among its customers.

In 2007, the value of the brand was estimated at

R$8.076 billion, according to an evaluation

conducted by the international consulting firm,

Interbrand, which has classified Itaú as the most

valuable brand in Brazil since 2002.The ranking takes

into account factors such as performance, market

relations and capacity to engage in highly

competitive scenarios.

Consistently increased financial results achieved have

contributed toward the good performance of the

brand, as well as the progressive consolidation of its

multiple services, its highly successful merger of

BankBoston into Personnalité, international

expansion in Argentina, Chile and Uruguay and the

engagement of Itaú in the implementation of

initiatives that prioritize sustainability.

The growing recognition and appreciation of the

brand are also enhanced by the Itaú brand

management, which includes articulation of activities

related to businesses, communications and research

of different perceptions generated by the brand in a

number of different market segments.This search for

synergy involves all Itaú areas and the purpose is to

understand the fundamental characteristics of the

Itaú brand and assure consistency in application of

the concepts related to it in the day to day

operations of the Organization.

Intellectual capital

Itaú Holding has a solid history of appreciating its

intellectual capital, encouraging the ethical and

professional education of its employees, as well as

free debate and taking advantage of the

incorporation of different cultures and levels of

expertise to aggregate value to its cultural

organization.

The process of integrating BankBoston personnel,

which took a good part of the first half of 2007, is a

good example of this capacity that Itaú has of

integrating workers of different origins and corporate

cultures.Despite the high degree of complexity

involved in the integration of the difference in

cultures between the two companies, the merger

occurred amicably and there was a good level of

Boston employee retention in the Itaú structure.

Itaú Holding believes that integration processes such

as this reflect opportunities to add expertise,

knowledge and values to the management model.

These processes also signify opportunities for people

that now are part of a united and efficient team, in

which personal merits and team work are

recognized.Today, it is not coincidental that a

significant portion of directors and managers at Itaú

Holding is made up of employees who worked at

institutions acquired by Itaú.

28

Intangible Assets


People management

Itaú Holding has distinctive practices in place to attract

and retain high performance professionals, details of

which can be found in the volume Relationships and

Indicators, the “Employees”chapter.

See also:

Technological capital

In addition to the entire structure and the heavy

investments in technology to increase customer

convenience, one of the reasons why the Itaú brand

is closely associated with modernity by all publics,

Itaú Holding is always developing new technological

knowledge and innovation bases to meet the needs

of its complex business structure.

Development of these technologies is one of the

pillars of success of Itaú Holding throughout all units,

enabling all expansion and organic growth planning

to be based on solid and structured bases,

simultaneously reducing inherent business risks.

In 2007, funds invested in information technology

totaled roughly R$2 billion.Customers conducted

approximately 3 billion automatic teller transactions,

which network is responsible for 40% of all

convenience transactions performed daily by the

customers themselves.Computer access, available to

5.5 million enrolled customers, reflected a total of 867

million accesses a year.Altogether, nearly 1.8 billion

transactions were performed through the customer

service centers, Internet and automatic debit and

purchase debit card systems.

Just to have an idea of this behind the scenes effort,

in 2007, 5.1 million hours (4.76 million hours utilized

in the development of systems and 342 thousand

support hours) were incurred perfecting our own

existing systems, especially in the development of

new products and services.

29

Performance Culture in the day to day routine of Modo Itaú de Fazer” (“The Itaú Way”)

The Performance Culture program seeks to assure that the principles and values of the Itaú Way are

implemented consistently and conscientiously throughout the Organization. In use since 2005, the main

objective of this system is the development of a stimulating and motivating environment that encourages

employee participation to benefit business performance.

The Performance Culture implementation process includes combined evaluation of attitudes and results,conduct

management on a day to day basis, review of all leadership competencies and continued improvement.This

concept is fundamental for better business in that it adds the value of people to the Organization's objectives to

put the capacity of each one of our employees to the best use possible, regardless of hierarchical level.

Additionally, the Performance Culture and continual improvement create an open environment in which all

suggestions as to what is in the best interests of Itaú are heard, reviewed and forwarded.The principles of

engagement and commitment are the guidelines for the performance philosophy, which not only aligns values,

but also strives to create new challenges and motivate all involved at all times.

Initially Performance Culture workshops and training courses were offered to professionals in the administrative

area, but in 2007 were expanded to the branches as well.This transformation process will still undergo a

maturation process in 2008.The goal is to reach as many branches as possible and finish the first cycle of

undertakings in all administrative areas.

30

CorporateGovernance


Governance Structure

The Itaú Holding corporate governance structure,continually improved to follow best market practices,

supports business performance management and ethicaland sustainable generation of value.

31

Fiscal Council

Nomination andCompensation

Committee

Internal AuditCommittee

Disclousure andTrading Committee

InternationalAdvisory Council

Advisory Council

Internal AuditCorporate

External Audit Operations InternalAudits

Board of Directors

Executive Board

Senior EthicsCommission

Senior CreditCommission

Senior Financial RiskAdministration

Commission

Senior AccountingPolicies Commission

Senior TaxCommission

General Shareholders' Meeting

Senior Audit andOperations RiskManagementCommission

The involvement of the Board of Directors and its Committees, on the basis of the

administrative matrix structure of Itaú Holding, strengthens the administrative

foundations of an organization that intends to endure and remain sustainable for

the long-term and is focused strictly on business performance and creation of

value for a number of Itaú relationship publics, with ethics, transparency and the

adoption of the best corporate governance practices.

The structure of the Committees related to the Board

of Directors assures formal, specialized and

systematic treatment of matters of strategic

relevance, providing input for improvement of

management controls.The members of the Board of

Directors and other members of the Committee

structure work with the bodies associated with the

Board, striving to seek a consensus of opinion

through dialogue and a systemic vision that is

characteristic of Itaú Holding management.

The bodies associated with the Executive Board have

decision making power, thereby assuring capacity to

take decisions and encourage communications and

integration among the areas to make contributions

and offer points of view in an effort to add value to

the Organization.

See the following details regarding the duties and

composition of the main levels within the corporate

governance structure of Itaú Holding:

General Shareholders' Meeting

The highest level of the company is the General

Shareholders’Meeting which calls, general and

extraordinary meetings according to the pertinent

legal provisions.The general meetings are held in the

first four months of each year to examine and

approve the financial statements and elect the

members of the Board of Directors and the Fiscal

Council. Extraordinary meetings are held to decide

matters related to the company which are its

responsibility according to legal provisions.

Board of Directors

Itaú’s board of directors meets quarterly and now has

17 members elected by the Shareholders General

Meeting.Members must assess officers’ reports and

the conglomerate’s quarterly, half-yearly and annual

financial statements, determine the dividends to be

paid, weigh decisions and business affairs that may

have a direct effect on the company’s assets, and

discuss other subjects submitted by the president.

Since 2001, the Board of Directors has included

professionals who are independent in relation to the

controlling shareholders, thus ensuring greater

defense of minority shareholders’ interests in

decisions, and fostering discussion and exchange of

ideas.Currently, there are five independent

professionals on the Board of Directors:Pérsio Arida

(former Brazilian Central Bank president), on the

board since 2001; Roberto Teixeira da Costa (first

president of the Brazilian Securities Commission),

since 2001; Alcides Lopes Tápias (former Minister of

Development, Industry and Commerce), since 2002;

Tereza Cristina Grossi Togni (former Brazilian Central

Bank director), since 2004; and Gustavo Jorge

Laboissiere Loyola (former Brazilian Central Bank

president), since 2006.

Based on Brazilian legislation, and best practices for

corporate governance advocated by the Brazilian

Corporate Governance Institute (IBGC) and the rule-

set of the Brazilian Securities Commission (CVM), the

board of directors structured its self-evaluation

program two years ago, to be applied annually.

32

Corporate Governance


Criteria are defined by the Nomination and

Compensation Committee and cover activities

directly related to the board, such as its level of

activity, composition, independence and relations

with external and internal auditors.

Fiscal Council

This body is elected annually by the General

Shareholders’Meeting and is responsible for

inspecting administrator acts, examining the financial

statements and issuing an opinion on the

management’s annual report. It has been in effect

since 2000 and comprises three independent

professionals from the parent company group: Iran

Siqueira Lima (former Central Bank director), Alberto

Sozin Furuguem (former Central Bank director) and

Marcos de Andrade Reis Villela (Member of the

Corporate Governance Business Counsel of the Rio

de Janeiro Commercial Association).

Advisory Councils

The Advisory Council and the International Advisory

Committee comprise Itaú directors and executives as well

as other persons of renowned competence in the

international finance and economics field.These bodies

work with the Board to assess perspectives of the Brazilian

and international economic scenario and the application

of codes and internationally accepted standards,especially

in the monetary and finance policy corporate governance,

capital market,payment systems and money laundering

prevention areas.

Nomination and CompensationCommittee

Created in 2005 and approved by the General

Shareholders’Meeting as the Compensation

Committee, this body comprises one independent

member, Roberto Teixeira da Costa. In 2006 this

committee was also assigned responsibility for

reviewing and proposing names for the Board;

recommending members to sit on the Statutory

33

Committees; providing statements regarding

situations of potential conflict of interest related to

participation of members on the Board of Directors

or on the Executive Board on statutory bodies of

other companies and proposing evaluation criteria

for the Board of Directors' activities.

This Committee also retained duties for defining

executive compensation policies, including the

following items:apportionment of overall and annual

funds established by the General Meeting;payment of

profit sharing;approval of stock options purchases;and

extension of benefits of any nature and representation

funds, taking into account the duties, seniority,

competence and professional reputation and value of

the services on the market. It is also the responsibility

of the Committee to provide input for the subsidary

company executives' compensation policy.

Audit Committee

The creation of the Itaú Holding Audit Committee

was approved at the General Shareholders’Meeting

held in April 2004.Currently its duties are in

compliance with the provisions of Resolution 3198, of

the National Monetary Counsel, Resolution 118, of

the Brazilian Private Insurance Board and the

Sarbanes Oxley Act (SOX) in the United States.Three

independent members were appointed from the

Board of Directors:Carlos da Camara Pestana,

Chairman, Alcides Lopes Tápias and Tereza Cristina

Grossi Togni, who is the financial specialist of the

Committee and is engaged full time in this position.

The Audit Committee, the only one in the Itaú

Financial Conglomerate, is one more instrument in

the defense of the minority shareholding interests.

It is the responsibility of this Committee to work

zealously to achieve and assure quality and integrity

of the financial statements, compliance with legal

and regulatory requirements and the engagement,

independence and quality of work from the

independent audit firms, definition and quality of

Internal Audit and the quality and efficiency of the

internal controls and risk management systems.

Internal Audit

Itaú Holding’s Internal Audit services work

independently to conduct methodologically

structured examinations, analyses and surveys to

evaluate the integrity, adequacy, effectiveness,

efficiency and economicity of the information

systems and processes and internal controls in our

risk management environment.

Internal Audit's activities are directly supervised by

the Audit Committee, which is part of Itaú Holding’s

board of directors, and is monitored by the Senior

Operational Risk Audit and Management

Commission. In order to perform its duties properly,

Internal Audit has access to all documents, physical

and logical records, systems, locations and people

involved with the activities under review.

34



Disclosure and Trading Committee

The primary function of this committee is to manage

policies for disclosing material acts or facts and

trading in the company’s own stock. Its scope of

activities covers a range of internal actions designed

to improve information flows and oversee the ethical

conduct of our management and staff.

Among Brazil’s publicly listed companies, Itaú led the

way in setting up corporate governance committees.

Brazilian Securities and Exchange Commission (CVM)

Instruction 358 requires public companies to have a

Disclosure Policy and an optional Trading Policy. In

addition to having both, Itaú widened the scope of

the Instruction to set up committees, which was

not a requirement. In 2005, the Ordinary General

Shareholders Meeting made this committee

mandatory.

Internal Commissions

The Executive Board has internal commissions to

coordinate its administrative work, as follows:

Senior Itaú Holding Commission

Senior Ethics Commission

Senior Credit Commission

Senior Financial Risk Management Commission

Senior Accounting Policies Commission

Senior Taxation Commission

Senior Audit and Operational Risk Management

Commission

35

Learn more:

Announcements convening meetings, proposalsforwarded by the Board of Directors and minutesof meetings are available on the Investor Relationssite (www.itauri.com.br), section "Releases >>General Meetings".The internal regime governing the Board ofDirectors, Fiscal Council and International AdvisoryCommittee regulations, and trading and disclosurepolicy may be found on our Investor Relations site(www.itauri.com.br) in the “Corporate Governancesection >> Regulations and Policy".

History of Adopting Best Practices

36


Four independent

members elected to the

board of directors

Admitted to Bovespa's


Level 1

Becomes part of Dow

Jones SustainabilityWorld

Index (DJSI) for 2nd

consecutive year

Holds six public meetings

with capital market

agents

Tag Along for all

shareholders

ADR Level II listing on

the NYSE

Financial Holding

Company Status

Stock Options Plan

introduced

Material Fact or Event

Disclosure Committee,

with executives and

independent board

members

Trading Committee

composed of executives

and independent board

members

Part of the DJSI for the

3rd consecutive time

11 Public Meetings held

with Capital Market

Agents

Share buyback

program for one year

Publishes“fiscal council”

regulations

Included in DJSI for 4th

consecutive year

Nine public meetings

with capital market

agents

Audit Committee

(International

Standards), three

members, two of

whom are totally

independent

New channel for

communication with

shareholders – Ações

Itaú em Foco

Adoption the Equator

Principles (August)

Treasury trading

regulations created

Dividend reinvestment

program introduced


consecutive year

Nine public meetings

with capital market

agents

2001 2002 2003 2004


37

Sets up Remuneration

Committee

Trading and Disclosure

Committees become

mandatory

New Corporate Code

of Ethics

Selected for the

Bovespa ISE


consecutive year

Thirteen public

meetings with capital

market agents

Discloses internal regulations for

the board of directors

Sets up Nomination and

Compensation Committee, and

combines Trading and Disclosure

committees

Selected for the ISE for 2nd

consecutive year

Complies with Sarbanes-Oxley

Section 404 requirements one

year in advance

Sets up Executive Committee

for Social and Environmental

Responsibility

Launches segmented version of

Investor Relations website in

Portuguese, English and Spanish


consecutive year

Fourteen public meetings with

capital market agents

2005 2006 2007

Selected for the 8th consecutive

year to be part of the DJSI, and still

the only Latin-American Bank to be

part of the index since it was

introduced in 1999

Award from Management &

Excellence/Latin Finance as Latin

America's Most Sustainable and

Best Managed Bank (for the 3rd

consecutive time)

Management & Excellence rated

Itaú Holding as AAA+ for corporate

governance

Part of Bovespa ISE for the third

consecutive year

First company to adhere to Abrasca's

Manual for Material Information

Control and Disclosure

38


Performance of Shares and ADRs

More shareholders,more liquidity,and better valuationon the São Paulo and New York Stock Exchanges reflectthe capital market's assessment of Itaú's performance.

39

Itaú’s shares are traded on the following stock

exchanges:São Paulo (Bovespa), tickers ITAU3

(common shares) and ITAU4 (preferred shares); New

York (NYSE), ticker ITU; and Buenos Aires (BCBA), ticker

ITAU4.Certificates traded in New York and Buenos

Aires are based on preferred shares.

Market capitalization, a significant rise in share

liquidity, and launches of differentiated

products/services for the capital market, among

other initiatives, reflect our focus on a Performance

Culture of creating value for our shareholders and

sustainable profitability. In 2007, this universe grew

15.5% (from 55,327 in December 2006 to 63,901 by

end-2007).

Due to its long-term strategic vision, Itaú Holding’s

market value has increased at an average annual rate

of 31.5% over the last ten years.By the end of 2007, its

market value had risen 20.2% in relation to 2006 and

reached R$ 110.9 billion.The market value of its

preferred shares (PN) at the end of last year was

equivalent to approximately 3.7 times its net

shareholder equity.

Market Value (*) – R$ million

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

7,184 7,05618,276 19,64521,297

Itaú on the stock market – 2007

Shareholders 63,901

PN shares in circulation 1,154,316

ON shares in circulation 1,242,735

Total shares in circulation 2,397,051

PN shares in treasury 36,676

ON shares in treasury 10,266

Total shares in treasury 46,942

Total Shares 2,443,993

19,079

32,70245,195

61,935

92,270

110,888

(*) Average quotation of preferred stock on the last trading day of period.Total shares in circulation.

40



Performance on stock market (Bovespa) – R$

In 2007 PN stock ON stock

Year highpoint (a) 51.50 48.99

Year average 42.09 37.60

Year low point (b) 33.75 28.71

Variation % (a/b) 52.59% 70.64%

Closing Quotation (*) 45.50 43.00

(*) December 28,2007.

Average Daily Financial Volume Traded – R$ Million

BOVESPA NYSE TOTAL

2002 22 8 30

2003 23 12 35

2004 31 19 50

2005 59 42 101

2006 63 81 144

2007 103 169 272

The quotation of the preferred stock (Bovespa: ITAU4)

rose 16.2% to end 2007 at R$ 45.50 per share, and the

common stock (Bovespa: ITAU3) rose 30.3% to

R$ 43.00 per share.The ADRs (ITU) traded on the New

York Stock Exchange (NYSE) rose 40.9% to US$ 25.86

per ADR at the end of the year.

Points to highlight in 2007:

a) 108.6% rise in the average daily financial volume

traded for the ADRs;

b) 37.9% of the average daily financial volume traded

in shares on Bovespa.

By the end of 2007, the number of ADRs in circulation

increased 18.5% to reach 220.1 million. In December

2007, ADRs accounted for 19.4% of the preferred

shares in circulation and 9.0% of the total shares of

the Itaú’s capital stock.

From the initial NYSE listing on February 21, 2002, to

the end of 2007, the quantity of ADRs in circulation

rose from 3.1 to 220.1 million.A point to note is that

on February 21, 2007, Itaú Holding concluded its fifth

year of listing on the NYSE.An event

commemorating this period of five years as a listed

company was held on March 1st and attended by

around one hundred NYSE investment professionals.

This event was broadcast in full with simultaneous

translation on our “Investor Relations”site.

Included in Market Indexes

Being included in market indexes is an important

factor for publicly held companies.Many fund or

portfolio managers use these indicators as

parameters when selecting shares, or invest

exclusively in portfolios consisting of stock from a

certain index. Itaú Holding’s stock is included in

several indexes in local and international markets, e.g.:

Brazil:

São Paulo Stock Exchange Index (Ibovespa) (stocks

accounting for 80% of Bovespa’s trading volume);

IBX-100 (index of Bovespa’s 100 most actively

traded shares);

IBX-50 (index of the Bovespa’s 50 most actively

traded shares);

IGC (Bovespa’s Corporate Governance Index);

ITAG (index of Bovespa-listed companies that

offer minority shareholders tag-along rights);

ISE (Bovespa’s Corporate Sustainability Index);

International:

Dow Jones Sustainability World Index (index of

the NYSE’s most solid, ethical and sustainable

companies);

BNY Composite (Bank of New York Index of all

ADRs traded in the United States);

BNY Latin America 35 ADR (the 35 most

actively traded ADRs from Latin American-based

companies);

BNY Latin America (index of all Latin American

companies trading ADRs in the USA);

BNY Brazil (index of all Brazilian companies

trading ADRs);

BNY Emerging Markets (index of all emerging

market-based public companies trading ADRs);

BNY Emerging Markets 50 (the 50 most actively

traded emerging market-based public companies

trading ADRs);

41

BNY BRIC Select (index of the most actively traded

ADRs for companies based in Brazil, Russia, India,

and China).

BNY BRIC Select Canadian (Index of companies

that traded most ADRs based in Brazil, Russia, India

and China – aimed at Canadian customers and

monitored in accordance with the Canadian

exchange rate);

BNY International 100 (Index of the top one

hundred companies that traded ADRs);

S&P Latin America;

Global 1200 Financial Sector;

S&P ADR Index.

Dividends/JCP (Interest on Own Capital)

The policy for distribution of Dividends/JCP is to

remunerate shareholders through supplementary

monthly payments (usually twice a year).Over the

last ten years, the average net amount distributed to

shareholders was 31.4% of consolidated annual net

income and 30.0% was paid out in 2007.

Main Events in 2007

Stock Split

Itaú Holding’s shares were split to raise their liquidity

through the consequent adjustment of the

quotation in the market to a more attractive level for

trading.On October 1, one new share was distributed

for each preferred or common share on the Bovespa,

without altering each shareholder’s portion.On

October 9, one new ADR was distributed for each

ADR on the NYSE; and one new CEDEAR for each

CEDEAR on the BCBA on October 4, 2007. In order to

maintain shareholding interest unaffected and

compensate for the split, the stock quotation was

divided by two on the same dates.

42



Dividends/Interest on Own Capital (JCP) – Net – R$ million

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

308 291

512 534687 704

942

1,172

1,585

1,923

2,544

Share Buyback and Cancellation

Itaú Holding has had a share buyback policy for over

20 years; some 3,241,200 preferred shares and

136,100 common shares were bought back in 2007.

Under our Operational Rules for Trading Own Shares

for Treasury, our monthly disclosure to regulatory

bodies and on the Investor Relations site shows

monthly volumes traded and minimum, average, and

maximum prices for transactions in our own shares.

This policy enables Itaú to cancel some of these

shares and raise shareholders’portion of Itaú

Holding’s capital. From 1997 to 2007, some 19.9% of

total capital in circulation was bought back and

canceled. In addition to higher percentage

ownership, buyback policy raises stock liquidity and

boosts profit per share and dividends paid out to

shareholders.From 1997 to 2007, profit per share

grew at an average of 28.0% a year.

We also have previously bought back shares in

Treasury that may be used in our stock option plan,

for options not yet exercised by management.Note

15 to the Financial Statements accompanying this

Annual Report provides details of this plan,

specifically the average cost of acquiring Treasury

stock, and transactions with options.

Unrealized gains

In 2007, there were a number of partial sales of Itaú

Holding’s interests in certain companies, especially

the public offering of the shares of the São Paulo

Stock Exchange.

Those transactions made it possible to price the

companies at market value.The difference between

market value and book value for these four

companies was over R$ 6.0 billion, as shown in the

table below:

43

R$ million

Current Market value Book value Unrealized holding % (a) (b) gains (a-b)

Bovespa Holding S.A. 4.02% 973.33 58.78 914.55

BM&F S.A. 2.31% 519.85 20.77 499.08

Serasa S.A. 10.29% 369.66 99.01 270.65

Redecard S.A. 23.21% 4,498.59 172.14 4,326.45

Total – 6,361.43 350.70 6,010.73

International Financial Reporting Standards (IFRS)

At the Apimec-SP meeting held on December 5,

2007, the market was informed of the reconciliation

between BR GAAP and US GAAP accounting

standards and the International Financial Reporting

Standards (IFRS), which will be used to standardize

accounts reported by companies all over the world

and which will become obligatory in Brazil.

R$ million 12.31.2006

Net income Net shareholders equity

Under BRGAAP 4,309 23,564

Under IFRS 6,440 27,533

Under USGAAP 5,896 27,417

Details and explanations of the reconciliation

between Brazilian Accounting (BR GAAP) and IFRS,

applicable to the net shareholders equity and net

income of Banco Itaú Holding Financeira S.A., on

December 31, 2006, and their underlying

assumptions are available on our Investor Relations

site.

Investor Relations policy

Investor Relations involve the main stakeholders:

shareholders, investment professionals, media

providing specialized coverage of finance and

academics researching financial and capital markets.

The main aim of the Investor Relations unit for Banco

Itaú Holding Financeira S.A. is to add value for our

shareholders.The ongoing work of the unit includes

strategic planning, coordinated implementation,

constant servicing, assessments, and feedback.

Our Investor Relations policy is to provide data

sufficient to assist persons considering an investment

in Itaú Holding Financeira stock, through the

disclosure of information with transparency and

quality. In all cases, we respect legal and ethical

principles and seek to consolidate and maintain the

leadership and innovation of Banco Itaú Holding

Financeira S.A. in the capital market.

44



See also:

Investor Relations

Read more on Itaú's relations with its investors

in the "Shareholders" chapter of Relationships

and Indicators.

Our channels for providing services for our

stakeholders includes public meetings, meetings

with groups of investors in Brazil and other countries,

our website “Contact us”button, telephone and fax, as

well as our regular channels such as the annual

report (printed and on-line versions), quarterly

earnings reports, e-mails and website presentations

of statements, press releases and material facts, the IR

website and our newsletter Ações Itaú em Foco

distributed quarterly to all our shareholders and

those registering through the IR website.

45

Accountability, transparency andaccessibility – highlights of 2007

Segmentation of the Investor Relations site in

homepages for investors and analysts, meeting

the particular needs of each group.

Launch of the "My IR" page on the Investor

Relations site (version in portuguese).

Internet chat sessions in partnership with the

National Investors Institute (Instituto Nacional

de Investidores, or INI) to discuss results and

strategies with individual shareholders.

Holding 16 meetings with market analysts and

shareholders in Brazil through the Capital

Market Analysts and Investment Professionals

Association (Associação dos Analistas e

Profissionais de Investimento do Mercado de

Capitais, or Apimec).

Roadshows outside Brazil (in 2007, we

expanded to cover the Far East and Middle East).

Holding four teleconferences in Portuguese and

four in English broadcast live on the Investor

Relations site, with 6,179 visitors listening.

46 Management


Management model

Strict adherence to procedures and discipline in theexecution of processes ensure Itaú's efficiency in all

management initiatives involving ethics, risk or costs.

47

Since its beginnings, Itaú Holding as an organization

has built sound management procedures to support

the upscaled offer of products and services for

customers. In keeping a close watch on the main

market trends at all times, Itaú has made use of all

instruments capable of ensuring consistency, security,

and agility in business.All its procedures build

mechanisms to track how earnings evolve and

consequent returns to be expected.

Our segmentation strategy is based on knowledge

that provides efficient management of our business

units, including rapid responses to customer

demands and market trends.The Itaú Holding

management model uses interactivity across units

and constant exchange of information throughout

the Organization, which generate more powerful

synergies, faster decision making and solutions

founded on rational and structured analysis of

existing variables.

This interaction between areas enriches decision

taking with a wide range of perspectives and takes

place mainly in the several strategic committees

pervading the Organization as formal instances of

the corporate governance structured.

One of the means that ensures the dissemination

and tracking of performance standards is the Itaú

Management Action for Results Program (locally

AGIR), a management planning tool through which

the Bank ensures that employees are in tune with its

guidelines.The program sets priorities, establishes

objectives, monitors performance, remunerates

based on performance, and attributes significance

weighting to service.

Investments made to enhance management

procedures are relevant because they ensure returns

by aligning all the Organization’s objectives and

commitments.

An example of the effects of this constant effort to

enhance the operation was the participation of Itaú

Private Bank in the National Quality Award (Prêmio

Nacional da Qualidade, or PNQ). Itaú Private Bank was

a finalist among the 58 organizations competing,

which is considered a good performance, since the

bank began to adapt its management model on

PNQ lines only three years ago.Even more important

than competing for the PNQ award is confirmation that

the bank’s management system is progressing

consistently and quickly.

Ethics management

Itaú’s Corporate Ethics Code states the ethical

commitments that Itaú Holding assumes with

respect to its strategic stakeholders and society. Its

purpose is to preserve the company’s reputation,

strengthening attitudes such as fairness, cooperation,

transparency, accountability, and compliance with

Itaú Holding’s sustainability policy.

Itaú’s Ethics Code values responsibility and dialogue

with strategic stakeholders.Along with

recommendations or guidelines for conduct, it

proposes conscientious action and management of

consequences based on moral principles and values.

The Code applies to all Itaú Holding companies, so

there are versions in Portuguese, Spanish, English and

Japanese.Not only managers and collaborators, but

suppliers too are encouraged to comply. It was

introduced in 2000 and is frequently reviewed; the

most recent updating was in 2005. It is available for

consultation and download from Itaú’s website.

Key references for the Ethics Code are the United

Nations Millennium Development Goals, its Global

Pact, the Caux Round Table Business Principles, the

Dow Jones Sustainability World Indices, the Bovespa

Business Sustainability Indices, and the Ethos

Indicators.

48

Management


Stock option plan

Itaú is one of the few Brazilian companies using

stock options to remunerate executives. Since

part of the variable remuneration for senior

managers takes the form of stock options, this

produces commitment to Itaú’s future

performance and adds value for shareholders.

The objective of the plan is to make executives

part of the medium and long-term process of

developing the institution by enabling them to

participate in the value that their work and

dedication adds to Itaú’s stock.The plan

stipulates the persons eligible, conditions and

limits, details of exercise prices, vesting and

exercise of options, and other transparent

detailed rules.

The Appointments and Remuneration

Committee analyzes the board’s proposals and

periodically designates Itaú Holding directors to

whom options will be granted.

See also:

Ethics and management

Practices for disseminating the ethics culture in

Itaú Holding in the chapter "Employees" of

Relationships and Indicators.

Note that the Corporate Ethics Code is just one of a

number of instruments governing Itaú Holding’s

strategies, policy, practices and safeguards from the point

of view of business ethics (see table).

Ethics management in Itaú Holding – Instruments

Corporate values Define the main lines of the organization's culture.

Itaú Vision Sets long-term goals.

Corporate Ethics Code Guides behavior of management,collaborators and suppliers.

As part of the Performance Culture Program,the Itaú Way poses a mean of Modo Itaú de Fazer (The Itaú Way) materializing the Values,the Vision and the Ethics Code.

Corporate policy and programs • Policy for receiving and handling denunciations.

Complementing the Corporate Ethics • Policy for combating corruption and bribery.

Code.See examples (opposite). • Corporate policy for preventing and combating illicit activities.

• Corporate policy for information security and privacy.

• Policy for risk management.

• Corporate policy for crisis management.

• Negotiation policy.

• Disclosure policy.

• Legal compliance policy.

• Internal controls and implementation of Sarbanes-Oxley Act.

• Program for valuing human diversity.

• Program for conscious use of credit – employees.

49


Corporate policy for preventing andcombating illicit acts

Itaú sees preventing and combating illicit activities as

part of its institutional responsibility to society, so it

published its corporate policy on prevention of illicit

activities in 2006, in order to formalize this

commitment, and ensure alignment with best

market practices and recommendations from

international bodies.

This policy sets Itaú’s guidelines for preventing and

combating illicit activities.The great challenge is to

identify and repress increasingly sophisticated

attempts to disguise the origin, ownership, and

movement of assets and valuables derived from

illegal activities.Financial institutions have a key role

to play in the effort to combat these operations.

Money laundering is one of the main illicit activities

to be combated and poses a major concern for both

government and society.

Money launderingand corruption prevention policy

The Organization maintains an environment of

controls to discourage illicit activities through both

preventive measures, and by encouraging

collaborators to commit to the values and principles

of the conglomerate.

Specific procedures are in place to appraise and

identify customers when starting or continuing the

business relationship.The aim is to avoid Itaú being

used to move funds originating from illicit practices.

Supplementing the process of appraising customers,

systematic monitoring is based on the perspective of

preventing money laundering and fraud.Over

530,000 current account transactions were analyzed

in 2007.

50

Management

Learn more:

More details on the Corporate Ethics Codemay be found at www.itau.com.br in thesection on "The Company"– Ethics Code.

Information security and privacy policy

Itaú Holding is committed to ensuring security for its

transactions and total privacy for its customers under

its policy for security and privacy of information and

its Information Security and Privacy Committee. In

2007, Banco Itaú made major progress in

consolidating this policy and its guidelines by

designating a department and officer entirely

focused on the subject.The recently created

Corporate Security department (DSC) comprises

sections in charge of inspection, prevention of illicit

activities, personal and property security, information

security and business continuity.

In addition to this new department, Itaú Holding

developed an extensive in-house campaign to make

its collaborators more aware of the importance of

security for the information they handle during their

routine operations.The campaign culminated with

the Information Security Week involving outside

speakers and all central office and branch network

collaborators.

In addition, the Organization is continually investing

in information security and privacy and holds the

IQnet/Good Privacy certificate awarded by Fundação

Vanzolini.

Donations to political campaigns

Itaú Holding’s support for political campaigns is

provided with total transparency and in tune with

the Organization’s principles and values.To ensure

ethical conduct in this process, a “Political

Contribution Committee”was created, composed of

bank board members and executives.

The Committee analyzes candidates’platforms and

backgrounds and, after extensive evaluation and

debate, selects those offering what it considers the

most effective proposals to reach sustainable

development and improve living conditions for

Brazilians.

All funds go to candidates – not to political parties;

they are recognized in the accounting records by

Itaú and strictly comply with the legislation

regulating donations to election campaigns.

Donations made by Itaú Holding may be seen at

www.tse.gov.br.

51

Risk management

Itaú sees risk management as an essential instrument

to optimize use of capital and select the best

business opportunities in order to obtain the best risk

return ratio for its shareholders. In advance of the

determinations of the New Basel Capital Accord, Itaú

developed a strong control environment to monitor

and mitigate risk using capital allocation models

covering all risk factors specified by the Basel

Committee.

In order to comply with Basel II, Itaú set up a specific

structure acting through committees, with the

participation of all areas involved in adapting risk

controls to the standards required under the New

Accord.

Main risk categories

Market risk

Market risk stems from the variation in the value of

assets and liabilities caused by uncertainties over

changing market prices and rates (interest rates,

stocks, foreign currency and commodity prices), as

well as correlations between these variables and their

related volatility.

The main tools and measures used by Itaú to

manage risk are Value at Risk (VaR),which provides a

statistical prediction of the maximum loss in value of

the Bank’s portfolio under normal market conditions,

based on certain time horizons and confidence

intervals;VaR Stress, which determines the effects of

extreme market conditions on portfolio value, based

52

Management


on optimistic and pessimistic stress scenarios as

defined by Itaú senior management; Stop Loss, which

is designed to limit real losses incurred by the trading

desks; Gaps Analysis, which is a graphical depiction,

by risk factor, of cash flow at market value as of the

due dates, and is used to assess risk exposure over a

specific period; Sensitivity Analysis (DV1), which, like

Gaps Analysis, is a measure of the sensitivity of a

particular portfolio to certain outcomes, if the interest

curve of the risk factor rates change by 1 bp; Results

Analysis, which compares results to certain

benchmarks; Allocation of Capital, which helps

measure the return on specific operations or

investments against the risk incurred, and is used to

ensure that an institution can absorb the impact of

unexpected losses and continue operating under

adverse conditions; and the Stop Loss alert, which

consists of simulating the outcome from a specific

stress scenario that may potentially involve

exceeding the Stop Loss limit.

Credit risk

Credit risk may be defined as measuring the

uncertainty of collecting an amount to be repaid,

where the transaction carries effective, contingent or

potential rights against a certain debtor. Itaú Holding

employs statistical models to determine how much

capital should be allocated to cover portfolio credit

risk, taking into account the quality and

concentration of the portfolio, as well as the credit

ratings of the clients within the portfolio.

Liquidity risk

Liquidity risk occurs when an institution’s reserves,

cash and cash equivalents are insufficient to meet

certain payment requirements, such as when a

mismatch in cash flow causes a temporary inability to

settle commitments. Itaú’s structure is designed to

monitor and analyze the Organization’s liquidity,

through statistical and financial-economic projection

modeling of the asset and liability variables that

affect our cash flow and reserve levels in local or

foreign currency, allowing us to maintain adequate

reserves and liquidity requirements in Brazil and

abroad.

53

Operational risk

Operational risk is defined as the possibility of losses

due to faults, inadequacy or failure of internal

processes, persons or systems, or due to external

events.

Increasingly sophisticated banking business

environments and evolving technology make risk

profiles of organizations more complex, clearly

pointing to a type of operational risk for which risk

management – although not requiring new

practices – now requires a specific structure other

than that traditionally used for credit or market risk.

In line with the principles in CMN Resolution No.

3.380, dated 06/29/2006, Itaú Holding defined an

operational risk management policy approved by its

Audit Committee and ratified by the Board of

Directors, which is applicable for the companies and

subsidiaries in Brazil and other countries.

This policy constitutes a set of principles, procedures,

and instruments to ensure ongoing adaptation of

management to the nature and complexity of

products, services, activities, processes, and systems.

The structure formalized in the policy stipulates

procedures for identification, evaluation, monitoring,

control, mitigation, and communications related to

operational risk, as well as the roles and

responsibilities of the bodies involved in this

structure.

In addition to this structure, Itaú Holding uses the

management model of economic valuation by line

of business, including statistical models to quantify

the operational risks incurred, which facilitates

provisioning for expected losses and allocation of

capital for unexpected losses (VaR with 99.9%

confidence interval).This proprietary mechanism

enables the bank to further refine pricing for its

products and services, and it will be submitted to the

approval of the Brazilian regulatory agency in the

Advanced Model for Operational Risk category, thus

meeting the requirements of the New Basel Capital

Accord within the periods stipulated by the regulator.

On this basis, the Organization will be enhancing its

management procedures, meeting regulatory

agency requirements and in particular maintaining

its image as a sound and trustworthy bank.

54

Management


Underwriting risk

Underwriting risk, as defined by Brazil’s

Superintendency of Private Insurance

(Superintendência de Seguros Privados, or Susep), is

“risk originating from an adverse economic situation

that contradicts society’s expectations both at the

time of setting underwriting policy and in relation to

uncertainties existing when estimating provisions”. In

December 2006, Brazil’s insurance regulator (Susep)

followed the worldwide trend toward strengthening

the insurance market by issuing Resolutions Nos.155

-158 altering the rules for allocation of capital from

underwriting risk for different types of insurance, as

well as the regulatory agency’s performance criteria

in relation to possible insufficiency of capital affecting

insurance companies, due to come into effect as of

January 2008.

In December 2007, Susep issued Resolution No.178

and Circular No.355, modifying Resolutions Nos.155

and 158 by lengthening the period for minimum

capital adequacy from three to four years and

stipulating a more gradual process of meeting

percentages for paying in capital required for

adequacy. In addition, risk factors and underwriting

risks correlation matrices were updated, resulting in

less capital allocated in relation to the previous

parameters.

In advance of this resolution, Banco Itaú introduced

models for management of its insurance business in

2006.As from early 2007, numbers relating to the

different branches of business will be periodically

disclosed to the Organization’s executives.

55

For more details:

On risk management see our InvestorRelations site at www.itauri.com.br,Corporate Governance section >> RiskManagement in the ManagementOperations Analysis Report available in theFinancial Information section, and also the20-F Report available in the FinancialInformation section >> CVM/SEC Filings.

Market risk indicators

The following table consolidates Itaú Holding’s VaR,

including the portfolios of Itaú BBA, Banco Itaú

Europa, Banco Itaú Buen Ayre, Banco Itaú Chile and

Itaú’s structural portfolio.The Itaú and Itaú BBA

portfolios are shown jointly and broken down by risk

factor.

As of the third quarter of 2007, domestic and

international markets saw a significant increase in

volatility.The crisis involving subprime loans in the

United States peaked in August, with the highlight

on local and international interest yield curves, and

continued to affect markets until the end of the year.

In this period, Itaú Holding maintained its policy of

operating within relatively low limits.The higher

levels of risk seen in 2007 were not due to exposure

to subprime customers but to the fluctuating market

risk associated with the crisis, which is part of normal

business risk.

Note that our business units have significant risk

diversification, thus enabling the Itaú conglomerate

to keep its total exposure to market risk very low

compared to its capital.

56

Management


VaR for Banco Itaú Holding Financeira – R$ million31/Dec/07 31/Dec/06

Fixed rate 97.1 58.4Reference interest rate (TR) 7.6 3.8Inflation Indices 10.0 6.0USD coupon rate 14.3 9.5USD exchange rate (**) 6.7 7.4Private and sovereign bonds – other countries 12.1 14.0Equity 16.4 11.8International interest rate 4.1 14.4Commodities 0.4 1.1Exchange rate – Other currencies 1.0 2.1Other 0.9 0.8

Banco Itaú Europa 1.5 0.8Banco Itaú Buen Ayre 1.6 0.3Banco Itaú Chile 1.2 –Diversification Effect 56.6 (37.9)

Overall Total VaR (**) 118.2 92.5Maximum VaR 312.3 111.1Average VaR 117.3 58.4Minimum VaR 48.8 28.9(*) Does not include Own Desk Portfolio.(**) Includes the effect of fiscal adjustments.

Itaú

* +

Itaú

BBA

Efficiency Index

2001 2002 2003 2004 2005 2006 2007

62.1%58.2%

54.5% 53.9%50.3%

47.6%46.2%

Cost management

Cost management aligned with Visão Itaú (Itaú

Vision) has proved to be an important element in

attaining sustainable results. In 2007, in addition to

effects arising from salary raises for employees under

the banking industry contract, there were a number

of outstanding events that had considerable impact

on non-interest expenses; in particular there was

consolidation of the integration process for

acquisitions made in 2006, such as that of

BankBoston in Brazil; expansion in Latin America with

acquisition of the operations of BankBoston in Chile

and Uruguay; the acquisition of a private customers

portfolio outside Brazil; and sales of shareholdings,

mainly Serasa and Redecard.

The intensive dynamism of our business required

tight controls over expenses, making them more

efficient and rational.Our teams showed great

commitment and our estimates were maintained as

budgeted; this together with growing synergy

related to acquisition processes and internal

processes, due to our continuous improvement

culture, ensured productivity gains for both

management of existing products and the

development of new ones.On this basis, we see the

sustainable evolution of our efficiency index

continuing over recent years.

57

58 Businesses


Overview

Successfully integrating BankBoston'soperations and growth in several segments of

business set the tone for 2007 in Itaú.

59

All Itaú Holding’s business units posted growth in

2007. In some cases, growth surpassed forecasts, as in

the vehicle financing and finance company segment.

Despite having to implement the process of

integrating BankBoston’s platforms and teams, which

took until mid-year, Itaú Holding continued to grow

organically and opened a substantial number of new

branches and points of service, increasing its

customer base in its several segments of business.

The following events were the main highlights for

Itaú Holding in 2007:

Institutional Investors

Large Corporations

Public Sector

Middle Market CompaniesR$ 6m < Annual Sales < R$ 150m

Investments > R$ 2 million

Income > R$ 5,000/mo

Income > R$ 3,200/moR$ 500k < Annual Sales < R$ 6mSmall Companies

BranchesManaged

Income < R$ 3.200

BranchesConsumers

Earnings

ConsumerFinance

Annual Sales < R$ 500kMicro Companies

Business segmentation – Itaú Holding

60

Business


Highlights in 2007

61.4% growth in automobile loans

The vehicle segment was one of the main highlights for Itaú Holding, with

substantial growth in the portfolio, which grew 61.4% against 2006 to reach a total

of R$ 29.5 billion.

Leadership in the bank card market

Banco Itaú ended 2007 with 14.8 million cards and R$ 41.4 billion total revenue.

This is a 22.6% market share and enables it to retain its leadership in Brazil.

24 million customers

Non-account holder business grew through the credit card, vehicle financing,

and consumer loan segments, which enabled Itaú Holding to reach around 24

million customers, almost half of them not current-account holders.This means that

the Bank is building relationships beyond the traditional borders of banking and

reaching a universe of customers comparable to the account-holder customer base.

61

Growth in capital market business

Banco Itaú BBA and Itaú Corretora seized opportunities offered by rapid growth in the

Brazilian capital market. Itaú Corretora won the Bovespa award for the highest number

of active customers in 2007 (Prêmio Destaque Bovespa). Itaú BBA placed R$ 18.5 billion

as IPO coordinator and distributor with another R$ 3.1 billion placed in secondary

public offerings, and was in fourth place in the ANBID ranking with an 8% market share.

Itaú partnership with Lopes Imobiliária

The partnership with Brazil’s largest real estate agency provides exclusivity for Itaú in

real estate offers for 20 years and the creation of a new company in which both

institutions will have equal participation.The expectation is that the initiative will have

a substantial impact on growth of the Bank’s real estate credit portfolio, which is likely

to end 2008 at about R$ 3.5 billion.

International expansion

The authorities in Chile and Uruguay approved acquisitions of BankBoston’s operations

there, and the full acquisition of BankBoston International with its head office in Miami,

and BankBoston Trust Company Limited, with its head office in Nassau – in the last two

cases through Banco Itaú Europa and its subsidiary Banco Itaú Europa Luxembourg.

Another highlight of the year was the purchase of the customer portfolio of the Private

Banking segment of ABN AMRO in Miami and Montevideo.

62


Banco Itaú S.A.

Business/Banco Itaú S.A.

Segmentation ensures quality service and newproducts and services tailor-made to match the

needs of different customer profiles.

63

As part of its segmentation strategy for more than

20 years, Banco Itaú developed structures, products,

and services to meet the specific needs of customers

with different profiles and sizes.The efficiency of its

servicing structure and continuous improvement in

products and services are based on consistent

investments in technology.

This structure has a service network of 3,310

branches and points of banking services, and the Taií

chain of 766 stores and 315 electronic points of

service. In addition, there are more than 24,000

automated teller machines and electronic points of

service located in companies.

Banco Itaú has strong participation in every sector of

the Brazilian economy and acts in the financial and

capital market in Brazil and internationally. In 2007, its

net shareholders equity totaled R$ 12.8 billion, and

assets reached R$ 242.5 billion.

Banking

Personal

Retail

In this segment, it is important to have an extensive

servicing network and outstanding presence, since

the branch is the main form of relationship with

customers.The focus is on retail customers as

potential users of all banking products and services.

In 2007, Banco Itaú opened 133 new branches.

Following its strategy of organic growth, the

expansion of the servicing network focused on the

South and Southeast regions in particular and

tracked economic development in these markets.

This strategy ensured a growing share for Itaú in the

sector, even though competitors grew also.

Following international trends, the centralized call

center was expanded in 2007 and provided more

agility and security for Banco Itaú customers. In

addition, Banco Itaú’s Internet site was enhanced on

the basis of suggestions made by customers.

Itaú Personnalité

Itaú Personnalité was one of the first efforts by retail

banks to cater to high-income customers and offer

products and services for personal customers whose

monthly income is over R$ 5,000 or whose

investments surpass R$ 50,000.With differentiated

service, Itaú Personnalité’s portfolio includes

investment options – funds, shares and financial

products – and pension plans, as well as short,

medium and long-term credit alternatives includes

real estate, and protection for property, personal and

currency assets.

To manage its customers’ funds, Itaú Personnalité

offers financial advice through qualified relationship

managers and consulting services provided by

professionals specializing in different markets.

At the end of 2007, Itaú Personnalité was present in

36 cities and 15 states in Brazil. Its 164 exclusive

branches and 34 service offices combine with Itaú

branches and ATM network to ensure the greatest

convenience for its customers.

64



In the first half of the same year, the process of

integrating operations and systems due to the

acquisition of BankBoston was concluded.New

customers were then able to enjoy all the benefits

offered by Itaú Personnalité.

Personnalité launched its own quarterly magazine in

December with well-written stories and experiences

relating to interesting people.

Itaú Personnalité’s plans for 2008 include continuing the

process of expanding its branch network and its

customer base, with ongoing investments in quality

practices and processes in order to maintain high levels

of customer satisfaction in this segment.

Internet banking customers – millions

Sep/05 Dec/05 Mar/06 Jun/06 Sep/06 Dec/06 Mar/07 Jun/07 Sep/07 Dec/07

Customers who accessed in the month

Registered customers

1.8 1.9 1.9 1.9 1.9 1.9 2.0 2.1 2.1

4.1 4.2 4.4 4.5 4.6 4.8 4.9 5.2 5.3

2.2

5,9

Itaú Private Bank

Consolidating its internationalization strategy and

substantial growth in its funding in the Brazilian

market were the key achievements of 2007 for Itaú

Private Bank – which specializes in financial and asset

consulting services for high-wealth customers.Due

to its size, Brazil is still the center of the Latin-

American market in the ambit of Itaú Holding. In

2007, the Brazilian operation opened 463 new

corporate accounts and net funding was R$ 4.6

billion.This performance led to a 30.6% rise the

portfolio from R$ 23.8 billion in 2006, to R$ 31.1 billion

in 2007.Brazilian customers account for

approximately 45% of Itaú Private Bank’s base and

82% of its volume of funds.

The acquisitions of private banking operations from

BankBoston International (BBI), with its head offices in

Miami; BankBoston Trust Company Limited (BBT),

based in Nassau, and ABN AMRO Bank N.V. (Miami

and Montevideo) were important drivers for business

in Latin America, making Itaú Private Bank one of the

region’s leaders.

The BankBoston and ABN AMRO Bank portfolios

added almost R$ 10 billion in assets to the 2006 total

of R$ 7.7 billion managed by the Banco Itaú Europa

operation in Luxembourg, representing growth of

128%.

A good number of the 9,000 new customers brought

in through the acquisition of the BankBoston and

ABN AMRO operations come from other Latin-

American countries, such as Argentina, Chile,

Uruguay, and Venezuela.To meet their needs for

information and recommendations, Itaú Private Bank

set up new teams of specialists in these countries.

The local presence of these professionals is important

to track the market, provide sales teams with

information and advise customers on investments.

Another highlight in 2007 was the number of

customers of the Fundo Exclusivo (Exclusive Fund)

product – personalized for investments of over

R$ 10 million – which increased from 150 to 400.The

main reason for greater interest in this type of more

aggressive product is demand for options with

higher potential gains, since lower interest rates have

cut yields from more conservative investments.

65

Business Clients

Banco Itaú maintains relationships with micro, small

and middle market companies through specialized

service structures with independent units and

infrastructure, as well as managers specially trained to

provide solutions and detailed advice on products

and services to best meet the particular business

requirements of these segments.

The process of integration with BankBoston was

concluded in 2007 and this meant substantial

growth of the customer portfolio in the small and

medium company segment, which is an important

focus of strategic performance for Itaú Holding and

its goal of reaching an increasingly substantial market

share in the business market.

Over the coming years, a good part of growth in

loans to business customers will be in the small and

medium company segment, since the large

companies are increasingly turning to the capital

market for funding and making less use of financing

obtained directly from banks.

Micro-companies

The specialized service provided to Banco Itaú’s

micro-companies comprises the states of São Paulo,

Rio de Janeiro, Minas Gerais and Paraná.Offering

areas and ambiences that are exclusive to this type of

public, the managers of these units have been

trained to offer solutions catering to the needs of

these companies and their partners, especially as

regards cash flow and credit line management.

At the end of 2007, some 700 managers were

serving over 220 thousand clients distributed among

these units.An expansion is being envisaged in 2008

for the States of Rio Grande do Sul, Bahia and Goiás,

adding up to 313 thousand clients and 945

managers. In 2007 the credit portfolio for the

segment grew 45% and in 2008 a growth of 60% is

expected.

Small and Medium Sized Companies

Clients having this profile, which, comprises

companies having yearly revenues between R$ 500

thousand and R$ 150 million, have available a series

of specific products and services, such as cash

management, investments, derivatives, insurance,

private pension plans, currency exchange and foreign

66



67

trade services, and also financing and lending lines

according to their credit needs.These clients also

make use of Banco Itaú’s expertise to improve the

way they manage their finances.

As regards small and medium sized companies, the

year of 2007 began offering a big challenge that

needed to be faced: the integration of the operations

of Banco Itaú and of BankBoston. In a successful

process this integration was accomplished nimbly

and with quality, taking advantage of whatever

existed best in the two banks with the purpose of

focusing better on the small and medium sized

company segment.

Among the actions undertaken we should mention

the integration of teams and of systems, the

improvement of the products and services portfolio

and of the credit policy, and the migration of

BankBoston’s clients.

Besides this integration, a large restructuring

culminated at the end of 2007 with the

implementation of a new business service structure

for the small and medium sized companies.The

objective was to try to obtain a closer relationship,

which would be more adequate to the needs of each

of the different profiles of legal entities, said objective

to be achieved though the efforts of a highly trained

team, made up of specialized managers.

Banco Itaú is also committed to developing and

encouraging the use of products, services, solutions

and businesses that contemplate sustainable

development and which stimulate the best social

and environmental practices in the small and

medium sized companies.As regards this aspect, one

should mention the launching of a social-

environmental risks policy pertaining to credits

offered to legal entities.

The small and medium sized segment shall obtain a

significant movement of expansion in 2008, with

aggressive goals to increase the client base, an

increase in presence in venues where it is already

active and expanding its geographic coverage by

opening 52 new company service platforms.

Institutional Investors

Institutional Clients

The funds being managed by institutional investors

at the end of the 4th quarter in 2007 were R$ 62.7

billion, which represents a growth of 20.3% over the

end of 2006 and 3.4% over the previous quarter.

According to the December, 2007 ANBID ranking,

Banco Itaú maintained its leadership as the largest

manager of private resources belonging to Private

Complementary Social Security Entities, with a

managed volume of R$ 30.5 billion, which represents

a market share of 20.2%.

The maintenance of this position substantiates the

service segmentation strategy, making available to

clients a specialized structure constituted of high

level professionals possessing technical know-how to

cater to the specific demands of institutional clients.

Corporate

The corporate investor segment offers a range of

investment products consisting of a diversified family

of mutual and self-directed funds, with differentiated

strategies for management and capital allocation.The

flexibility of these products allows customized

solutions for our customers, and Banco Itaú ensures

specialized management and services focused on

the specific needs of each one of them.

Similarly to the Institutional Investors segment, Itaú is

also a leader in handling investment funds for clients

that are legal entities, controlling a market share of

15.5%.The results reflect the advantages brought by

segmentation, management quality and flexibility

concerning the structures of the investments.

As regards the large size companies segment,

according to the most recent ANBID ranking, Banco

Itaú reached R$ 16.3 billion in resources managed

by it.

Intrag DTVM

Intrag DTVM, which acts in the providing of fiduciary

management services, ended the 4th quarter of 2007

with a total volume of R$ 30.4 billion of funds that

were under its administration, presenting a growth of

31.1% over December 2006 and 9.2% over the

previous quarter.

This growth rate derives from the quality of

management of the fiduciary services provided,

pertaining to the maintenance and the improvement

of a structure consisting of specialized professionals

and the constant concern with the quality and risk

control of services provided.

The activity of Intrag DTVM has been divided into five

large performance segments:Pension Funds,

Corporations, Receivables Funds, Bank Treasuries and

Fund Managers. In 2007, Intrag started offering

fiduciary management services to private banks in

the market and to FIPES, which are new performance

niches offering great growth potential.

Public Sector

Banco Itaú was a pioneer among private institutions

by offering segmented service to the public sector.

It offers a wide range of products and services which

vary from payments of vendors and public servant’s

payrolls to the management of public funds, the

collection of taxes, currency exchange service and

assignments of hydric resources credit rights and

petroleum royalties.

To that effect, Itaú counts on specialized teams to

establish relations with public agencies at all levels:

federal, state and municipal, including the executive,

legislative and judiciary branches. In order to cater to

the specific needs of the public sector, the structure

of this segment operates through independent

platforms at the branch offices of Banco Itaú with a

nationwide reach.

In 2007, all sector managers went through training

with the objective of refreshing products and

services and to acquire new tools, thus allowing

differentiated services to clients.Part of the training

activities approached themes such as bids, budgets,

the Law of Fiscal Responsibility, among others.

The Public Sector segment caters to 902 agencies,

being responsible for the payroll of some 1.78 million

public servants.

Matters related to sustainability are also part of the

day to day activities of the segment.The Public Sector

segment worked jointly with the remaining areas of

Itaú, encouraging the public sector to partake of

events associated with the theme, such as “Itaú’s

Dialogues Pertaining to Sustainability”, helping to

disclose new concepts and get the Bank closer to the

communities where it operates.

68



Real-Estate Lending

As planned at the end of 2006, the year was marked

by an impressive development of the real-estate

segment at Banco Itaú.The country’s economic

stability and the reinforcement of a wide

performance strategy created a favorable

environment which allowed performance records,

having R$ 2.4 billion in loans accomplished with both

individuals and legal entities.This amount represents

a growth of 164% as compared to the performance

achieved all along the previous year.

The objective during the year had been to invest in

the improvement of processes, expanding business

performance channels and expanding Itaú’s market

share (currently 16%) among private institutions.One

should also stress the raising of funds from the Inter-

American Investment Corporation (IIC) in the amount

of R$ 200 million for the granting of real-estate

financing, said funds being intended to provide

credits of up to R$ 100 thousand to individuals.

Within this context, the partnership with Lopes

should be considered.Lopes is the largest real-estate

intermediation and consulting company in Brazil.The

agreement, which is to be exclusive during 20 years,

envisaged the creation of a real-estate products sales

financing promoter, with the objective of fomenting

the growth of the secondary market and to facilitate

access to credit.

New products were launched as a contribution to

the development of the sector, bearing reduced

interest rates and financing for up to 25 years. In 2007,

Itaú became the first private bank to offer real-estate

financing using funds from The Guarantee Fund for

Time of Service (FGTS), expanding the possibilities

for the acquisition of a home in order to reduce the

housing deficit.

Furthermore, as regards the corporate segment,

after the launch of the Product “Social-Environmental

Construction”, financing fees were reduced for the

construction of undertakings encompassing

environmental preservation and social incentive

actions.

69


Credit Cards

Itaú Cards

The integration of the teams, as well as the unification

of the portfolios and of the sales and marketing

processes, of Itaucard, Credicard Itaú and BankBoston

was concluded in 2007.When Citibank exercised its

exclusive right to use the Credicard name, as of

January, 2007 Banco Itaú started offering credit cards

bearing only Itaú names (Itaucard and Itaú

Personnalité).

The Bank ended the year with 14.8 million cards and

total billings of R$ 41.4 billion, which represents a

market share of 22.6%, and it kept its leadership

position as regards the credit card market in the

Country.

The main challenges for Banco Itaú for 2008 are to

expand its client base and to increase the profitability

of its credit card portfolio by launching new products

and benefits and by intensifying the quest for new

partnerships.

Orbitall

Orbitall kept its performance in the means of

payments market, having processed in 2007 some

21.6 million credit cards, 1.5 million benefit-allowance

electronic cards and 5.5 million private label cards, a

volume that represented an increase of 10.4% in

the total number of cards processed as compared

with 2006.

In 2007 Orbitall nicely took the position as a service

provider for third parties (banks and retail networks).

This strategy ought to bring a significant increment

in new clients in 2008 and over the coming years.

Insurance, Private Pension and Capitalization

The integration of the Insurance, Private Pension and

Capitalization operations became consolidated in

2007 through the joint administration of businesses,

which also involved important changes in risk

strategies and on a greater focus on clients needs.

Furthermore, the available sale channels of Itaú were

used to commercialize products pertaining to asset

insurance.One of the greatest objectives for the year

was the increase in the penetration of Insurance into

the checking account holders base, a challenge that

still remains current for 2008.

The year of 2007 was also marked by great

achievements.At the end of the year, Itaú Vida e

Previdência, the group’s company for life insurance

and private pension business, reached the historical

mark of R$ 20.7 billion in private pension reserves.

Itaú Seguros (responsible for insurance business) and

its subsidiaries, including Itaú Vida e Previdência,

reached in 2007 R$3.3 billion in paid premiums,

showing a growth of 8.9% as compared to 2006.The

contracting of Private Pension and VGBL products

reached the mark of R$ 5.3 billion in 2007, showing a

growth of 20.2% as compared to 2006.The

Capitalization provisions, on the other hand, added

up to R$ 1.1 billion during the period.

As regards this segment, Banco Itaú clients have

access to a line of products the financial results

whereof are passed on to basic education programs

ongoing in the country.Since 1994, the PIC Criança

and PIC Itaú-Unicef have been launched, the funds

whereof are directed to the social programs

operated by the United Nations Children's Fund

70


(Unicef ) – PIC Esperança and PIC Itaú Criança, the

results whereof are also destined to social programs

operated by Unicef and by Fundação Itaú Social.

Due to the excellent results obtained with the

commercialization of these capitalization plans, Itaú

made PIC Natureza available to the market, which

was launched with the support of WWF-Brasil, a non-

governmental organization in charge of managing

donations for reforestation projects in the different

regions in Brazil.

Itaú XL employs a team with more than 15 years of

experience in the market of industrial and business

lines, and after more than one year of operations and

joint venture consolidation with Itaú, this team has

been fully organized and prepared to take advantage

of the opportunities for a new scenario with the fall

of the reinsurance monopoly in Brazil.Risk

underwriting policies have been redesigned and the

services have been adapted to the new market

conditions.

The financial resources of the new company surpass

the new requirements for capital and solvency, thus

rendering viable the plans for business expansion,

taking advantage of the know-how and the

penetration of Itaú in the Brazilian market and the

expertise of XL in the underwriting of large risk

insurance in open markets.

Fund and Portfolio Management

The total of funds managed by Itaú at the end of

December reached R$ 210 billion, with a growth of

16.8% for the year.The total of investment funds

managed by the Bank reached R$ 182.5 billion,

showing a growth of 8.8%. Itaú thus consolidated its

position as the largest private administrator of third-

party funds. Itaú has maintained itself as one of the

largest fund managers in the market with a share

of 15.4%.

The differentiated performance of the investment

consultant team also contributed toward this

conquest.They are specialists in the financial market

who provide financial advisory services to help

clients to decide about their investments.

In response to the changes made to the Investment

Funds Legislation (CVM Instruction 409, introduced

by CVM Instruction 450 dated March 30, 2007) all

legal documentation having to do with investment

funds (Regulations, Prospects and Term) has been

71

adapted to the new regulation.The objective of the

changes made by CVM were to expand the

possibilities of the investments made by the funds, as

well as to introduce new limits for the investment of

resources of the funds into different securities,

negotiable papers and operational modalities, taking

into account the type of financial asset and its issuer.

The highlight of the product launches for the year

was the Fundo Itaú Renda Fixa Ecomudança

(RF Ecomudança Fund) in the Retail, Personnalité and

Private segments.This fixed income fund sets aside

part of its administration fee for environmental

actions that reduce the amount of CO2 (carbon

dioxide) in the air, which is the main factor

responsible for global warming and which reinforces

Itaú’s commitment to sustainability.

This Fund joins other products in the funds segment,

which are predicated on concepts of social-

environmental responsibility, such as the Fundo Itaú

de Excelência Social (FIES).Launched in 2004, the FIES

is a fund that invests in shares of companies that are

engaged in differentiated social-environmental

management practices.This option has been

gradually gaining strengh,going from assets of

R$ 361.9 million in 2006 to R$ 538,8 million in 2007.

Itaú Corretora de Valores

(Securities Brokerage House)

The year of 2007 was especially positive to Itaú

Corretora.The company has taken a position as a Full

Brokerage House, offering services to foreign and

local institutional clients as well as to individuals,

performing Class A analyses.

In Bovespa’s ranking, Itaú Corretora intermediated a

volume of R$ 109 billion, which meant an increase of

98% as compared to the same period in the previous

year.Evincing its great penetration capacity into the

client base, Itaú Corretora received Bovespa’s

Destaque Award as result of the largest number of

active clients in 2007.At BM&F, Itaú Corretora

negotiated 14 million contracts. It ended the year in

third position, in terms of volume, operated among

the brokerage houses associated with banks.

Its participation in public share offering also

increased from 11 to 19, of which 14 were IPOs and

five were secondary offers.Always acting in

partnership with Banco Itaú BBA, it reached a total

volume of R$ 22.5 billion, which placed the institution

among the three most active institutions and as the

largest domestic group in the segment.

72



Learn more:

Credit cards site: www.itaucard.com.br

Our funds site:www.itau.com.br/Investimentos/Fundos http://www.itau.com.br/socioambiental

73

For the fourth consecutive year, the brokerage house

maintained its leadership in the domestic ANBID

fixed income distribution ranking.22 Fixed Income

offerings (Debentures, FIDCs, CRIs, CPRs and CDCAs)

were executed, reaching a share of 40% in the total

number of offerings executed for the year, and 27%

of the total financial value offered.As regards the

international fixed income product, Itaú Corretora

negotiated approximately US$ 9 billion throughout

2007 on behalf of its clients, split up between

sovereign debt and securities of domestic

companies and banks abroad.

Another area of significant growth was that of

Itautrade, Itaú Corretora’s home broker, where clients

may negotiate stocks through the Internet, which

ended the year in fifth place in the Homebroker

Ranking, with a negotiated volume of R$ 8.6 billion,

129% larger than in 2006.

Itaú Corretora is proceeding with the consolidation

of its strategic position as the best specialist in Brazil,

operating with highly qualified research teams and

with professionals located in New York, Lisbon, Hong

Kong and Tokyo, which has increased its distribution

potential.

Highlights for 2007

New York Event: In May the “2nd.Annual Brazil

Conference”took place in New York, promoted by Itaú

Corretora in partnership with Itaú BBA.The conference

was attended by 41 companies, 80% of them represented

by the CEOs.The total market value of the participating

companies was equivalent to 29% of the total market

value of Bovespa, and 27% of the GDP.This event already

joined the permanent agenda of the largest investors and

Brazilian companies, helping to consolidate the image of

the Top Brazilian Player in the market.

Institutional Investor:The analysis team of Itaú Corretora

obtained third place in the most highly respected research

ranking on the market,held by Institutional Investor.

Itaú Corretora received BM&F's Operational Qualification

Seals.This certification has the objective of stimulating the

improvement of the brokerage houses in order to

prepare them to compete both in the international and

the local opportunity scenarios. In order to obtain the

seal, the brokerage house must be in compliance with all

the requirements put forth by BM&F that are pertinent to

its business position. Itaú Corretora received four seals:

Agro Broker, Carrying Broker, Execution Broker and Retail

Broker.

New international funds:These funds have been triggered

by the Brazilian macro-economic stability.Through the

funds that have been created by Banco Itaú, Korean and

Chilean investors may invest in Brazil directly from their

countries. In August, Banco Itaú associated itself with

Daewoo Securities and KDB Asset Management in Korea

to create Samba Brazil Fund, the portfolio of which is

made-up of stocks of Brazilian companies and fixed

income securities. At the end of 2007 the fund was

managing resources to the tune of R$ 143 million. In

October, Banco Itaú created three funds directed at

Chilean investors.The Itaú Selection Brazil Mutual Fund

and the Itaú Small Cap Brazil Mutual Fund invest in stocks

of Brazilian companies while the Itaú Mix Brazil Mutual

Fund operates a portfolio made-up of Brazilian and

Chilean fixed income assets.At the end of 2007 the three

funds created for the Chilean market managed resources

to the tune of UR$ 25 million.

74


Itaucred Businesses

Businesses/Itaucred Businesses

Leadership in car financing and strongconsumer credit growth led Itaucred to reach

the mark of 7 million clients.

75

The volume of loans involving non checking account holding clients,

which were serviced within Itaucred’s structure, has grown in an

exponential manner over the last few years, beginning to represent an

ever larger and more important segment in Itaú Holding’s businesses

and results. In 2007, this figure surpassed the mark of 7 million clients,

functioning as a veritable “bank within a bank”in the group’s business

structure.

Vehicles

The vehicles segment was one of the major

highlights of Itaú Holding in 2007, demonstrating

impressive growth in the portfolio and an

improvement in the analysis and approval processes

involved. In 2007 new credit granted in the vehicle

financing and leasing segment added up to R$ 23.1

billion, which represents an increase of 56% as

compared to 2006.This result surpassed the result

recorded by the market, which grew approximately

35%.The credit volume reached R$ 29.5 billion, with a

growth of 61.4% as compared to 2006.

This performance kept Banco Itaú (under the brands

Itaú and Banco Fiat) in the leadership position of the

vehicle financing market, with a share of 25.4%.

Currently, heavy vehicle financing accounts for some

6.3% of the total amount financed by Itaucred

Veículos.

Itaucred Veículos reached the mark of 2.4 million

clients who obtained financing.Of these clients, 950

thousand already had life insurance and 700

thousand have Itaucard and Fiat Itaucard credit cards.

76



The Bank is also offering credit to the consumers of

16 thousand dealers and distributors of passenger

vehicles, trucks, and motorcycles scattered all over the

country.100% of the proposals are currently being

taken and processed through Internet, thus assuring

greater security and agility to the credit granting

process for the dealers and clients being financed.

New Businesses

In 2007 Itaucred Veículos started an operation to

finance motorcycles. In December, this business

channel had established business platforms in

São Paulo, Campinas and Belo Horizonte.The

implementation of the operation on a nationwide

scale shall take place through 2008.

In August, 2007, Itaú acquired a classified ads website

for the purchase and the sale of vehicles called

iCarros.All through 2008, dealerships will be offered

the possibility to advertise their inventories using

this channel.

Taií

Taií, which is a consumer credit segment offered by

Banco Itaú, distinguishes itself through the offer of

personal credit, restricted use cards (private labels),

Itaucard Visa and MasterCard credit cards (co-

branded), besides other credit products intended for

consumers, throug Taií's own shops or in partnership

with large Brazilian retailers. It encompasses the

operations of Financeira Itaú (FIT), which is 100%

owned by Itaú and Financeira Itaú CBD (FIC) and

Financeira Americanas Itaú (FAI), in which Itaú owns

50% of the capital stock.

Excluding payroll credit, the Taií credit portfolio

reached the mark of R$ 1.9 billion in December, 2007,

with a meaningful growth of 56% as compared to

2006, motivated mainly by a 57.0% growth in sales.

The client base reached the level of 6.1 million, 22.7%

higher than during the same period in 2006.

77

Financeira Itaú

The network of Taií owned shops closed 2007 with

258 shops in the states of São Paulo, Rio de Janeiro,

Minas Gerais, Paraná, Espírito Santo, Bahia,

Pernambuco, Goiás and Ceará.Financeira Itaú offers a

portfolio of products to its clients which includes

personal loans through credit cards, personal loans

guaranteed by checks, insurance and Itaucard VISA

and MasterCard credit cards (these cards started to

be commercialized as of September, 2007).The focus

of the year was the increase in the portfolio of

products and the activation of the client base.This

portfolio reached a volume of R$ 459 million, an

increase of 60.9% as compared to the previous year.

Financeira Itaú CBD (FIC)

FIC offers products and services to the clients of the

Pão de Açúcar, Extra, Extra-Eletro, CompreBem and

Sendas retail stores. FIC’s product portfolio includes

personal loans guaranteed by checks, loans granted

by means of credit cards, direct consumer credit

(CDC) for the purchase of home appliances,


insurance, private label cards and co-branded VISA

and MasterCard credit cards. As from the third

quarter of 2007, FIC changed its operations module

seeking greater efficiency, productivity and cost

reductions, changing the physical presence to

electronic in some of the shops.This type of action

will make FIC present in the 545 shops belonging to

the group.

In 2007 this group of products generated a portfolio

of R$ 1,345 million,which represents an increase of

55.1% as compared with the previous year.The last

quarter in 2007 was marked by the steep growth of

the client base that used the co-branded cards,which

started with an upgrade of part of the private label

cards, increasing significantly the volume of

transactions inside and outside the shops.The

significant improvement of results as compared to

the previous quarter also deserves to be highlighted.

FIC reached its break-even point in November,as

planned.

Financeira Americanas Itaú (FAI)

In 2007, FAI reached the level of 1 million accounts,

which was in line with its client portfolio growth

objective, as well as the expansion of its market share

by diversifying its product portfolio.The credit

portfolio reached the mark of R$ 134 million, which

corresponds to 50% of the total volume, since FAI's

operations are included in Banco Itaú's financial

records in proportion to Itaú's percentage of

ownership.

FAI makes use of the following distribution channels:

Lojas Americanas (LASA) and Americanas Express

points of sale: through its 278 shops,FAI is offering

to this group of clients a product portfolio which

includes personal loans,guaranteed by checks,

personal loans taken out via credit cards, insurance,

private label cards and co-branded cards;

Americanas.com:offers co-branded online FAI

cards which offer the option to pay purchases on

these cards, together with a differentiated awards

program.

78


Learn more about:

Personal credit, vehicle financing andhome financing on the sitehttp://www.itau.com.br/itaucred

Shoptime TV Channel:as of July, 2007 this

modality will benefit from the distribution of direct

consumer credit for the purchase of home

appliances and electronics, insurance, personal loans

through cards and check-guaranteed personal loans.

It is worth stressing that the figures referring to

Taií's performance in 2007 are in line with the goals

that have been established for the year:

100 new points of sale: 247 shops were opened

in 2007, 147% more than envisaged originally.

A 50% growth in the credit portfolio (not

including payroll credit): Taií’s credit portfolio

reached the level of R$ 1.9 billion in December,

2007, which represents an increase of 56.0% as

compared to December, 2006.

Improvement in the efficiency rating: the

rating presented at the end of 2007 reflects an

improvement of 20.0% when compared to the

previous fiscal year.

Improvement in the default rate: this indicator

kept stable as compared to 2006, closing the year

at 25.9%.

We expected to reach the break-even point for

the operation in the fourth quarter of 2007,

which was to be achieved together with the

three units (FIC, FAI and FIT): as mentioned

previously, during the last quarter in 2007 FIC

reached the break-even point in November.

Payroll Credit

The expansion potential and the generation of

payroll credit business led Itaú Holding to create in

2007 a specific department to manage operations

pertaining to this segment, with the objective of

increasing the priority of the product among those

offered by the group.The operation of the segment

basically consists of an agreement between Itaú and

Banco BMG to distribute the product through Itaú’s

sales channels.

In 2007 the portfolio reached the mark of

R$ 3.3 billion, which meant an increase of 45.8% as

compared to 2006.Even while concentrated on the

public sector, this area should be a highlight over the

coming years.

79

Goals for 2008

A growth of 25% in the credit portfolio (payroll

credit not included).

An improvement in the Efficiency Rate.

Break-even of the FIT operation.

80


Banco Itaú BBA

Businesses/Banco Itaú BBA

Market knowledge,quality of information and afull range of solutions insure Itaú BBA's excellence

in servicing large companies.

81

Profile

Itaú BBA is the bank which is responsible for the

corporate and investment banking activities of Banco

Itaú Holding Financeira. It offers a complete product

and services portfolio for some 2 thousand economic

groups using a group of highly qualified

professionals to cater to the needs and the specific

requirements of its clients.

Within this context as one of the paramount

aspects of its business strategy, Itaú BBA establishes

a full integration among the activities for which it is

responsible, thus making viable a type of

performance that is directed toward the best

interest of its clients, irrespectively of the products

and services to be offered, which range from typical

operations of a commercial bank to capital market

operations and advisory services in mergers and

acquisitions.

All through 2007 a group of important actions has

significantly contributed toward the consolidation of

Itaú BBA as the main wholesale bank in the country,

such as consistent growth of investment banking

activities; sophistication and innovation in structured

and derivative instruments which have a larger

added value; international expansion with emphasis

on Itaú BBA’s participation in the structuring and

development of large company markets in Argentina

and Chile, as well as continued development of cash

management products and services.

It is worth stressing that through the periodical re-

evaluations of the profiles and potentials of corporate

clients of Itaú Holding, 910 economic groups were

transferred from Banco Itaú to Itaú BBA in

September, 2007, thus substantially expanding its

client base and consolidating a management model

intended for close relationships and an in-depth

knowledge of the companies being served.

82



Investment Banking

The Bank has been showing an enhanced

participation in the capitals market, providing large

corporations with alternatives to obtain resources

through fixed and variable income instruments.

In 2007 Banco Itaú BBA participated in debenture

and promissory note transactions totaling R$18

billion, plus $1.7 billion in FIDCs (credit receivables

funds). In the Anbid (National Association of

Investment Banks) ranking, which covers transactions

up to December, Banco Itaú BBA ranked first in

origination and distribution of fixed-income and

FIDCs, with market shares of 24% and 27%

respectively.

As an IPO coordinator and distributor, Itaú BBA

reached the mark of R$ 18.5 billion, and the mark of

R$ 3.2 billion in subsequent public offers. Itaú BBA

came up third in Thomson’s ranking as regards this

market, with a market share of 10%.Acting in the

acquisitions and mergers area, the bank closed 2007

in fifth place in Thomson’s ranking, with

18 transactions which totaled R$13.3 billion.

Corporate Banking

The credit and co-obligations portfolio grew

R$ 3.8 billion, representing an increment of 15% as

compared to the previous year.This increment

includes 910 economic groups which were

transferred from Itaú to Itaú BBA’s management.

The year of 2007 was also marked by the increase in

the volume of operations involving the derivatives

market.This expansion is due to the greater

volatility of both domestic and international

markets during the year, and to the larger

penetration of derivative and more sophisticated

products in corporate clients, consolidating Itaú BBA

as one of the leaders of this market.

The raising of funds on the local market presented

impressive growth in 2007, the result of the financial

liquidity experienced by a large portion of Brazilian

companies and of Itaú BBA’s fund raising strategy,

directed toward the offering of long term

investment, alternatives for its clients.During this

period the portfolio grew 76% as compared to 2006.

83

International Area

As regards Itaú BBA’s international area, ready

currency operations should be highlighted for 2007,

with a volume in excess of US$ 45 billion, which

represents a growth of 95% as compared to the

contracted volume in 2006, as well as the structuring

of long term, bilateral and/or syndicated transactions

with other institutions. Itaú BBA continued to offer a

large number of credit lines for foreign trade, closing

2007 with lines drawn from corresponding banks of

approximate volume of

US$ 5.1 billion.

The expansion of operations in the wholesale market

in Argentina was consolidated in 2007 under the

structure of Banco Itaú Buen Ayre, as well as the

process of strengthening corporate operations in

Chile using Itaú Chile’s structure.Following this

internationalization strategy, Itaú Holding is seeking

excellence in serving the large companies that are

active in these two markets, irrespective of their

being local or Brazilian businesses.

As regards cash management services, we should

mention the offer of a complete products and

services portfolio and the disclosure of specific

solutions to clients, placing Itaú BBA in an enhanced

position in the segment. In 2007, the volume of

collections and payments grew 54% as compared to

the previous year.

84



Finally, Banco Itaú BBA was active in BNDES

on-lending to finance large-scale projects for

strengthening domestic infrastructure and

increasing the productive capacity of various

industrial sectors.Overall, Itaú Holding disbursed

more than R$ 2.7 billion for various projects and

financing in 2007, corresponding to an evolution of

77% as compared to 2006.

The on-lending of funds for large-scale projects is

keeping with the criteria established by the Equator

Principles, a set of voluntary guidelines to help

financial institutions assess andmonitor socio-

environmental impacts of large projects, that Banco

Itaú and Banco Itaú BBA adopted in 2004,and the

Socio-Environmental Risk Policy launched at the end

of 2007, to be used in credit granting processes to

legal entities, involving R$ 5million or more.

85

Learn more:

About Banco Itaú BBA atwww.itaubba.com.br

86


International Presence

Businesses/International Presence

Acquisitions accelerate the growthof Itaú Holding abroad.

87

Itaú Holding sees international markets, especially

in Latin America, as being an important part of its

business strategy.Currently, it has representations

and/or operations in Argentina, the Bahamas, Chile,

China, Frankfurt, Hong Kong, Japan, Luxembourg,

Madrid, Portugal, the Cayman Islands, the United

States, the United Kingdom and Uruguay.

The acquisition of BankBoston’s operations in Chile

and Uruguay, which were approved in 2007 by the

regulatory authorities of these two countries,

increased considerably the international retail

participation of Itaú, which already counted on the

support of Banco Itaú Buen Ayre in Argentina.The

greater challenge as regards these operations is the

creation of a business platform that would allow the

interchange of businesses and models know-how

among the several units of the Bank, in order to

create the conditions to leverage and to grow in

these regional segments.

Itaú Holding also counts on a significant presence as

regards foreign trade financing, the placement of

Eurobonds and the offer of more sophisticated

financial operations (Structured Notes) abroad

through its subsidiaries located in North America,

Europe and Asia.

Banco Itaú Europe

The consolidated assets of Banco Itaú Europe

reached € 4.5 billion at the end of 2007, 38.9%

percent higher than at the end of the previous year.

This increase is due mainly to the acquisition of

private banking operations belonging to the Bank of

America and ABN AMRO.At the end of 2007, the

consolidated net profits reached € 53.1 million.

Banking products reached the sum of € 113,1 million,

35.9% higher than in 2006, reflecting the stable

contribution of the financial margin, the high

performance of the capitals markets, treasury,

international private banking areas and the equity

held in Banco BPI. In consolidated terms, the return

on equity (ROE) reached 12.3% and the efficiency

ratio reached 53.8%.

The international private banking activity had in 2007

an important boost to development with the

acquisition of new business units and client

portfolios.Besides its presence in Luxembourg, with

this expansion, Itaú Europa also became present in

both Miami and Nassau.Such expansion contributed

toward the increase in assets under its management,

which at the end of the year surpassed US$ 6.3 billion.

The investment grade status of the Bank, given by

Moody’s (Baa1) and Fitch Ratings (BBB+), has been an

important support factor toward the diversification of

the sources of the funds with the Bank maintaining

an active presence in the primary and secondary

markets throughout 2007.

Latin America

Argentina

In 2007, Banco Itaú Buen Ayre (IBA) went through a

restructuring and expansion process.Said

restructuring included the development of electronic

relationship channels (Call Centers, ATMs and Home

Banking), the implementation of predictive models

for the contracting of loans, an increase in the sales

force and specialization of commercial products and

agents.

As a result of this process, IBA recorded an important

growth in the products directed toward individuals,

especially savings accounts, personal loans and credit

cards.Furthermore, it recorded a growth of 18.5% of

the individual customer base, which surpassed the

barrier of 200 thousand clients.

For the purpose of serving the Small and Medium-

Sized Companies, a new business segment was

created in 2007 which was independent individual

segment and the network of branches.To do this, six

new business platforms were inaugurated in the

metropolitan region of Buenos Aires, together with

service points in the country’s hinterland.Focus was

placed on the financing of operating capital, foreign

trade and cash management solutions.

88



At the end of 2007, IBA operated 79 branch offices,

6 platforms, 26 Bank Service Points (PABs) plus over

200 ATMs, employing 1,383 employees.Total assets

reached R$ 1.9 billion (51% more than in December,

2006).Profits reached R$ 6 million.The loan portfolio

grew 54.4% as compared with December, 2006,

reaching R$ 1.3 billion.

On December 31, 2007, Itaú Asset Management

(IAM) Argentina had over R$ 1.1 billion in assets

under its management, being ranked third in the

local asset management industry, and having a

market share of 8.7%. In 2007, three of the IAM funds

obtained the maximum “5 star”classification from

Standard and Poor´s.

(NY)

Itau Bank Ltd (Cayman)

Europa

Europa

Securities

EuropaLuxembourg

(Hong Kong)(Nassau)

(London)

(Portugal)

(NY)

(Uruguay)

(Uruguay)

(Argentina)

(Argentina)

(Brazil)

(Chile)

(Brazil)

(NY)

Securities

(Shangai)

(Tokyo)

89

Chile

In 2007,o Banco Itaú Chile (BIC) concentrated its efforts

in replacing the BankBoston brand name with the Itaú

brand name in each of the segments in which the

Bank is active.All through the year,one of the priorities

was to improve the experience of being a BIC client

through the building of competitive advantages based

on the quality of services,products and processes.

One of the competitive advantages was the launching

of three funds (Mix Brasil, Small Cap Brasil and Selección

Brasil) focused on individual clients who requested

securities issued by Brazilian and Chilean companies,

as well as sovereign debt instruments.

In addition and as part of the strategy to improve the

quality of the services,the campaign “Open Agenda”was

launched, whereby clients could schedule a meeting

with the main BIC executives, getting unique,

exclusive and personalized attention from them.

We should stress the recognition given BIC by the Diário

Financiero newspaper,which called it one of the best

multinational companies operating in Chile in 2007.

On December 31, 2007, Banco Itaú Chile had

consolidated assets of R$ 8,219 million,

1,850 employees, 60 branch offices (of which nine

had been opened in 2007) and 77,561 checking

accounts (with a client base 16.6% larger than in

December, 2006).Banco Itaú Chile ranks ninth as

regards deposits, and it has a market share of 3.0%

regarding loans.

Uruguay

With the acquisition of BankBoston’s operations in

Uruguay, Itaú started controlling the third largest

bank in that country in asset volume, together with

OCA, the leading credit card administrator, for the last

ten years, and which today has a market share of

42.8%.

During 2007, Banco Itaú Uruguay focused its efforts

on the implementation and consolidation of the Itaú

brand in the local market.

Furthermore, new products and services have been

launched, such as Multipay (Internet banking

specifically intended to cater to the needs of

corporate clients) and the Visa Lan Pass, a partnership

with LAN airlines where the amounts spent by the

clients on credit cards are turned into miles in the

LAN compensation program.

90



In 2007 a new branch office was opened in the city of

Tacuarembó, and a Banking Service Station (PAB) was

opened in the Montevideo Free Trade Zone.

On December 31, 2007, consolidated assets

belonging to Itaú in Uruguay (considering both the

Bank and OCA) reached the amount of R$ 2.0 billion,

and consolidated profits for the operations reached

R$ 49 million.

On the same date, Banco Itaú Uruguay had

98,199 clients, 16 branch offices and 477 employees.

OCA had 316,999 clients, 20 branch offices and 440

employees.

91

International Presence – Operational highlights for 2007

In March, all the remittance businesses acquired

from Banespa Tokyo in Japan were transferred to

Banco Itaú’s systems and processes.Once this had

been accomplished, over 46 thousand clients

belonging to the Itaú branch office in Tokyo were

able to use a full range of the services offered by

the bank, such as Bankfone Japan, Bankline Japan,

and over 26 self-service terminals in the Japanese

Post-Office.

In September, Banco Itaú obtained a loan of

R$ 200 million from the Interamerican

Investments Corporation (IIC) of the International

Development Bank (IDB).The funds were

directed to the real-estate segment to finance

real-properties for individuals worth

some R$ 100 thousand.The loan is for five years

and was the first in local currency to be

performed by IIC.

In November, Banco Itaú closed syndicated loans

in the amount of US$ 220 million through its

Grand Cayman branch office for a

two-year term.The structure of the operation

had Calyon as its leader and bookrunner, under

the co-leadership of the Unicredit Group, Bank of

America, ING, HSBC, Standard Chartered and

Bayerische Landesbank,as well as the

participation of ABN AMRO.

In 2007, Banco Itaú Chile issued a bonus program

in Ufs (local index) divided into two tranches,

which added up to an equivalent of R$ 340

million.The term for the issues is ten years.

Learn more about:

Banco Itaú Europa on site www.itaueuropa.pt

Banco Itaú Buen Ayre on site www.itau.com.ar

Banco Itaú Chile on site www.itau.com.cl

Banco Itaú Uruguay on site www.itau.com.uy

OCA on site www.oca.com.uy

Banco Itaú HoldingFinanceira S.A.BOARD OF DIRECTORS

President Olavo Egydio Setubal

Vice-PresidentsAlfredo Egydio Arruda Villela FilhoJosé Carlos Moraes AbreuRoberto Egydio Setubal

Board MembersAlcides Lopes TápiasAlfredo Egydio SetubalCarlos da Câmara PestanaFernão Carlos Botelho BracherGeraldo José CarboneGuillermo Alejandro CortinaGustavo Jorge Laboissiere LoyolaHenri PenchasMaria de Lourdes Egydio VillelaPersio AridaRoberto Teixeira da CostaSergio Silva de FreitasTereza Cristina Grossi Togni

EXECUTIVE BOARD

Director-PresidentRoberto Egydio Setubal

Senior Vice-PresidentHenri Penchas

Executive Vice-PresidentsAlfredo Egydio SetubalCandido Botelho Bracher

Legal ConsultantLuciano da Silva Amaro

Executive Directors Rodolfo Henrique FischerSilvio Aparecido de Carvalho

Managing DirectorsJackson Ricardo GomesMarco Antonio Antunes Wagner Roberto Pugliesi

NOMIMATION AND COMPENSATION COMMITTEE

President Olavo Egydio Setubal

MembersAlfredo Egydio Arruda Villela FilhoCarlos da Câmara PestanaFernão Carlos Botelho BracherJosé Carlos Moraes AbreuRoberto Egydio SetubalRoberto Teixeira da Costa

AUDIT COMMITTEE

PresidentCarlos da Câmara Pestana

MembersAlcides Lopes TápiasGustavo Jorge Laboissiere LoyolaTereza Cristina Grossi Togni

DISCLOSURE AND TRADING COMMITTEE

Alfredo Egydio SetubalAlcides Lopes TápiasAlfredo Egydio Arruda Villela FilhoAntonio Carlos Barbosa de OliveiraAntonio Jacinto MatiasHenri PenchasMaria Elizabete Vilaça Lopes AmaroRoberto Teixeira da CostaSilvio Aparecido de CarvalhoTereza Cristina Grossi Togni

ADVISORY COUNCIL

Fernando de Almeida Nobre NetoLício Meirelles FerreiraLuiz Eduardo Campello

INTERNATIONALADVISORY COUNCIL

Roberto Egydio SetubalArtur Eduardo Brochado dos Santos SilvaCarlos da Câmara PestanaFernão Carlos Botelho BracherHenri PenchasJosé Carlos Moraes AbreuMaria de Lourdes Egydio VillelaRoberto Teixeira da CostaRubens Antonio BarbosaSergio Silva de Freitas

FISCAL COUNCIL

President Iran Siqueira Lima

MembersAlberto Sozin FuruguemMarcos de Andrade Reis Villela

Banco Itaú S.A.

BOARD OF DIRECTORS

Director-President and General DirectorRoberto Egydio Setubal

Senior Vice-PresidentsAlfredo Egydio Setubal Antonio Jacinto Matias Henri Penchas

Executive Vice-PresidentsJosé Francisco CanepaMarco Ambrogio Crespi Bonomi Rodolfo Henrique FischerRonald Anton de JonghRuy Villela Moraes Abreu

Legal ConsultantLuciano da Silva Amaro

Executive DirectorsAlexandre de BarrosCláudio Rudge OrtenbladFernando Tadeu PerezJoão Jacó HazarabedianOsvaldo do NascimentoRicardo Villela MarinoSérgio Ribeiro da Costa WerlangSílvio Aparecido de Carvalho

Senior Director-ManagersAlexandre Zákia Albert Antonio Carlos Morelli Carlos Henrique MussoliniJackson Ricardo GomesJosé Geraldo Borges FerreiraLuiz Antonio Fernandes ValenteLywal Salles FilhoMarcio Antonio Teixeira LinaresMaria Elizabete Vilaça Lopes AmaroMáximo Hernández González Natalísio de Almeida JúniorPaulo Roberto SoaresSandra Nunes da Cunha Boteguim

Board of Directors and Executive Management

92


Director-ManagersAlmir VignotoAndré de Moura Madarás Antonio Carlos Richecki RibeiroAntonio Sivaldi Roberti FilhoArnaldo Pereira PintoAurélio José da Silva PortellaCarlos Eduardo MônicoCelson Luiz Hupfer Cesar PadovanCícero Marcus de Araújo Cristiane Magalhães TeixeiraEdelver CarnovaliEduardo Almeida PradoErivelto Calderan CorreaFábio Whitaker VidigalFernando Marsella Chacon RuizHeli de AndradeJaime Augusto ChavesJean Martin Sigrist JúniorJoão Antonio Dantas Bezerra LeiteJoão CostaJoaquim Marcondes de Andrade WestinJosé Antonio LopesJúlio Abel de Lima TabuaçoLinda AgarinakamuraLuís Antônio RodriguesLuiz Antonio Nogueira de FrançaLuiz Antonio RibeiroLuiz Eduardo ZagoLuiz Fernando de Assumpção FariaLuiz Marcelo Alves de MoraesManoel Antonio GranadoMarcelo BoockMarcelo Habice da MottaMarcelo Santos RibeiroMarco Antonio AntunesMarco Antonio SudanoMarcos Aurélio Reitano Marcos Roberto CarnielliMaria Elsa Alba Bernhoeft Miguel Burgos NetoMoacyr Roberto Farto CastanhoOlivio Mori Junior Osvaldo José Dal FabbroPaschoal Pipolo BaptistaPatrick Pierre DelfosseRenata Helena Oliveira Tubini Ricardo OrlandoRicardo OrlandoRicardo Terenzi NeuenschwanderValma Aversa Prioli

Itaú Seguros S.A.

BOARD OF DIRECTORS

Director-PresidentRoberto Egydio Setubal

Director-SuperintendentOsvaldo do Nascimento

Executive Director-Vice-President Olavo Egydio Setubal Júnior

Executive DirectorsCláudio Cesar SanchesJosé Carlos Moraes Abreu Filho

Managing Directors Astério Sampaio MirandaIdacelmo Mendes VieiraManes Erlichman NetoMarco Antonio Antunes

Banco ItaucredFinanciamentos S.A.BOARD OF DIRECTORS

Director-President

Roberto Egydio Setubal

Vice-President Directors José Francisco Canepa Marco Ambrogio Crespi Bonomi

DirectorsAdrienne Patrice Guedes Daibert Arnaldo Pereira PintoDilson Tadeu da Costa RibeiroErivelto Calderan CorrêaEvanir Coutinho Ussier (*)Fernando José Costa TelesFlávio Kitahara SousaJackson Ricardo GomesJason Peter Crauford Luís Fernando StaubLuís Otávio MatiasLuiz Henrique Didier JúniorManoel de Oliveira FrancoMarco Antonio Antunes Marcos Vanderlei Belini Ferreira Mário Mendes Amadeu Mário Werneck BrittoMauricio Ferreira Agudo RomãoRodolfo Henrique Fischer

(*) Elected at ASM of 01/02/2008 - awaiting Bacen's approval.

93

Banco Itaú BBA

BOARD OF DIRECTORS

PresidentRoberto Egydio Setubal

Vice-PresidentsFernão Carlos Botelho BracherHenri Penchas

Board MembersAlfredo Egydio SetubalAntonio Beltran MartinezAntonio Carlos Barbosa de OliveiraCandido Botelho BracherEdmar Lisboa BachaEduardo Mazzilli de VassimonJean-Marc Robert Nogueira Baptista EtlinRodolfo Henrique FischerSérgio Ribeiro da Costa Werlang

EXECUTIVE BOARD

Director-PresidentCandido Botelho Bracher

Executive Directors– Vice-PresidentsAntonio Carlos Barbosa de OliveiraEduardo Mazzilli de VassimonJean-Marc Robert Nogueira Baptista Etlin

Business Director – Vice-PresidentAlberto Fernandes

Legal Consultant Ezequiel Grin

DirectorsAlexandre Enrico Silva FigliolinoAndré Emílio Kok NetoAndré Luis Teixeira RodriguesAndré Luiz Helmeister Caio Ibrahim DavidElaine Cristina Zanatta Rodrigues VasquinhoEmerson Savi JunqueiraFábio de Souza Queiroz FerrazFernando Fontes IunesFrancisco Paulo Cote GilGilberto Frussa Gustavo Henrique Penha TavaresJoão Carlos de GênovaJosé Irineu Nunes BragaLilian Sala Pulzatto KieferLuis Alberto Pimenta GarciaMarcelo MazieroMarcelo NaigeborinMário Lúcio Gurgel PiresMário Luís BrugnettiMario Luiz AmabileMilton Maluhy FilhoOdair Dias da Silva JuniorPaolo Sergio PellegriniPaulo de Paula AbreuPaulo Romagnoli

Corporate Information

Head Office

Praça Alfredo Egydio de Souza Aranha,100

Torre Itaúsa

CEP 04344 902 – São Paulo – SP

www.itau.com.br

Investor Relations Services

Geraldo Soares

Investor Relations Superintendent

Praça Alfredo Egydio de Souza Aranha,100

Torre Conceição – 11º andar

CEP 04344 902 – São Paulo – SP

Tel.: (0xx11) 5019 1549

Fax: (0xx11) 5019 1133

e-mail: [email protected]

www.itauri.com.br

Investfone Service Centre

Shareholders Only

Tel.: (0xx11) 5029 7780

Fax: (0xx11) 3274 3120

Hours:Monday-Friday, 9:00 am - 6:00 pm

Shareholder Services

Belo Horizonte – MG

Av. João Pinheiro, 195 – Térreo

CEP 30130 180

Brasília – DF

SCS Quadra 3 – Ed.Dona Angela

Sobreloja – CEP 70300 500

Curitiba – PR

Rua João Negrão, 65 – Sobreloja

CEP 80010 200

Porto Alegre – RS

Rua Sete de Setembro, 746 – Térreo

CEP 90010 190

Rio de Janeiro – RJ

Rua Sete de Setembro, 99 – Subsolo

CEP 20050 005

Salvador – BA

Av.Estados Unidos, 50 – 2º andar

Ed.Sesquicentenário – CEP 40010 020

São Paulo – SP

Rua XV de Novembro, 318 – Térreo

CEP 01013 001

For other locations, contact anybranch of Banco Itaú S.A.

Customer Services

Itaú Bankfone

Information and banking transactions

Major metropolitan areas:

4004 4828 (*)

Other locations:0800 011 8944

(*) No need to dial the Area Code

Talk to Us – Internet Client Support Service

www.itau.com.br

Itaú Corporate Ombudsman

0800 5700011

Caixa Postal:nº 67.600 – São Paulo/SP

CEP 03162-971

(*) No need to dial the Area Code

Corporate Ombudsman – response service for entities

Praça Alfredo Egydio de Souza Aranha,100,

Torre Conceição, 6º andar.

CEP 04344-902 São Paulo/SP

0800 7214828

[email protected]

Central Bank of Brazil Support Services Group

Praça Alfredo Egydio de Souza Aranha,100,

Torre Conceição, 6º andar.

CEP 04344-902 São Paulo/SP

Major metropolitan areas:

4004 1244

(*) Other locations:0800 7221244

Fax:Option 2 of initial menu

Corporate Information

94


Bovespa Trades

Common Shares: ITAU3

Preferred Shares: ITAU4

BCBA (Argentina) Trades

Cedear Itaú Holding: ITAU4

NYSE (USA) TradesADR Itaú Holding: ITU

Depositary Bank (ADR):

The Bank of New York

101 Barclay Street – 22 West

New York, NY 10286

(212) 815 2293

(212) 571 3050

Specialist (ADR):

LaBranche & Co., Inc.

One Exchange Plaza

25th Floor New York,

New York 10006-3008

(212) 425 1144

[email protected]

International Offices

Banco Itaú – New York Branch

540 Madison Avenue

New York, NY 10022

Tel.: (1 212) 486 1280

Fax: (1 212) 888 9342

Banco Itaú – Tokyo Branch – Japan

1-6-1 Marunouchi, Chiyoda-ku

Tokyo 100-0005

Tel.: +81 (3) 5293 4828

Fax: +81 (3) 5293 4830

www.itau.co.jp

Banco Itaú – Grand Cayman Branch

20 Genesis Close Ansbacher House –

3rd.Floor P.O.Box 2582gt

Grand Cayman, Cayman Islands B.W.I

Tel.: (1 345) 945 1271

Fax: (1 345) 945 1275

Banco Itaú BBA

West Bay Street

Nassau, Bahamas

Banco Itaú BBA

Montevideo, Uruguay

Plaza Independencia, 831

Of.706 C.P.11.100

Tel.: 59 82 9013965

Fax:59 82 9085613

Itaú Bank, Ltd

20 Genesis Close

P.O.Box 2587gt

Ansbacher House – 3rd.Floor

Grand Cayman, Cayman Islands B.W.I

Tel.: (1 345) 945 4175

Fax: (1 345) 945 4185

Itaú Securities Inc.– New York

540 Madison Avenue – 23rd.Floor

New York, NY 10022

Tel.: 212 207 9056

Fax:212 207 9076

Banco Itaú Europa - Lisbon

Rua Tierno Galvan,Torre 3 – 11º andar

1099-048 Lisboa

Tel.: (351 21) 381 1000

Fax: (351 21) 388 7219

www.itaueuropa.pt

Banco Itaú Europa - London Branch

17, Dominion Street, 6th Floor

EC2M 2EF London – United Kingdom

Tel.: (44 207) 663 7830

Fax: (44 207) 663 7831

Banco Itaú Europa Luxembourg

Avenue de la Porte-Neuve, 29

L- 227 – Luxembourg

Tel.: (352) 22 33771

Fax: (352) 663 7831

BIE Bank & Trust Ltd.

Cardinal Avenue

Grand Cayman, Cayman Islands

P.O.Box 501

B.W.I.

Banco Itaú Buen Ayre – Head Office

Cerrito 740

C.P.C1010AAP

Buenos Aires – Argentina

Tel.: (5411) 4378 8420

www.itau.com.ar

Banco Itaú Chile

Enrique Foster Sur 20 Piso 6

Las Condes

Santiago – Chile – C.P. 755-0198

Tel.: (562) 686 0000

www.itau.com.cl

Banco Itaú Uruguay S.A.

Zabala 1463

C.P.11.000

Montevideo, Uruguay

Tel.: (5982) 916 0127

www.itau.com.uy

OCA SA

Colonia 1424,

C.P. 11200 Montevideo, Uruguay

Tel.: (5982) 901 8839

www.oca.com.uy

95

Publication and Overall Coordination: Banco Itaú Holding Financeira

Editorial Coordination: Report Comunicação

Editorial and Graphic Design: Adroitt Bernard

Translation: Global Translation.BR

Photos: João Musa; pages 24, 30, 33, 38, 43, 69, 72, 86 and 90 – Itaú archive

Printers: Stilgraf

Circulation: Portuguese – 5,000 copies.English and Spanish versions will be available on CD.

Distribution: sent to Shareholders, Investors, Employees, Clients, Suppliers, NGOs, Consumer

Defense Organizations, the Media, Government Agencies and Universities.

Banco Itaú Holding Financeira address:

Praça Alfredo Egydio de Souza Aranha, 100

Torre Itaúsa – CEP 04344-902 – São Paulo – SP

Address for electronic version: www.itauri.com.br

If you have any questions, comments or suggestions, or would like more copies of the

report, please e-mail our Investor Relations Department at [email protected].

Our special thanks to everyone who authorized the use of their image in this Report.

Credits

96





Banco Itaú





Taií - FIT, FIC (CBD),FAI (LASA) and

Consigned Credit

Vehicles


Itaucred

Banco Itaú BBA


has been in operations for over 60 years, is one of the largest in Brazil and has a net worth of R$29 billion, assets totaling R$295billion and achieved a market value of R$111 billion.


operates nationwide, through our 3,528 strong branch and bank service outpost network; over 24,000 automatic teller machinesand electronic customer service stations located at places of business and the Taií network comprising 766 shops and 315electronic service stations.



Our diversified operations...are primarily anchored on services based on specialized structures for the several client profiles, persons with special physicalneeds, small and medium size companies as well as micro-firms, the Government and institutional investors.

include business management services such as underwriting, custody, securities brokerage, credit cards, cooperative financingplans, insurance, investment certificates and private pension plans.


have earned us the title of leader in Private Banking and high income (Itaú Personnalité) sector as well as the lower end of thesocial ladder, by means of Taií, which conducts financial operations involving financing and credit cards extended to customers,who for the most part, do not have access to more conventional financial services.

Our values are solid and...based on ethics and transparency, in relation to human rights, compliance and diversity that are exercised in relationships withour strategic publics such as customers, government, employees, suppliers, shareholders and investors.

uphold continual improvement in our operations assuring competitive positioning and good performance of our operations.


include social and environmental accountability providing continuity to our commitment toward sustainable financial businessdevelopment.









The Most Admired Companies in Brazil – 1st place in the categories:Retail Bank and Private Pension Plans – Carta Capital and TNS InterScience magazines.



www.itau.com.br


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