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13

June 30,2000 and 1999

CompleteFinancial

statementsMana

gementandDiscussion

and

&Analysis

2

Information on the Resultsof the First Half of 2000

1. Banco Itaú obtained a consolidated net income of R$800million in the six months, with annualized profitabilityof 26.8% on the consolidated stockholders' equity. Therecurrent net income showed a growth of 43.1% on theequivalent period of 1999 (R$559 million).

2. On June 12, Itaú set up a strategic alliance with AmericaOnline Latin America, Inc.(AOLA) and its subsidiaryAmerica Online Brasil Ltda.(AOLB), by means of which itwill receive 12% of AOLA's capital stock. The agreementincludes the offering of all of the AOLB products andservices to the Itaú customers, with the right to a certainnumber hours free of charge for the use of Internetservices. Thus, in entrusting AOLB with the provision ofthe best technology and content to its customers, Itaúwill continue keeping its focus on the supply of financialservices and on its policy of generating value for thestockholders, besides permitting the expansion of thecustomer base and the reduction of operating costs.

The Administrative Council of Banco Itaú S. A. approved, on August 7, 2000, theManagement Report and Financial Statements covering the first half of 2000.For the information of our customers and stockholders, we highlight thesignificant facts of the period.

3. In the period under review, Banco Itaú and Banco Matrixentered into a partnership for the joint-administration of48 funds managed by Matrix in Brazil and abroad, totalingaltogether R$ 1,800 million. Thus, the recognized expertiseof Banco Matrix staff in the management of funds is addedto the tradition and leadership of Banco Itaú in theinvestment funds market, permitting a more activeperformance in that market.

4. On August 1, Itaú concluded the agreements with theCaja de Ahorros y Pensiones de Barcelona ("la Caixa), third-largest Spanish financial group, establishing the bases ofa cooperation of mutual strategic importance. Suchcooperation will result in the participation of "la Caixa"in the capital of Banco Itaú to the extent of 1%, includingits right to appoint one member to the InternationalAdvisory Committee and one Managing Director. As a result,"la Caixa" will be in close touch with its customers inBrazil and Argentina through Banco Itaú and thepartnership will enable Itaú to expand and diversify itsrelations, foreshadowing new business opportunities.

5. Among the various recognitions that Itaú received in theperiod, we highlight: Best Domestic Bank in Latin America,Best Domestic Bank in Brazil and Best Domestic EquityHouse, awarded by Euromoney magazine in its July edition.

3

São Paulo, August 7th, 2000

Olavo Egydio Setubal

Chairman of the Administration Council

6. Banco Itaú and its subsidiaries had 39,230 employees,by the end of the half-year. The remuneration of personnel(fixed, variable and profit sharing) added to charges andbenefits totaled R$1,100 million. Of the remunerationpaid directly to employees, the variable part (profitsharing, commissions, awards, etc.) represents 17% ofthe total.

7. The preferred shares of Banco Itaú closed the period quotedat R$158.50 per thousand-share batch, and an appreciationof 2.3% as against the fall of 2.1% experienced by the SãoPaulo Stock Exchange index. Thus, its market capitalizationreached R$17,395 million (US$9,664 million), the highestamong all banks in Latin America.

8. The consolidated stockholders' equity of R$6,353 millionrose by 7.6% on the December 1999 figure. The workingcapital of R$3,807 million and the risk-based capital ratioof 19.6% highlight the financial strength of Itaú.

9. The consolidated assets of Itaú reached R$54,529 millionby the end of the half-year. The balance of loans, leasing,advances, guarantees and operations with characteristicsof credit totaled R$21,572 million, with a growth of22.4% in relation to the equivalent period of 1999. Thehighlights were personal credit and onlending borrowingsin domestic currency with increases of 65.2% and 28.0%,respectively, in the same period.

These figures highlight the results of the first half of 2000 and reflect the support and encouragement of our customers andstockholders, and the dedicated efforts of our employees.

The Management Report and Financial Statements in complete form will be published in "Gazeta Mercantil" and "DiárioOficial do Estado de São Paulo" newspapers, of August 10, 2000 and have already been published in Itaú's Web Site onInternet (www.itau.com.br).

10. Itaú reached the total of R$80,139 million in ownconsolidated free resources added to funding and thoseunder management, 7.0% higher than the figure forDecember 1999. Of this total, R$37,331 millioncorrespond to investment funds and other managedresources, which in turn rose 16.7%.

11. Itaú acts in the social field by means of the Itaú SocialProgram, focused on the Basic Education and Healthareas and supported in the concept of partnership byspecialized entities in such areas. In the half-year, Itaúinvested R$6 million in the support to 103 programs. Inaddition, Itaú earmarked R$20 million for the Itaú SocialFoundation, an institution that concentrates on thecoordination of the social performance of the Itaúcompanies.

4

Management Report

To our Stockholders:

We submit for your appreciation the Management Reportand the financial statements of Banco Itaú S. A. and itssubsidiaries, covering the first half of 2000, which complywith the guidelines set by the Central Bank of Brazil (Bacen)and the Brazilian Securities and Exchange Commission.

Economic Scenario

The accumulated inflation (IPCA) in the half-year reached1.6%, as against 4.0% in equivalent period of 1999,indicating that the annual target of 6% will be met. Theprimary fiscal surplus was consolidated as 4.0% of the GDP.The basic interest rate (Selic) dropped from 22.0% (June/99) to 17.5% at the end of June, and the foreign exchangerate have remained relatively stable. This set of indicatorscreated conditions for an economic growth of 3% in theperiod. The prospects for sustained growth in the comingyears has thus improved.

The trade balance presented a surplus of US$0.9 billion, asagainst the deficit of US$0.6 billion in the equivalent periodof 1999. The foreign accounts returned to normal, enablingthe government to clear by anticipation US$10.3 billion inloans from the IMF, BIS and BOJ obtained at the time of theinternational crisis.

The recently approved Fiscal Responsibility Law is animportant additional tool for disciplining finances in thethree spheres of government.

Outstandings Events

Strategic alliance with America Online Latin America(AOLA)

On June 12, Itaú entered into a strategic alliance withAmerica Online Latin America, Inc. (AOLA) and its affiliateAmerica Online Brasil Ltda. (AOLB), by which Itaú will receive12% of AOLA's capital stock. AOLA is going on with theproceedings to go public through an Initial Public Offering(IPO) to be effected at NASDAQ.

It is important to note that, as part of the agreement, Itaúwill receive these shares without any cash disbursement, asthere will be, simultaneously to the underwriting, an upfront collection of resources, in identical amount, referringto the service supply agreement established with AOLB. Thisvalue will be added to Itaú's result in a five-year period, inaccordance with the rendering of the services.

The agreement includes the supply of all of the AOLB productsand services to the Itaú's customers, with the right to acertain number of free of charge hours for using Internetservices. The customers will also have access to a FinancialWeb site and to all the technological innovations that AOL,the world Internet leader, will make available in Brazil.

Thus, in entrusting AOLB with the provision of the besttechnology and content for its customers, Itaú will continuefocusing on the supply of financial services and with itspolicy of generating value for the stockholders, adopting astrategy in the virtual space that reinforces the aggressiveposition in supplying on-line services in Brazil, besidespermitting the expansion of the customer base and thereduction of operating costs.

Itaú believes that the supply of AOLB services will be anadditional factor strengthening the relations with itscustomers, besides the fact that it will be an incentive forthe customers to use the Internet to perform their financialservices.

The completion of this partnership agreement is conditionedto approval by the competent governmental authorities.

Partnership with Banco Matrix

In the first half-year, Banco Itaú and Banco Matrix establisheda partnership for the joint-administration of 48 fundsmanaged by Matrix in Brazil and abroad, totaling R$1,800million. With this, Itaú aims at complementing, expandingand diversifying the portfolio of fund derivatives, withoutincreasing the operational costs. The recognized expertiseof the Banco Matrix Staff in the management of funds is,thus, added to the tradition and leadership of Banco Itaúin the investment fund market.

Partnership with “la Caixa”

On August 1, the agreements with the Caja de Ahorros yPensiones de Barcelona ("la Caixa) were concluded,establishing the bases for a cooperation of mutual strategicimportance.

" la Caixa", an institution with more than 150 years ofactivity, today occupies the first place among the EuropeanSavings Banks in the classification by net income, beingthe third Spanish financial group, with assets ofUS$74 billion, a stockholders' equity of US$5 billion and20,465 employees. As a financial institution, it is one ofthe leaders in Spain, with a global market share of 10% andof 36% in the Region of Catalonia, its natural market, withapproximately 4,300 branches and 6,300 self-service outlets.It has the important participation of 3.83% in DeutscheBank, 5% in Telefonica, 9.9% in Repsol-YPF and 5% inENDESA, besides 12.5% in Banco Português de Investimentos,in which Itaúsa has an equal share.

Such cooperation will result in the participation of "la Caixa"in the capital of Banco Itaú with the percentage of 1%, andit will have the right to appoint one member to theInternational Advisory Consultative and one ManagingDirector.

5

Management Report

As a result, "la Caixa" will be in close touch with its customersin Brazil and Argentina through Banco Itaú and thepartnership will enable Itaú to expand and diversify itsrelations, foreshadowing new business opportunities.

Recognition

Banco Itaú received recognition for its performance invarious areas:

• Best Domestic Bank in Latin America, Best Domestic Bankin Brazil and Best Domestic Equity House, awarded byEuromoney magazine

• State and Nationwide Corporate Image, awarded by GazetaMercantil newspaper

• Greatest Transparency Prize 1999, by Atlantic Rating, forthe transparency of the financial statements andcommunication with stockholders

• Highlights of the Capital Market - 1999, given by ABAMEC- SP and ABAMEC - Nationwide, for its attention tostockholders, investors and investment analysts

• Social Top, awarded by the Association of Sales andMarketing Directors of Brazil (ADVB), for the Itaú SocialProgram

• Marketing Top, awarded by ADVB, for the products FlexprevItaú, Itaucard and Super PIC of the Milênio

• Columnists Prize, by the Brazilian Association of Marketingand Advertising - ABRACOMP, in the category advertiserof the year

• Best Marketing in the Century, by FGV, Editora Referênciaand Madia Associados, for its work as a whole

Net Income, Stockholders´ Equity and Market Capitalization

Banco Itaú had a consolidated net income of R$800 millionin the half-year, with an annualized profitability of 26.8%on the consolidated stockholders' equity. Recurrent netincome had a growth of 43.1% on the equivalent period of1999 (R$559 million).

The consolidated net income per thousand-share batch was ofR$6.80, while the stockholders' equity amounted to R$53.99.

Banco Itaú's preferred shares closed the period quoted atR$158.50 per thousand-share batch, and an appreciationof 2.3% as against the fall of 2.1% experienced by the SãoPaulo Stock Exchange index. Thus, its market capitalization

reached R$17,395 million (US$9,664 million), the highestamong all banks in Latin America.

The consolidated stockholders' equity of R$6,353 millionrose by 7.6% on the figure for December 1999. Own workingcapital of R$3,807 million and the risk-weighted capitalratio of 19.6% highlight the financial strength of Itaú. Theindividual stockholders' equity reached R$6,820 million.

Risk Manegement Policy

At Itaú, the adequate control of credit, market or operationalrisks is a priority factor in the management of the Bank.

The use of modern techniques in the granting of credit(credit scoring, classification of risks, among others),throughout recent years, allowed the loan portfolio risk toremain at a very low level. Overdue credits fallen due anunpaid between 11 and 30 days remained at the level of2.5%. As a result of the improvement in the economicsituation, Itaú increased the flexibility of its loan-grantingpolicy, permiting a faster pace of growth by the loanportfolios in this healthier economic scenario.

In the half-year, in accordance with Bacen Resolution 2.682,Itaú started to apply credit rights' classification based onthe evaluation of the customers and operations, for theprovisioning of Non-accrual losses. In the consolidatedincome statement, the excess provision in relation to therequired minimum was of R$616 million. In the incomestatement, the provision for loan losses expenses, net ofcredit recoveries, (note 6.f), impacted the earnings of theperiod by R$178 million, with a reduction of R$246 million,when compared to the equivalent period of 1999.

The management of market risks was carried out in a lessdisturbing manner in this half-year, due to the reduction involatility when compared with the equivalent period of 1999.Even so, the adequate management of risks brought favorableresults to the Bank.

6

Assets and Loans

The consolidated assets of Itaú reached R$54,529 millionat the end of the period.

The balance of loans, leasing, advances, guarantees andoperations with characteristics of credit totaled R$21,572million, with a growth of 22.4% in relation to the first halfof 1999. The highlights were personal credit and onlendingborrowings in domestic currency with increases of 65.2%and 28.0%, respectively, in the same period. In the foreigntrade area, the contracting of US$900 million in a broadrange of differentiated operations is highlighted. The fundsapplied in bonds and securities issued by companies,financing institutions included, reached R$7,472 million,with a growth of 16.7%.

We draw attention to the pioneering initiative of Itaú inextending the financing term for vehicles with pre-fixedinterests for up to 60 months, which can be contracted inthe Bank's branches and vehicle dealerships. There has neverbeen in Brazil any offer of vehicle financing under theseconditions.

Securities issued by the National Treasury or by Bacencontinue having a significant participation in the portfolio,representing R$10,043 million, which shows the high levelof Itaú's liquidity.

In the international area, we highlight the important rolethat Itaú played in the distribution of Brazilian Assets, suchas the issuing of: Syndicated BCP S.A. Loan of US$1.1billion, in which Itaú was the only Brazilian bank to act asarranger; and the Commercial Paper of Metropolitan Overseasof US$200 million and of Brascan Imobiliária S.A. of US$60million.

Resources Raised and Under Management

By the end of the half-year, Itaú reached R$80,139 millionin own consolidated free resources added to fundings andthose under management, 7.0% higher than the positionin December 1999. Of this total, R$37,331 millioncorrespond to the investment funds and other managedresources, which in turn had risen by 16.7%.

The Investidor Profissional (Professional Investor) magazine,April issue, indicated Itaú as the largest privateadministrator of pension fund resources, since - by the endof the period - it held R$7,177 million of resources undermanagement. Itaú also reached the leadership of theCorporate and private bank sectors, totaling R$7,429 million.

In the period, Itaú has shown its capacity for raisinginternational resources with two issues totaling US$250million, establishing new benchmarks for the Brazilian market:

the first with a remuneration of less than 9%, and the secondwith the lowest spread over treasury offered to investorssince the Asian crisis.

Internet

Itaú has been taking advantage of the great opportunitiesthat the Internet offers for the expansion of the number ofcustomers and business deals as shown by the agreementwith AOLA commented on at the beginning of this report,among several other actions. Itaú continues to analyze otherchances of alliances in the Internet area.

In this period, the following sites were launched, directedto segments and specific customer needs: Small Companies,Itaú Investnet Personnalité (customers of high income),Itaucred (financing and leasing of vehicles), Itaucard (creditcards), International Itaú (products and services aimed atforeign trade and international business), Investor Relationsand Institutional Investors. The use of Itaú Bankline throughthe Internet grew 192% in relation the equivalent period of1999. Itaú also launched new services: "Itaú i-Mail" and"Itaú i-Cellbank ", by means of which the customers canreceive statements of checking and savings accounts by E-mail and cellular phone.

Insurance, Private Pension Funds and Capitalization

Itauseg and its affiliates showed a net profit of R$72 millionin the period, with an annualized return of 23.0% onstockholders' equity. The premiums earned reached R$651million and the technical provisions R$816 million. Theimprovements introduced in the acceptance of risks andpricing of new business led to the improvement of the ItausegClaims Incurred Index, which reached 62.8% in the period,compared with 67.5% in equivalent period of 1999. Thus,the combined ratio reached 99.6%. The invoicing recoveryin the Auto product starts to be noticed, after a significantreduction, due to the implementation of the risk selectionmethodology.

Summing up the performance in the capitalization areas andpension plans, the Itaucap and Itauprev presented a netincome of R$118 million and R$15 million and an annualizedprofitability of 12.4% and 61.0%, respectively. The technicalreserves in these companies totaled R$836 million and R$675million, respectively, by the end of the period.

Management Report

7

(Approved at the Meeting of theAdministrative Council of August 7th, 2000)

Internacional Presence

Banco Itaú Buen Ayre closed the half-year with US$820million of assets and US$444 million in loans, highlightingthe increase of 31.7% in the corporate loans in relation toDecember 1999. The Deposits had reached US$539 million,with an increase of 16.6% over December 1999.

The Banco Itaú Buen Ayre network of 94 branches, whichservices more than 150,000 customers, is the sixth largestin the Buenos Aires metropolitan area and its 352 AutomaticTeller Machines (ATM's) represent the first owned network inthat same area.

The Banco Itaú Europa, S.A. (BIE), controlled by ItaúsaPortugal and supervised by the Bank of Portugal, whoseoperations concentrate on the financing of internationaltrade and support to the Portuguese companies investingin Brazil, closed the half-year with total assets of Eur. 1,308million (US$1,249 million) and a stockholders' equity ofEur. 187 million (US$179 million), showing a growth of34.2% and 71,4%, respectively, over the equivalent periodof 1999. The net income was of Eur. 8.1 (US$7.8 million),having increased 52.0% in relation the equivalent period of1999.

The achievement by BIE of the investment grade by theinternational rating agencies Fitch IBCA and Moody's deservesmention, as it provides easier access to the internationalcapital market, at lower cost, equivalent to that of thesecurities issued by companies with the same classification.

Banco Itaú Europe Luxembourg, also controlled by ItaúsaPortugal and under the supervision of the Central Bank ofLuxembourg, concentrating exclusively on the activities ofprivate banking, had a net income of Eur. 2.1 million(US$2.0 million). The total resources managed by the Bankexceeded US$700 million.

Human Resources

Banco Itaú and its subsidiary companies had 39,230employees, by the end of the half-year. The staff remuneration(fixed, variable and profit sharing) added to charges andbenefits totaled R$1,100 million. With reference to theremuneration paid directly to the employees, the variablepart (profit sharing, commissions, awards, etc.) represents17% of the total. The spontaneous benefits representR$81 million of this sum, with special mention to the to theComplementary Retirement Plan offered by the ItaubancoFoundation. These values indicate monthly remunerationand average charges per employee of R$5,000 in the period.

The investments in training reached R$16 million in theperiod, involving more than 50,000 participants.

Social Activities

Itaú acts in the social field by means of the Itaú SocialProgram, concentrated mainly on the Basic Education andHealth areas and supported in a concept of partnership withspecialized entities in such areas. In the period, Itaú investedR$6 million in the support to 100 programs, such as theProject Improvement of Education in the Municipality,directed to the formation of educators; and the PartnershipsProgram, seeking the institutional strengthening of the 30final contending NGOs (Non-Governmental Organizations)forthe Prize Itaú-Unicef 1999. Itaú Social also supported theprograms Capacitação Solidária (Solidary Qualification) andSolidary Alphabetization and the Futura TC Channel.

Itaú earmarked R$20 million, in the period, for the ItaúSocial Foundation, an institution directed to thecoordination of the social behavior of the Itaú companies.

In the area of the culture, Itaú Cultural is consolidating itsposition as a byword. Its various activities aimed at formingartists, curators and the public; to foster the manifestationof new artists and new languages; and ensure that the actionsand products produced reach growing parts of the Brazilianpopulation. In that direction, Itaú Cultural is articulatingstrategic alliances with cultural entities, to provide new eventsboth in Brazil and abroad.

Acknowledgements

We wish to thank our stockholders for their confidence andsupport, which were indispensable to the continuousdevelopment achieved by Itaú. To our employees andcollaborators, we also wish to express our appreciation oftheir efforts, which have provided the Bank with remarkableresults, besides the constant improvement of our productsand services. To our customers, our special thanks for theirconfidence and loyalty, which we make every effort toreciprocate with highly specialized services to meet theirprecise financial requirements in terms of quality andconvenience.

Management Report

8

Balance Sheets (In thousands of reais)

Itaú

2000 1999

Current assetsCash and cash equivalents (Note 16i)Interbank funds applied (Note 4b)

Money marketInterbank deposits (Notes 5a and 5b)Valuation allowance (Notes 5a and 5c)

Securities (Notes 4c and 5)Own portfolio (Note 5b)Subject to repurchase commitmentsSubject to forward commitments:

Open contracts and premiumsSubject to external fundingDeposited with the Central BankPrivatization certificatesValuation allowance (Notes 4c, 5a and 5c)

Interbank accountsPending settlementsCompulsory deposits:

Central Bank depositsNational Housing System

Interbank repassesCorrespondents

Interbranch accountsThird party funds in transitOwn funds in transit

Loan operations (Note 6)Loans:

Public sectorPrivate sector

Allowance for loan losses (Notes 4d and 6d)Leasing operations (Note 6)

Lease receivables:Public sectorPrivate sector

Allowance for lease losses (Notes 4d and 6d)Other receivables

Foreign exchange portfolio (Note 9)Income receivableSecurities clearing accountsSpecific creditsOther (Note 11a)Allowance for losses (Notes 4d and 6d)

Other assetsShort-term investmentsAssets received in settlement of debtValuation allowancePrepaid expenses

Long-term assetsInterbank funds applied (Note 4b)Interbank deposits (Notes 5a and 5b)Securities (Notes 4c and 5)

Own portfolio (Note 5b)Subject to repurchase commitmentsDeposited with the Central BankPrivatization certificatesValuation allowance (Notes 4c, 5a and 5c)

Interbank accountsCompulsory deposits:

Deposited with the Central BankNational Housing System

Interbank repassesLoan operations (Note 6)

Loan:Public sectorPrivate sector

Allowance for loan losses (Notes 4d and 6d)Leasing operations (Note 6)

Lease receivables:Private sector

Allowance for losses (Notes 4d and 6d)Other receivables

Foreign exchange portfolio (Note 9)Income receivableSecurities clearing accountsSpecific creditsOther (Note 11a)Allowance for losses (Notes 4d and 6d)

Other assetsOther assetsAllowance for valuationsPrepaid expenses

Permanent assetsInvestments (Note 4e)

Subsidiaries and affiliates:Domestic (Notes 7, 14, 17a and 17c)Foreign (Notes 7, 14 and 17b)

Other investments (Note 7)Allowance for losses

Fixed assets (Note 4f)Property for own useOther fixed assets for own useAccumulated depreciation

Deferred expenses (Note 4g)Goodwill to be amortized (Notes 2a and 12d)Deferred installation expenses (Note 4g)Accumulated amortization (Note 4g)

Total assets

28,319,3911,229,5415,406,2343,751,8051,654,436

(7) 5,294,6835,056,199

843,541

6,460225,688

4,07313,905

(855,183)5,051,5592,504,551

2,503,7966,302

36,744166

32,037 5,213

26,8246,818,266

307,746 7,372,772 (862,252)

-

---

4,333,4442,668,167 112,820 356,032

- 1,206,808

(10,383) 153,627

-236,568

(116,421) 33,480

12,121,35616,38316,383

6,618,7324,654,158

1,946,96614,37836,036

(32,806) 64,530

- 55,444 9,086

4,537,230

243,150 4,564,761

(270,681)-

--

872,986 22,005 1,329

17,2791,165

832,875 (1,667)

11,495--

11,495 8,540,0196,796,473

6,105,843563,685128,753(1,808)

1,223,5021,459,2351,339,992

(1,575,725)520,044276,528369,259

(125,743) 48,980,766

31,415,5821,747,938

8,435,008 5,566,7042,868,323

(19)5,246,361

5,475,85771,441

42,619319,483

150,616472

(814,127)5,339,793

2,401,128

2,906,497 6,62924,914

625 1,428

1,037 391 5,309,910

- 6,201,533 (891,623)

1,348

1,348-

- 5,104,487 2,653,904

798,720 504,476

1,007 1,173,051

(26,671) 229,309

- 211,457

(75,212) 93,064

9,996,791 182,060 182,0604,355,040

3,461,029 681,401

218,85940,749

(46,998) 99,489

- 57,076

42,413 4,367,129

191,384 4,269,371

(93,626)-

--

993,073-

953 144,480

1,054 851,686 (5,100)

- -

--

5,486,0493,820,304

3,234,783462,490124,839(1,808)

1,201,8781,449,778

1,206,194 (1,454,094)

463,867308,176223,117

(67,426)46,898,422

Assets

Itaú Consolidated

2000 1999

39,475,613 1,557,208

6,591,3503,867,335

2,724,022 (7)

9,436,4629,147,660 833,802

7,366 225,688 75,516

13,907 (867,477)5,522,636

2,640,839

2,875,1036,306

- 388

34,234 5,212

29,022 9,556,802

381,187 10,139,369

(963,754)357,647

-387,950

(30,303)6,059,2312,699,746 487,108451,674

2032,431,403 (10,903)

360,043 4,026

297,169(138,748)

197,59612,063,149

16,38316,383

4,751,6302,529,294

2,207,901 14,37836,036

(35,979)56,369

92555,444

-5,254,067

252,8305,413,814(412,577)

242,288

258,890(16,602)

1,726,59522,0051,736

38,0693,377

1,669,993(8,585) 15,817 6,267

(2,504)12,054

2,990,521567,067

137,035142,596291,958(4,522)

2,237,2242,491,2801,721,659

(1,975,715)186,230

2,123334,608

(150,501)54,529,283

41,444,1992,079,0068,174,5655,573,7332,600,851

(19)9,571,9579,442,232

190,838

42,619319,483

395,737 474

(819,426)7,186,9203,776,426

3,403,2156,631

-648

48,56648,150

4167,716,050

5,560 8,710,327

(999,837) 206,143

1,348 232,698

(27,903)6,007,214

2,604,728 538,748 714,566

1,4002,174,443 (26,671)453,778

2,955258,959

(80,333) 272,197

11,915,405182,060

182,060 5,166,426 4,050,958

907,398 218,859

40,749(51,538)

57,076

-57,076

-4,604,266

191,384 4,640,476 (227,594)

190,757

193,919 (3,162)

1,714,341-

1,5187 ,8544,251

1,718,916 (18,198)

479--

479 2,918,043

540,938

156,210108,928278,948 (3,148)

2,258,7612,481,3411,558,496

(1,781,076)118,344

1,063211,156

(93,875) 56,277,647

9

Balance Sheets

Current liabilitiesDeposits (Notes 4b and 8a)

Demand depositsSavings accountsInterbank depositsTime deposits

Money market repurchase commitments (Notes 4b and 8b)Own portfolioThird party portfolio

Acceptances and debenturesDebenturesForeign borrowings in securities (Note 8c)

Interbank accountsPending settlementsInterbank on-lendingCorrespondents

Interbranch accountsThird party funds in transitOwn funds in transit

Borrowing (Note 16i)Borrowings from domestic - Other institutionsForeign currency trade finance borrowings (Note 16h)

On-lending borrowings from public institutionsFederal Development Bank (BNDES)CEFFederal Capital Goods Financing Agency (FINAME)Other institutions

Other liabilitiesCollection of taxes and contributionsForeign exchange portfolio (Note 9)Corporate and statutory contributionsTaxes and social security contributionsDue in connection with securities dealingTechnical provision of insurance, pension plans andcapitalization operations - VinculatedFinancial and development fundsOthers (Note 11b)

Long-term liabilitiesDeposits (Notes 4b and 8a)

Interbank depositsTime deposits

Money market repurchase commitments (Note 4b and 8b)Own portfolio

Acceptances and debenturesDebenturesForeign borrowings in securities (Note 8c)

Interbank accountsInterbank on-lending

Borrowings (Note 16i)Borrowings from domestic - Other institutionsForeign currency trade finance borrowings (Note 16h)

On-lending borrowings from public institutionsFederal Development Bank (BNDES)CEFFederal Capital Goods Financing Agency (FINAME)Other institutions

Other liabilitiesForeign exchange portfolio (Note 9)Taxes and social security contributionsDue in connection with securities dealingOthers (Note 11b)

Technical provision of insurance, pension plansand capitalization operations - Not vinculated

Deferred incomeDeferred income

Minority interest in consolidated subsidiariesStockholders' equity (Notes 2a and 12d)

CapitalDomesticForeign

Capital reserves (Note 12c)Revaluation reserves (Note 12c)Retained income (Note 12c)(Treasury shares) (Note 12a)

Total Liabilities

35,449,37819,392,2943,627,106

12,436,3992,924,516

404,2734,304,6192,488,3351,816,2841,186,467

-1,186,4672,525,983

2,413,306-

112,677418,950418,640

3102,618,609

221,3822,397,2271,123,879

788,969-

334,910-

3,878,577 331,789

1,531,171371,748321,750112,914

--

1,209,205 6,685,6424,055,4304,055,430

-428,963428,963820,660

-820,660

--

355,33369,398

285,935791,244464,744

-326,500

-234,01222,005 4,52347,707

159,777

- 25,70025,700

-6,820,046

2,363,183636,817202,21512,423

3,707,200(101,792)

48,980,766

36,137,87019,699,7562,690,554

12,905,1913,628,213 475,798

3,356,894 585,3292,771,5651,184,512

-1,184,5123,583,0713,487,191

1,96693,914

348,563336,55712,006

3,994,351-

3,994,351379,462147,423

-232,039

-3,591,261

371,5841,467,594

176,931175,980365,324

--

1,033,848 4,781,3102,402,8002,402,800

-91,71591,715

804,721-

804,721--

165,739-

165,7391,113,728

549,584-

564,144-

202,607-

80,314-

122,293

- 14,07714,077

- 5,965,165

2,080,774419,226263,34012,745

3,285,600(96,520)

46,898,422

Itaú

2000 1999Liabilities

41,599,42821,773,3244,233,989

14,489,919249,658

2,799,7584,232,158

2,834,615 1,397,543

1,120,595 9,699

1,110,8962,727,105

2,613,519 515

113,071424,200

423,633 567

2,915,955 363,047

2,552,9081,124,176

788,9681

334,995 212

7,281,915412,232

1,563,623382,956609,918307,132

352,48898

3,653,468 4,024,456

114,2461,081

113,165 440,300

440,300 1,795,678

1,000,467 795,211

257 257

359,040 73,140 285,900 791,975464,744

- 326,680

551522,96021,953

277,0192,780

221,208

1,982,963 124,521 124,521445,076

6,352,839

2,363,183636,817202,21512,423

3,239,993(101,792)

54,529,283

42,670,957 21,373,344 3,656,245

14,967,303 158,560

2,591,236 4,424,5152,201,2532,223,2621,291,534

99,087 1,192,447 3,787,807

3,691,3012,473

94,033 405,935 392,122 13,813

4,395,086215,204

4,179,882 382,621

148,220-

233,469 932

6,610,115446,656

1,418,339 199,798738,688588,135

258,488104

2,959,907 5,821,123

---

91,715 91,715

3,841,0823,091,885

749,197758758

172,303 6,536

165,767 1,114,840

550,447 1

564,392-

600,425-

252,668 91

347,666

1,776,51599,607

99,607346,774

5,562,671

2,080,774419,226

263,340 12,745

2,883,106 (96,520)

56,277,647

Itaú Consolidated

2000 1999

(in thousands of reais)

10

Itaú

Income from financial operations

Loans

Leases

Securities portfolio

Trade finance and foreign exchange portfolio

Compulsory deposits

Expenses of financial operations

Deposits, money market and interbank funds

Borrowings and on-lending

Leases

Provision for loan losses (Notes 4d and 6d)

Net income from financial operations

Other operating income (expenses)

Banking service fees

Capitalization premiums, insurance and pension plans premiums

Expenses in constituting technical provisions of insurance,

capitalization and pension plan operations

Insurance claims

Selling expenses - insurance

Pension plan benefits expense

Salaries and employee benefits

Other administrative expenses

Tax expenses

Equity share in income of subsidiaries and affiliates (Note 14)

Other operating income (Note 11c)

Other operating expenses (Note 11d)

Operating income

Non operating income (loss)

Income before income tax and social contribution and profit Sharing

Income tax and social contribution

Due on operations for the period (Note 10a)

Deferred related to temporary additions (Note 10b)

Extraordinary results

Profit sharing

Employees

Directors - statutories

Minority interest

Net income (Note 12d)

Number of outstanding shares (Note 12a)

Net income per thousand shares - R$

Stockholders' equity per thousand shares - R$

3,248,608

1,494,674

5

1,637,594

32,826

83,509

(1,971,341)

(1,584,716)

(194,665)

-

(191,960)

1,277,267

(285,125)

1,075,480

-

-

-

-

-

(662,292)

(979,100)

(143,595)

453,974

29,317

(58,909)

992,142

(78,633)

913,509

(74,112)

(29,096)

-

(43,533)

(12,606)

-

754,162

117,677,306,364

6,41

57,96

3,670,808

1,634,360

848

1,838,290

63,109

134,201

(3,521,815)

(2,886,031)

(338,900)

-

(296,884)

148,993

469,136

904,808

-

-

-

-

-

(549,425)

(907,648)

(119,748)

1,128,950

146,111

(133,912)

618,129

(59,788)

558,341

(33,845)

41,301

534,683

(17,711)

(13,566)

-

1,069,203

117,931,313,280

9,07

50,58

(*) Number of shares adjusted for better comparability due to the split performed in 1999 (Note 12a).

Itaú Consolidated

4,064,048

1,896,584

299,194

1,737,768

34,816

95,686

(2,031,614)

(1,269,246)

(211,160)

(235,354)

(315,854)

2,032,434

(822,875)

1,672,908

1,049,523

(304,141)

(374,213)

(98,258)

(84,350)

(1,043,349)

(1,346,287)

(270,140)

37,383

190,196

(252,147)

1,209,559

5,831

1,215,390

(289,853)

(42,697)

-

(54,143)

(14,636)

(13,886)

800,175

117,677,306,364

6,80

53,99

5,819,655

2,404,510

290,932

2,888,562

81,504

154,147

(3,938,639)

(2,593,884)

(630,954)

(179,593)

(534,208)

1,881,016

(768,839)

1,436,422

927,121

(190,101)

(450,016)

(114,567)

(59,838)

(1,012,444)

(1,209,141)

(277,832)

195,694

320,656

(334,793)

1,112,177

(51,678)

1,060,499

(433,884)

40,714

534,683

(23,917)

(15,106)

(69,258)

1,093,731

117,931,313,280

9,27

47,17

1st Semester2000

1st Semester1999

1st Semester2000

1st Semester1999

Statements of Income (In thousands of reais)

See the accompanying notes to the financial statements.

(*) (*)

11

Capitalstock

Capitalreserves

Revaluationreserves

Revenuereserves

Treasuryshares

Retainedincome

Total

2,000,000

500,000

-

-

-

-

-

-

-

-

-

-

-

-

-

2,500,000

500,000

2,500,000

500,000

-

-

-

-

-

-

-

-

-

3,000,000

500,000

421,257

(159,974)

1,746

4

-

-

307

-

-

-

-

-

-

-

-

263,340

(157,917)

264,390

(63,108)

933

-

-

-

-

-

-

-

-

202,215

(62,175)

15,506

-

-

-

-

-

-

(2,975)

214

-

-

-

-

-

-

12,745

(2,761)

12,739

-

-

-

-

(316)

-

-

-

-

-

12,423

(316)

2,739,164

(340,026)

-

-

-

(9,246)

-

2,975

-

(151,340)

-

53,460

423,530

567,083

-

3,285,600

546,436

3,744,960

(436,892)

-

-

(29,689)

316

(390,781)

-

37,708

781,578

-

3,707,200

(37,760)

(97,571)

-

-

-

(26,568)

27,180

439

-

-

-

-

-

-

-

-

(96,520)

1,051

(102,198)

-

-

(29,283)

29,689

-

-

-

-

-

-

(101,792)

406

-

-

-

-

-

-

-

-

-

151,340

1,069,203

(53,460)

(423,530)

(567,083)

(176,470)

-

-

-

-

-

-

-

-

390,781

754,162

(37,708)

(781,578)

(325,657)

-

-

5,078,356

-

1,746

4

(26,568)

17,934

746

-

214

-

1,069,203

-

-

-

(176,470)

5,965,165

886,809

6,419,891

-

933

(29,283)

-

-

-

754,162

-

-

(325,657)

6,820,046

400,155

Balances at January 1, 1999

Capital increase

Tax incentive investments credits

Reserves for donations of assets

Treasury shares

Stock options plan - Options exercized in theperiod

Resources operations - Argentine market - CEDEAR

Realization of the revaluation reserves of affiliates

Taxation of realization of the revaluation reservesof affiliates

Realization of the unrealized revenue

Net income

Appropriations from income:

Legal reserve

Statutory reserves

Unrealized revenue

Interest on capital

Balances at June 30, 1999

Changes for the period

Balances at January 1, 2000

Capital increase

Tax incentive investments credits

Treasury shares

Cancellation of treasury shares

Realization of the revaluation reserves of affiliates

Realization of the unrealized revenue

Net income

Appropriations from income:

Legal reserve

Statutory reserves

Interest on capital

Balances at June 30, 2000

Changes for the period

Statements of Changes inStockholders’ Equity

(In thousands of reais)

See the accompanying notes to the financial statements.

12

Itaú Itaú Consolidated

4,959,765754,162

185,215(453,974)

8,791-

16,9309,079

-

112,730-

215,4521,401,682

-1,348,403

-

1,253,212 202

- -

59,718 8,74936,322 3,092

- --

5,054,203 325,657 29,283

51,558 177,730

2,258,595100,657

- 810,222

- 503,530

- 463,603

9,106

- 238,022

- 86,240

-(94,438)

1,323,9791,229,541(94,438)

12,188,485 1,069,203

122,754 (1,128,950)

415,857 (534,683)

16,765(5,526) 18,680

- 1,916,063 1,013,432

901,189 2,835,523

-

-

- 310

- 49,850

30,720 21,947

5,295,455 149,892

- 4 -

11,570,970 176,470 26,568

80,582 234,925

4,331 30,692

3,623,452 3,102,048

- 2,423,845

- 636,998

-

793,217 - - -

437,842617,515

1,130,4231,747,938

617,515

6,053,453 1,093,731

181,962 (195,694)

716,513 (534,683)

-(19,340) 18,680

166,312 1,992,785

713,300-

1,275,539-

88,379

--

265,890 34,612

130,956 54,752 15,947

3,590 1,451

4 48,767

5,682,320 176,470 26,568

175,084 227,882 79,001 45,285

2,586,070 532,616 463,971 853,215 44,307

--

- - --

471,851371,133

1,707,8732,079,006

371,133

4,836,841 800,175

239,068(37,383)

15,504 --

3,085-

---

1,502,513-

1,275,934

37,544

632,434---

213,57322,031

88,406 2,670

122-

41,165 4,901,618

325,657 29,283

222,651 229,531 47,723

106,253

- 306,828

- 792,190 96,636

897,858 4,195

1,338,121 390,691 35,372 78,629

-(64,777)

1,621,9851,557,208(64,777)

Source of fundsNet incomeAdjusted net income

Depreciation, amortization and exhaustionEquity in net earnings of investeesGains on currency translationExtraordinary results of affiliatesGoodwill amortization

Net change in deferred incomeStock options plan - options exercized in the periodThird party funds

Increase in current and long-term liabilitiesDepositsMoney market repurchase commitmentsAcceptances and debenturesInterbank and interbranch accountsBorrowings and on-lending borrowingsOther liabilitiesTechnical provisions of insurance, capitalization and

pension plans operations - not vinculatedDecrease in current and long-term assets

Interbank funds appliedLeasing operationsOther assetsOther receivables

Disposal of fixed assets and investmentsAssets not for own useProperty for own useInvestments

Dividends received from subsidiaries and affiliatesDecrease in deferred expensesDonations of assets

Net change in minority stockholdingAplications of funds

Dividends paid and proposedPurchase of own shares

Investments inAssets not for own useProperty for own useInvestmentsIncrease in deferred expensesIncrease in current and long-term assets

Interbank funds appliedSecuritiesInterbank and interbranch accountsLoan operationsLeasing operationsOther receivablesOther assets

Decrease in current and long-term liabilitiesDepositsMoney market repurchase commitmentsAcceptances and debenturesBorrowing and on-lending borrowingsOther liabilities

Decrease/Increase in cash and cash equivalentsChanges in financial position

Cash and cash equivalentsBeginning of periodEnd of period

Decrease/increase in cash and cash equivalents

Statements of Changes inFinancial Position

06.30.2000 06.30.1999 06.30.2000 06.30.1999

(In thousands of reais)

13

Note 1 - Operations

The business of Banco Itaú S.A. is banking, comprising all authorized lines of business, including foreign exchange. TheBank is organized as a full service bank with commercial, investment, consumer credit and real estate portfolios.

Note 2 - Presentation of the financial statements

The financial statements of Banco Itaú S.A. (ITAÚ) and the consolidated financial statements (ITAÚ CONSOLIDATED) have beenprepared in accordance with accounting practices derived from the Brazilian Corporation Law and instructions issued by theBrazilian Securities and Exchange Commission (CVM) and the Central Bank of Brazil (BACEN), which include the use of estimatesnecessary to calculate accounting provisions.

a) Goodwill

In ITAÚ, the goodwill derived in prior periods from theacquisitions of Banco Bemge S.A. (BEMGE) and Banco delBuen Ayre S.A., and those resulting from the acquisitionsof Itaú Bankers Trust Banco de Investimentos S.A. (IBT)and of a portion of the shares of BPI - SGPS S.A. (BPI),are being amortized on the basis of future profitexpectations (10 years), in order to: (a) avoidunnecessary reductions in its stockholders' equity andits effects on operating limits; (b) avoid the need forpossible future capital increases; and (c) allow bettercomparability with the market practices.

In ITAÚ CONSOLIDATED, these goodwill were fullyamortized in prior periods, in order to (a) permit bettercomparability with the consolidated financial statementsof previous years, and (b) allow the assessment of itsresults and stockholders' equity using a conservativecriteria.

The following table presents the main indicators of ITAÚas of June 30, 2000 (Situation A), compared to thosethat would have reflected full amortization of the premiumsin reference (Situation B):

SituationA

SituationB

Stockholders’ equity - R$

Risk based capital ratio

Fixed assets ratio

Capital excess in relation to fixed assets ratio – R$

6,820,046

19.6%

63.1%

505,252

6,358,146

18.5%

64.1%

400,540

Notes to the Financial Statements Semesters ended on June 30, 2000 and 1999(In thousands of reais)

14

c) BACEN Resolution n º 2,723 of May 31, 2000

On May 31, 2000, BACEN issued Resolution 2,723,modifying the criteria for minimum stockholders' equityrelating to the degree of risk in an institution's assetstructure (Basel agreement). It also changes the maximumlimits for risk diversification and application of resourcesin fixed assets, including the following modifications inrelation to the previous regulations:

• Mandatory presentation of consolidated financialstatements, comprising all subsidiaries (StatutoryConsolidated), including Insurance, Pension andCapitalization companies and all those in which controlis the result of the sum of ownership interests held by aninstitution, with that of its managers, owners and relatedcompanies regardless of the percentage, as well as thosedirectly or indirectly acquired through investment funds;

• The above-mentioned limits must also be calculated onthe basis of these consolidated financial statements. Untilnow, these limits had been calculated based on thefinancial subsidiaries consolidated financial statements(Financial System Consolidated);

• Inclusion of ownership interests recorded in current assets,including those acquired through investment funds;

• Deduction of investments in fixed assets which exceed70% of stockholders' equity from the calculation basis forBasel Agreements Limits. The percentage will gradually bereduced to 50% by December 31, 2002.

The following table presents the effects in operating limitsfrom above mentioned changes:

Current Situation - Resolution 2,723

Prior Situation FinancialSystem Consolidated

Financial SystemConsolidated

StatutoryConsolidated

19.6%

61.9%

588,636

19.6%

63.1%

505,252

17.9%

45.3%

1,788,866

Based ratio

Fixed asset ratio

Available fixed asset excess

b) Risk based capital ratio

As of June 30, 2000, the risk based capital ratio was19,6% (24,0% as of June 30, 1999), which is in excessof the minimum requirements established by the Centralbank of Brazil of 11%.

The following table presents the effects in the risk basedcapital ratio considering the changes introduced byBACEN in the second half of 1999:

23.4%

0.7%

-2.1%

-2.0%

-0.4%

19.6%

Ratio calculated in accordance with the previous criteria

Effects from the changes in the weight

Effects from the risk weighted increase over tax credit

Excess foreign exchanges assets (1)

Interest rate risk

Ratio calculated in accordance with the current criteria

06.30.2000

(1) Basically due to permanent foreign investments in the amount of R$ 2,748,153 (Note 16 c)


15

Note 3 - Consolidated Companies

The consolidated financial statements include ITAÚ and its direct and indirect subsidiaries, including those listed below:

(a) This bank was merged into Banco Itaú Argentina S.A. onOctober 5, 1999.

(b) The name of the bank was changed to Banco ItaúArgentina S.A. after the merger with Banco del BuenAyre S.A.

(c) Subsidiaries of Investimentos Itaú S.A. (ITAÚSA) areincluded in the consolidation to enhance thepresentation of the Group's business with approval fromthe Brazilian Securities and Exchange Comission (CVM).

(d) Investment was acquired on August 31, 1999.

(e) New name of Itaú Bankers Trust Banco de InvestimentoS.A. - IBT which since September 10, 1999 is completelycontrolled by ITAÚ.

(f) Investments are proportionally included in theconsolidation.

(g) Investment is proportionally included in theconsolidation since June 30, 2000.

Participation %

Banco Banerj S.A. and subsidiaries

Banco Bemge S.A. and subsidiaries

Banco del Buen Ayre S.A.

Banco Francês e Brasileiro S.A.

Banco Itaú Buen Ayre S.A.

Banco Itaú Europa Luxembourg S.A. and subsidiaries

Banco Itaú Europa, S.A. and subsidiaries

BFB Leasing S.A. Arrendamento Mercantil

Cia. Itauleasing de Arrendamento Mercantil

Intrag Distribuidora de Títulos e Valores Mobiliários Ltda.

Itaú Banco de Investimento S.A.

Itau Bank, Ltd.

Itauvest Banco de Investimento S.A. and subsidiaries

Itaú Corretora de Valores S.A.

99.99%

99.85%

-

100.00%

99.99%

19.52%

19.53%

99.99%

99.99%

99.99%

99.99%

100.00%

100.00%

99.99%

99.99%

99.85%

99.49%

100.00%

100.00%

24.56%

24.58%

99.99%

99.98%

-

99.99%

100.00%

53.75%

99.99%

06.30.2000 06.30.1999

Financial Institutions

Afinco Ltda. and Subsidiaries

Armazéns Gerais Itaú Ltda.

Credicard S.A. Administradora de Cartões de Crédito and Subsidiaries

Itaú Capitalização S.A. and Subsidiaries

Itaucard Administradora de Cartões de Crédito e Imobiliária Ltda.

Itaú Gráfica Ltda.

Itaú Previdência e Seguros S.A.

Itaú Rent Administração e Participações S.A.

Itaú Seguros S.A. and Subsidiaries

Itaúsa Export S.A. and Subsidiaries

Redecard S.A.

SERASA - Centralização de Serviços dos Bancos S.A.

99.99%

99.78%

33.33%

99.99%

99.99%

99.99%

99.99%

99.99%

95.98%

22.23%

31.94%

31.64%

99.85%

99.78%

33.28%

99.85%

99.84%

99.84%

99.85%

99.85%

95.83%

27.98%

31.89%

30.80%

(a)

(b)

(c)

(c)

(d)

(e)

(f)

(c)

(f)

(g)

Participation %06.30.2000 06.30.1999

Non-financial Institutions


16

a) Basis of consolidation

All material intercompany profits, transactions andbalances have been eliminated on consolidation.

The difference in net income and shareholders' equitybetween ITAÚ and ITAÚ CONSOLIDATED is the result of theadoption of different criteria for amortization of thegoodwill that was originated on the acquisition ofinvestment and the elimination of unrealized incomeresulting from transactions between the companiesconsolidated. The respective taxes were deferred (Note 12d).

b) Interbank funds applied, loan operations, tradedreceivable discounted, financing, remunerateddeposits, money market repurchase commitments andother receivables and payables

Transactions subject to monetary correction or foreignexchange rates are recorded at present value calculated"pro rata die" based on the variation of the contractualindex. Real estate loans are adjusted to present valuebased on the discounted cash flow of future installments.Transactions with predetermined remuneration rates arerecorded at their redemption value, adjusted for anyunearned income/expenses.

c) Securities

Securities are recorded at the lower of price-level restatedcost and adjusted by a provision to reflect its marketvalue.

d) Allowance for loan losses

The balance of the allowance for loan losses wasconstituted based on an analysis of credit risk in the

loan portfolio in amounts considered sufficient to coverpossible losses. As of June 30, 2000, the specificallowance for loan losses (Note 6d I), which is constitutedfor operations that have installments overdue more than14 days, with renegotiations made, or under respon-sibility of companies in process of debt rehabilitation orbankruptcy, is highlighted in long-term assets. As ofJune 30, 1999 the amount highlighted in long-term assetswas related to a 100% of the non-accrual balances.

e) Investments

Investments in subsidiaries and affiliates are accountedfor by using the equity method. The financial statementsof foreign branches and subsidiaries were respectivelyconsolidated in ITAÚ and ITAÚ CONSOLIDATED, adapted,when relevant, to comply with Brazilian accountingstandards, and translated into reais. Other investmentsare stated at monetarily corrected cost at December 31,1995.

f) Fixed assets

Fixed assets are stated at cost of acquisition orconstruction less accumulated depreciation, monetarilycorrected at December 31, 1995. For insurance, pensionplans and capitalization subsidiaries fixed assets areadjusted to market value, through revaluations supportedby appraisal reports. Depreciation and amortization arerecorded using the straight line method, based onmonetarily corrected cost over the useful lives ofdepreciable assets at the following annual rates:

g) Deferred expenses

Deferred organization and expansion expenses representimprovements in third party properties and are linearlyamortized over the respectively rental periods, andacquisition and development of logistic, which are linearlyamortized based on contract terms, limited to 5 years.

Buildings used in operations

Installations, furnishings, equipment and security and communications systems

EDP systems

4%

10% to 25%

20% to 50%

%

(*) Over the period from May 1, 1999 to January 31, 2000, the social contribution rate was 4%. Beginning in February2000, the rate was reduced to 1%. This rate will remain in effect until December 31, 2002.

Amounts subject to litigation have been fully provided.

06.30.2000

Income tax

Additional income tax

Social contribution

Additional social contribution (*)

PIS

COFINS

15.00%

10.00%

8.00%

1.00%

0.65%

3.00%

06.30.1999

15.00%

10.00%

8.00%

4.00%

0.65%

3.00%

Note 4 - Summary of Significant Accounting Practices

Notes to the Financial Statements

h) Income tax, social contribution, PIS and COFINS

The provisions were calculated utilizing the appropriatecalculation basis considering pertinent legislation foreach tax at the rates shown below:

Semesters ended on June 30, 2000 and 1999(In thousands of reais)

17

Note 5 - Securities and Interbank Deposits

Itaú Consolidated

Securities and interbank deposits

Valuation allowance

Net book value

18,392,258

(870,983)

17,521,275

06.30.2000 06.30.1999

17,831,953

(903,463)

16,928,490

13,512,909

(861,144)

12,651,765

06.30.2000 06.30.1999

14,472,223

(887,996)

13,584,227

b) Portfolio Composition and Maturities - ITAÚ CONSOLIDATED

Maturity in days % of TotalPortfolio

Total

179,704

41,418

-

3,974

197

-

-

132,873

1,242

68,220

64,562

-

3,658

2,768,010

1,789,654

311,191

179,829

-

17,367

2,542

310,890

18,242

138,295

3,015,934

16.9%

28.5%

1,940,389

506,354

233,483

784,945

282,019

-

54,026

67,931

11,631

79

-

-

79

2,876,786

758,492

1,877,464

-

3,878

36,245

4,819

-

12,291

183,597

4,817,254

27.0%

24.5%

3,591,982

776,402

577,582

1,260,915

731,483

-

14,803

211,315

19,482

32,598

32,547

51

-

928,627

175,876

621,211

-

4,355

36,932

2,160

-

60,727

27,366

4,553,207

25.5%

13.5%

4,330,873

737,457

27,365

1,469,383

1,363,949

-

-

653,745

78,974

215,972

-

214,172

1,800

898,713

16,383

27,650

-

366,574

192,395

-

-

203,649

92,062

5,445,558

30.5%

33.6%

10,042,948

2,061,631

838,430

3,519,217

2,377,648

-

68,829

1,065,864

111,329

316,869

97,109

214,223

5,537

7,472,136

2,740,405

2,837,516

179,829

374,807

282,939

9,521

310,890

294,909

441,320

17,831,953

100.0%

56.3%

11.6%

4.7%

19.7%

13.3%

0.0%

0.4%

6.0%

0.6%

1.8%

0.5%

1.2%

0.0%

41.9%

15.4%

15.9%

1.0%

2.1%

1.6%

0.1%

1.7%

1.7%

2.5%

100.0%

11,713,276

3,041,255

1,513,489

3,853,127

1,497,881

862,862

62,162

820,141

62,359

278,612

79,955

160,652

38,005

6,400,370

2,782,911

1,050,503

191,951

66,136

1,326,105

28,541

274,883

146,794

532,546

18,392,258

63.7%

16.5%

8.2%

20.9%

8.1%

4.7%

0.3%

4.5%

0.4%

1.5%

0.4%

0.9%

0.2%

34.8%

15.1%

5.7%

1.0%

0.4%

7.2%

0.2%

1.5%

0.8%

2.9%

100.0%

31-1800-30 181-365 Over 365

June 30, 2000

Public securities - Domestic

Financial Treasury Bill

Treasury bills

Treasury Notes (1)

Central Bank Notes (1)

Central Bank Bonds

Central Bank Bills

DCB - Debt comission bond and otherBrazilian debt securities

Others

Public securities - Foreign

Bond's Argentina

Bond's Portugal

Others

Private securities - Issued by companies

Interbank deposit applied

Bank certificates of deposit/mortgages

Shares in publicly traded companies (2)

Debentures (2)

Mortgages Bills

Options Premiuns

Quotas of foreign investment funds

Euro Bond’s and others

Others (2) (3)

Total

% of maturity - 06/30/00

% of maturity - 06/30/99

% of TotalPortfolio

Total

June 30, 1999

(1) Includes R$ 225,688 (R$ 178,195 of NTN-D and R$ 47,493 of NBC-E) which are related to securities funded by foreign resources and that will be held to maturity, inaccordance with second article of BACEN Circular 2913 of June 12, 1999.

(2) Includes the own securities portfolio (in accordance with joint Brazilian Central Bank and Securities and Exchange Commission rule 28/1990) as stated in BACEN'sConsolidated Operating Financial System totaled R$ 1.652.927. The shares are held in custody by the stock exchange and the debentures are held by CETIP.

(3) Includes R$ 136,861 relating to investments in fixed income funds managed by third parties and R$ 135,849 relating to investments in equity funds.

a) Summary

Itaú

Securities which comprise mutual fund portfolios in which ITAÚ and its subsidiaries hold quotas are included above.Investments in third parties funds remain classified in mutual funds.


18

c) Changes in the valuation allowance for securities

162,038

818,111

(119,005)

(6,498)

(112,507)

861,144

211,244

649,900

885,274

9,946

(7,224)

(637)

(6,587)

887,996

142,096

745,900

271,526

750,883

(151,426)

(37,738)

(113,688)

870,983

221,083

649,900

902,301

14,971

(13,809)

(3,008)

(10,801)

903,463

157,563

745,900

Itaú

Balances as of December 31, 1998

Provisions

Write-offs:

Reversals

Losses for sales

Balances as of June 30, 1999

Minimum provision required

Additional provision (*)


Provisions

Write-offs:

Reversals

Losses for sales



Additional provision (*)

Itaú Consolidated

(*) Additional provisions were constituted to cover the risk of future price fluctuations.


19

Note 6 - Loan and leasing portfolio

a) Summary

(1) Composed by honored endorsements and sureties, receivable for advances, commissions, debtors on purchase of assets and receivables.

(2) Advances on exchange contracts are recorded in other liabilities.

(3) Endorsements and sureties are recorded in memorandum accounts.


06.30.2000 06.30.1999 06.30.2000 06.30.1999

Loan and leasing operations

Other receivables (1)

Advances on exchange contracts (2)

Total

Endorsements and sureties (3)

Total with endorsements and sureties

12,488,429

127,223

1,233,451

13,849,103

2,778,614

16,627,717

10,663,636

68,928

1,322,381

12,054,945

1,898,387

13,953,332

16,834,040

165,878

1,233,503

18,233,421

3,338,654

21,572,075

13,975,712

109,388

1,322,691

15,407,791

2,217,229

17,625,020

b) Credit portfolio by risk level

I - Composition by type of operation and level of risk

TotalEBA C

ITAÚ

Risk levels

Loans operations

Loans and tradereceivables discounted

Financing

Farm and agribusinessfinancing

Real state financing

Securities financing

Leasing operations


Advances on exchangecontracts (2)

Total

F G06.30.1999

AA H Total

3,638,125

2,412,288

1,038,964

186,873

-

-

-

15,458

592,243

4,245,826

4,013,724

2,042,849

864,971

321,014

784,890

-

-

67,381

277,211

4,358,316

2,352,192

836,306

385,371

95,666

1,034,849

-

-

36,066

291,827

2,680,085

1,267,292

574,318

112,586

22,817

557,571

-

-

3,277

64,648

1,335,217

406,300

287,858

31,479

2,514

84,449

-

-

912

6,529

413,741

231,661

14,279

14,808

170,408

32,166

-

-

31

-

231,692

278,356

154,616

5,951

6,185

111,604

-

-

1,441

236

280,033

56,853

16,767

361

26

39,699

-

-

40

-

56,893

243,926

87,238

3,738

3,315

149,635

-

-

2,617

757

247,300

12,488,429

6,426,519

2,458,229

808,818

2,794,863

-

-

127,223

1,233,451

13,849,103

10,662,288

4,588,571

2,179,076

730,094

3,119,460

45,087

1,348

68,928

1,322,381

12,054,945

06.30.2000

Risk levels

Loans operations

Loans and tradereceivables discounted

Financing

Farm and agribusinessfinancing

Real state financing


Leasing operations


Advances onexchange contracts (2)

Total

06.30.199906.30.2000

4,300,041

3,054,387

1,057,244

186,873

1,537

-

13,049

26,993

592,243

4,932,326

5,965,555

3,991,599

861,596

328,244

784,116

-

450,052

76,200

277,211

6,769,018

3,045,008

1,453,030

441,748

107,932

1,042,298

-

70,773

48,715

291,827

3,456,323

1,381,730

687,169

113,717

22,865

557,979

-

60,957

6,681

64,648

1,514,016

483,807

360,914

35,487

2,554

84,852

-

22,820

1,181

6,529

514,337

268,903

51,065

15,108

170,407

32,323

-

5,918

148

-

274,969

327,016

201,685

7,229

6,200

111,902

-

9,790

1,586

236

338,628

76,380

36,011

542

58

39,769

-

3,959

148

-

80,487

338,760

138,252

6,362

6,465

187,681

-

9,522

4,226

809

353,317

16,187,200

9,974,112

2,539,033

831,598

2,842,457

-

646,840

165,878

1,233,503

18,233,421

13,547,747

7,385,770

2,182,578

761,460

3,172,852

45,087

427,965

109,388

1,322,691

15,407,791

(1) Composed by honored endorsements and sureties, receivable for advances, comissions, debtors on purchase of assets and receivables.

(2) Recorded in other liabilities.

D

TotalEBA C D F GAA H Total

ITAÚ CONSOLIDATED


20

II -Composition by business sector

Itaú

Public sector

Industry

Chemicals and petrochemicals

Others

Private sector

Industry

Steel, mettallurgy and heavy industry

Chemicals and petrochemicals

Food and beverages

Paper and pulp

Light and heavy vehicles

Electrical and electronics

Textiles and clothing

Autoparts and accessories

Fertilizers, insecticides, and crop protection

Pharmaceuticals

Others

Commerce

Services

Financial

Energy, telecommunications, and others

Other

Housing

Individuals

Businesses

Primary sector

Farming and livestock

Mining

Other - Individuals

Credit cards

Other

Other - Businesses

Total loans

06.30.2000 06.30.1999

591,371

591,371

571,966

19,405

13,257,732

4,028,302

747,930

762,776

789,858

316,160

250,582

240,899

172,584

77,650

130,868

61,854

477,141

660,266

2,670,724

597,745

1,406,829

666,150

2,794,863

2,435,327

359,536

676,635

362,635

314,000

2,283,381

-

2,283,381

143,561

13,849,103

270,325

270,325

266,598

3,727

11,784,620

4,325,178

708,714

886,908

772,844

394,843

248,964

350,063

225,351

86,537

94,073

43,315

513,566

666,453

1,465,722

531,554

288,249

645,919

3,119,460

2,642,312

477,148

691,616

426,339

265,277

1,376,460

-

1,376,460

139,731

12,054,945

674,491

674,491

654,630

19,861

17,558,930

4,787,559

816,941

826,374

970,554

393,952

364,425

299,826

176,303

90,770

147,232

70,139

631,043

829,738

3,062,919

670,132

1,595,209

797,578

2,842,457

2,479,349

363,108

812,233

398,164

414,069

5,020,729

1,618,574

3,402,155

203,295

18,233,421

276,353

276,353

266,724

9,629

15,131,438

4,888,075

786,163

1,030,081

872,551

459,832

297,145

349,544

244,620

97,124

95,730

44,920

610,365

830,584

1,781,264

611,238

335,655

834,371

3,172,852

2,695,704

477,148

894,745

556,034

338,711

3,219,739

1,160,315

2,059,424

344,179

15,407,791

06.30.2000 06.30.1999

Itaú Consolidated


21

Maturities (days)

4,205,922

478,671

672,222

281,820

1,169,129

583,259

1,020,821

39,904

39,904

-

-

-

-

-

-

4,245,826

AAA B C TotalH

Itaú

4,340,768

1,035,770

473,366

323,399

582,520

606,647

1,319,066

17,548

16,722

826

-

-

-

-

-

4,358,316

2,640,381

398,140

351,160

177,349

263,018

337,824

1,112,890

39,704

12,360

26,883

461

-

-

-

-

2,680,085

1,300,437

281,688

152,201

71,073

112,572

134,498

548,405

34,780

9,374

10,002

14,201

1,203

-

-

-

1,335,217

372,740

101,296

57,625

17,503

27,750

63,157

105,409

41,001

6,002

8,944

11,833

13,597

625

-

-

413,741

217,822

16,232

28,727

1,076

7,885

55,148

108,754

13,870

424

807

1,827

1,808

9,004

-

-

231,692

243,284

23,858

16,913

20,252

35,643

46,006

100,612

36,749

3,271

7,511

4,584

3,756

16,885

742

-

280,033

37,760

1,488

4,664

1,148

3,042

4,232

23,186

19,133

418

860

1,494

1,706

13,826

829

-

56,893

163,032

8,510

5,299

5,327

15,472

20,921

107,503

84,268

1,001

3,333

5,903

6,350

24,652

33,208

9,821

247,300

13,522,146

2,345,653

1,762,177

898,947

2,217,031

1,851,692

4,446,646

326,957

89,476

59,166

40,303

28,420

64,992

34,779

9,821

13,849,103

ED F G

Risk Levels

III- Composition by maturity and level of risk, on 06.30.2000

Falling due installments

01 - 30

31 - 60

61 - 90

91 - 180

181 - 360

Over 360

Past due installments

01 - 14

15 - 30

31 - 60

61 - 90

91 - 180

181 - 360

Over 360

Total

Maturities (days)

4,883,291

653,242

745,385

346,089

1,186,763

694,806

1,257,006

49,035

49,035

-

-

-

-

-

-

4,932,326

AAA B C TotalH

Itaú Consolidated

6,746,783

2,523,213

549,229

374,017

740,396

821,597

1,738,331

22,235

21,409

826

-

-

-

-

-

6,769,018

3,238,844

672,820

391,059

224,744

363,411

384,534

1,202,276

217,479

13,840

203,178

461

-

-

-

-

3,456,323

1,425,498

312,728

161,701

77,953

134,398

161,049

577,669

88,518

10,813

12,095

64,408

1,202

-

-

-

1,514,016

432,316

114,533

68,109

20,849

36,600

75,652

116,573

82,021

6,993

10,703

13,166

50,534

625

-

-

514,337

226,235

16,906

31,791

1,460

8,906

56,643

110,529

48,734

605

1,111

2,327

2,266

42,425

-

-

274,969

261,342

27,467

18,280

21,470

38,752

50,105

105,268

77,286

3,598

8,056

5,156

4,460

55,274

742

-

338,628

41,160

1,843

4,915

1,380

3,656

5,170

24,196

39,327

512

1,018

1,775

2,044

33,146

832

-

80,487

184,618

10,282

6,395

6,282

18,455

24,769

118,435

168,699

1,281

4,379

6,904

7,255

40,818

51,419

56,643

353,317

17,440,087

4,333,034

1,976,864

1,074,244

2,531,337

2,274,325

5,250,283

793,334

108,086

241,366

94,197

67,761

172,288

52,993

56,643

18,233,421

ED F G

Risk Levels

Falling due installments

01 - 30

31 - 60

61 - 90

91 - 180

181 - 360

Over 360

Past due installments

01 - 14

15 - 30

31 - 60

61 - 90

91 - 180

181 - 360

Over 360

Total


22

c) Concentration of credit (*)

Itaú ConsolidatedItaú

Largest debtor

20 largest debtors

50 largest debtors

100 largest debtors

06.30.2000

750,472

4,291,515

6,279,757

7,708,392

4.5%

25.8%

37.8%

46.4%

(*) Balances include endorsements and sureties.

% oftotal

Risk06.30.1999

394,566

3,028,486

4,657,108

5,967,096

2.8%

21.7%

33.4%

42.8%

% do Total

Risk06.30.2000

750,746

4,838,477

7,156,781

9,061,443

3.5%

22.4%

33.2%

42.0%

% do Total

Risk

457,590

3,508,955

5,297,499

6,765,245

2.6%

19.9%

30.1%

38.4%

% do Total

Risk06.30.1999

d) Allowance for loan losses

As of March 31, 2000, Resolution 2,682 of December 21,1999 modified rules for establishing the provision fordoubtful loans, amongst which we highlight the following:

The new criteria introduced by this Resolution includes:

• A provision has to be made, once the loans has beenprovided, based on a periodic analysis of the quality of theclient/loan and not just in the event of default as requiredby the Regulations in force until February 29, 2000.

• Based exclusively on delinquency, write-offs can be made360 days after the due date or 720 days for operationswith a term of over 36 months. Other factors relating tothe analysis of the quality of the customer/credit can resultin write-offs before these limits. However, this can neverbe done in less than 180 days after the due date.

In addition to these criteria for establishing provisions,operations that are past due or non-accrued are no longer

presented separately in the balance sheet. Furthermore,for purposes of comparison, balances as of June 30, 1999were reclassified.

Although BACEN Resolution 2,697 of February 24, 2000permits financial institutions to be gradually introducedto the criteria of BACEN Resolution 2,682, ITAÚ and ITAÚCONSOLIDATED financial statements as of June 30, 2000already reflect these criteria.

BACEN Circular 2,974 of February 24, 2000 establishedthat the adjustments from the provisioning differencefor operations contracted until December 31, 1999, fromapplying criteria established under BACEN Resolutions2,682 and 2,697 have to be recorded in retained earnings.The adoption of new criteria by ITAÚ and ITAÚCONSOLIDATED has not resulted in any adjustments to bemade in retained earnings.

I - Changes in the allowance for loan losses

Itaú

858,198

97,666

296,884

(235,728)

1,017,020

1,013,454

191,960

(60,431)

1,144,983

272,350

354,323

518,310

1,340,240

-

534,208

(571,083)

1,303,365

1,253,371

315,854

(126,501)

1,442,724

437,763

388,961

616,000


Balances derived from BFB spin-off

Provisions for the period

Write-offs



Provisions for the period

Write-offs


Specific provision (1)

Generic provision (2)

Excessive provision

(1) For operations for which installments are overdue more than 14 days, with renegotiations made, or under the responsibilityof companies in process of debt rehabilitation or bankruptcy.

(2) For operations not covered by the previous item, but due to the classification of the client or the operation.

As of June 30, 2000, the balance of the provision in relation to the credit portfolio represented 8.3% (8.4% as of June 30,1999) in ITAÚ and 7.9% (8,5% as of June 30, 1999) in ITAÚ CONSOLIDATED.

Itaú Consolidated


23

II - Provision for loan losses by risks level

Itaú

Risk levels%

provisioned

0.0%

0.5%

1.0%

3.0%

10.0%

30.0%

50.0%

70.0%

100.0%

4,245,826

4,358,316

2,680,085

1,335,217

413,741

231,692

280,033

56,893

247,300

13,849,103

-

-

969

5,150

7,612

13,039

30,054

38,364

177,162

272,350

-

21,792

25,832

34,906

33,763

56,469

109,962

1,461

70,138

354,323 518,310 1,144,983

AA

A

B

C

D

E

F

G

H

Total

Creditportfolio

Minimum provision requiredSpecific Generic

Excessiveprovision

Existingprovision

Itaú Consolidated

Risk levels%

provisioned

0.0%

0.5%

1.0%

3.0%

10.0%

30.0%

50.0%

70.0%

100.0%

4,932,326

6,769,018

3,456,323

1,514,016

514,337

274,969

338,628

80,487

353,317

18,233,421

-

-

4,462

7,388

12,095

24,924

53,251

54,547

281,096

437,763

-

33,845

30,101

38,032

39,339

57,567

116,063

1,793

72,221

388,961 616,000 1,442,724

AA

A

B

C

D

E

F

G

H

Total

Creditportfolio

Minimum provision requiredSpecific Generic

Excessiveprovision

Existingprovision

III - Main Accounts Comparative, as of June 30, 2000, related to the criteria of Resolutions1,748/90 and 2,682/99

Itaú

Credit portfolio

13,849,103

(257,349)

-

-

13,591,754

-

257,349

(130,683)

-

126,666

272,350

-

(130,683)

(15,001)

126,666

354,323

-

-

(354,323)

-

1,144,983

-

(130,683)

-

1,014,300

518,310

-

-

369,324

887,634

Current situation (Res. 2,682)

Reversal of non-accrual loans

Reversal of Write-Offs (*)

Reversal of Res. 2,682 adjustments

Prior situation (Res. 1,748)

Non-accrual andoverdue loans


Specific Generic

Excessiveprovision

Existingprovision

Itaú Consolidated

Credit portfolio

18,233,421

(447,344)

-

-

17,786,077

-

447,344

(192,212)

-

255,132

437,763

-

(192,212)

9,581

255,132

388,961

-

-

(388,961)

-

1,442,724

-

(192,212)

-

1,250,512

616,000

-

-

379,380

995,380

Current situation (Res. 2,682)

Reversal of non-accrual loans

Reversal of Write-Offs (*)

Reversal of Res. 2,682 adjustments

Prior situation (Res. 1,748)

Non-accrual andoverdue loans


Specific Generic

Excessiveprovision

Existingprovision

(*) They are no longer made in the accelerated way (61 days after recorded as non-accrual loan) as required by Resolution 2,682/99.


24

Note 7 - Investments - Composition

137,035

38,058

98,156

821

142,596

142,596

291,958

227,861

18,419

24,147

21,531

156,210

32,381

70,390

53,439

108,928

108,928

278,948

216,218

16,341

25,018

21,371

Investments in subsidiaries and affiliates:

Domestic

Union Carbide do Brasil S.A.

AGF Brasil Seguros S.A.

Others

Foreign

BPI - SGPS S.A. (BPI)

Other investments:

Tax incentive investments

Equity securities

Shares and quotas

Others

Itaú Consolidated

06.30.2000 06.30.1999

(1)

(2)

(1) Investment resulting from the usage of privatization currencies.

(2) Includes investments in DURAFLORA S.A. disposed of on June 29,.2000 and SERASA, which was proportionally consolidated since June 30, 2000.

e) Credit recoveries and renegociated

I- Credit recoveries offset against the provision for loan losses

Itaú

100,750

46,600

54,150

89,689

46,922

42,767

137,389

51,169

86,220

109,804

48,582

61,222

1st semester - 2000

Renegotiations

Receipts

1st semester - 1999

Renegotiations

Receipts

Itaú Consolidated

II - As of June 30, 2000, the balances of renegotiated credits amounted to R$ 267,909 (ITAÚ) (R$ 241,522 as of June30, 1999) and R$ 319,853 (ITAÚ CONSOLIDATED) (R$ 258,257 as of June 30, 1999).

f) Provision for loan losses expenses, net of recoveries

Itaú

Provision for loan losses

(-) Recoveries

Provision for loan losses expenses, net of recoveries

Itaú Consolidated

191,960

(100,750)

91,210

1st semester 2000

296,884

(89,689)

207,195

1st semester 1999

315,854

(137,389)

178,465

1st semester 2000

534,208

(109,804)

424,404

1st semester 1999


25

Note 8 - Deposits and funding - Composition by maturities

a) Deposits - ITAÚ CONSOLIDATED

b) Repurchase commitment - ITAÚ CONSOLIDATED

0-30

4,233,989

14,474,966

114,557

1,336,159

20,159,671

31-180

-

14,953

135,098

1,101,448

1,251,499

181-365

-

-

3

362,151

362,154

Over 365

-

-

1,081

113,165

114,246

Total

4,233,989

14,489,919

250,739

2,912,923

21,887,570

06.30.1999

Total

3,656,245

14,967,303

158,560

2,591,236

21,373,344

Maturities in days

Demand deposits

Savings accounts

Interbank

Time deposits

Total

06.30.2000

0-30

752,921

2,050,670

-

2,803,591

31-180

437,095

230,174

230

667,499

181-365

283,517

474,916

2,635

761,068

Over 365

11,337

399,173

29,790

440,300

06.30.1999

Total

3,860,045

655,064

1,121

4,516,230

Total

1,484,870

3,154,933

32,655

4,672,458

Maturities in days

Financial institutions

Non financial companies

Individuals

Total

06.30.2000

c) Foreign borrowings in securities

Maturities in days 0-30 31-180 181-365 Over 365 Total Total

06.30.2000 06.30.1999

ITAÚ

Issued in Brazil:

Commercial paper

Fixed rate notes

ITAÚ CONSOLIDATED

Issued in Brazil:

Commercial paper

Fixed rate notes

Issued abroad:

Commercial paper

11,278

11,278

2,220

9,058

11,278

11,278

2,220

9,058

-

-

34,671

34,671

12,348

22,323

51,710

33,788

12,348

21,440

17,922

17,922

179,033

179,033

-

179,033

125,026

125,026

-

125,026

-

-

620,201

620,201

289,405

330,796

595,202

595,202

264,406

330,796

-

-

845,183

845,183

303,973

541,210

783,216

765,294

278,974

486,320

17,922

17,922

852,203

852,203

318,196

534,007

798,296

798,296

318,196

480,100

-

-

Non trade related

ITAÚ

Issued abroad:

Euronotes

Bankers acceptance

Commercial paper

Fixed rate notes

ITAÚ CONSOLIDATED

Issued abroad:

Euronotes

Bankers acceptance

Commercial paper

Fixed rate notes

TOTAL ITAÚ

TOTAL ITAÚ CONSOLIDATED

-

-

-

-

-

-

-

-

-

-

-

-

11,278

11,278

327,705

327,705

198,721

128,984

-

-

326,171

326,171

197,187

128,984

-

-

362,376

377,881

633,780

633,780

633,780

-

-

-

596,711

596,711

596,711

-

-

-

812,813

721,737

200,459

200,459

180,000

-

-

20,459

200,009

200,009

179,550

-

-

20,459

820,660

795,211

1,161,944

1,161,944

1,012,501

128,984

-

20,459

1,122,891

1,122,891

973,448

128,984

-

20,459

2,007,127

1,906,107

1,137,030

1,137,030

932,051

196,456

8,523

-

1,143,348

1,143,348

929,543

196,456

9,444

7,905

1,989,233

1,941,644

Trade Related


26

Note 9 - Foreign exchange operations


06.30.2000 06.30.1999 06.30.2000 06.30.1999

Assets - Other receivables

Exchange purchases pending settlement

Foreign currency bills exchange and term documents

Exchange sale rights

(-) Local currency advances received

Income receivable on advances granted

Liabilities - Other liabilities

Exchange sales pending settlement

Exchange purchases obligations

(-) Advances on exchange contract

Others

Memorandum accountsImport credits outstanding

2,690,172

1,995,416

19,416

771,517

(130,476)

34,299

1,553,176

766,468

2,012,207

(1,233,451)

7,952

53,536

2,653,904

2,143,649

27,829

766,556

(322,418)

38,288

1,467,594

768,309

2,010,865

(1,322,381)

10,801

70,246

2,721,751

2,045,084

19,416

753,687

(130,747)

34,311

1,585,576

748,822

2,062,142

(1,233,503)

8,115

53,626

2,604,728

2,131,500

27,829

735,522

(328,479)

38,356

1,418,339

731,568

1,998,487

(1,322,691)

10,975

70,321


27

Note 10 - Income tax and social contribution

a) Income tax and social contribution due on operations for the period are shown below:

Net income before income tax and social contribution

Taxes payable (income tax and social contribution ) at rates of 25% and 9%

(*) respectively

Increases/Decreases in income tax and social contribution payable

as the result of:

Permanent (inclusions)/exclusions

Equity share in income of subsidiaries and affiliates

Non-deductible expenses and provisions

Interest on capital

Temporary (inclusions)/exclusions

Allowance for loan losses

Labor provisions, tax contingencies and other expenses

Other adjustments

Income tax of foreign branches and subsidiaries

Income tax and social contribution from operations of the semester

Withholding tax on distribution of interest on capital

Total income tax and social contribution

b) The composition of accounting adjustments, which refer to temporary additions to deferred income tax and socialcontribution is shown below:

Deferred income tax and social contribution related to temporary additions

Tax credits

Constitution (reversal) over temporary inclusions/exclusions

Constitution (reversal) over tax loss carry

Constitution (reversal) over initial balance of tax loss carry/write-off and others

(42,697)

20,518

(8,635)

(54,580)

40,714

102,052

9,367

(70,705)

06.30.2000 06.30.1999

(*)According to Note 4h

c) The balances of tax credits and deferred tax liabilities (income tax and social contribution) as of June 30, 2000 werecomprised as follows:

Tax credits:

Temporary differences:

Provision for loan losses

Valuations allowance for Securities/Interbank Deposits

Provisions for interest on capital

Provision for tax contingencies

Provision for labor contingencies

Provision for civil contingencies

Real Estate allowances

Tax losses

Other

Total

Deferred tax liabilities:

Temporary differences:

Excess of depreciation on leasing operations

Revaluation reserves

Taxation of foreign branches and subsidiaries

Other provisions

Total

544,335

159,785

116,048

87,131

95,658

35,273

51,315

201,802

237,700

1,529,047

83,315

5,914

9,362

3,597

102,188

(40,629)

(42,670)

25,166

12,424

5,555

14,699

(2,004)

(4,666)

(12,385)

(44,510)

25,974

(297)

26,426

629

52,732

503,706

117,115

141,214

99,555

101,213

49,972

49,311

197,136

225,315

1,484,537

109,289

5,617

35,788

4,226

154,920

Priorperiod

Changes Presentperiod

The average expected realization period is one year.

1,215,390

(413,233)

185,890

12,710

63,301

109,879

(36,084)

32,149

(68,233)

(26,426)

(26,426)

(289,853)

(48,848)

(338,701)

913,509

(310,593)

298,044

154,351

33,814

109,879

(37,418)

26,284

(63,702)

(24,145)

(24,145)

(74,112)

(48,848)

(122,960)

06.30.2000 06.30.1999ITAÚ ITAÚ CONSOLIDATED

558,341

(201,351)

287,045

400,133

(162,704)

49,616

(101,559)

122,112

(223,671)

(17,980)

(17,980)

(33,845)

(26,470)

(60,315)

1,060,499

(369,409)

71,682

57,135

(39,752)

54,299

(113,960)

108,210

(222,170)

(22,197)

(22,197)

(433,884)

(26,470)

(460,354)

(29,096)

31,215

(10,348)

(49,963)

41,301

60,537

-

(19,236)

06.30.2000 06.30.1999

ITAÚ ITAÚ CONSOLIDATED

413,955

157,876

116,048

41,525

33,520

20,497

39,824

17,274

50,658

891,177

-

-

-

-

-

(26,284)

(43,791)

25,166

(551)

8,242

8,890

(2,367)

(7,303)

8,902

(29,096)

-

-

24,145

-

24,145

387,671

114,085

141,214

40,974

41,762

29,387

37,457

9,971

59,560

862,081

-

-

24,145

-

24,145

Priorperiod

Changes Presentperiod

ITAÚ ITAÚ CONSOLIDATED

Notes to the Financial Statements

06.30.2000 06.30.1999

Semesters ended on June 30, 2000 and 1999(In thousands of reais)

28

Note 11 - Others

a) Other receivables

b) Other Liabilities

Credit card companies

Provision for contingent liabilities

Provision for labor liabilities

Other foreign creditors

Salaries and employee benefits

Provision for payments

Liabilities for official agreement

Insurance companies

Values to be paid - Affiliate companies

Resources to be granted

Liabilities resulting from purchase of assets and rights

Others

Total

-

586,566

221,919

153,367

149,292

52,326

34,791

-

210

22,798

7,131

140,582

1,368,982

-

501,039

214,336

57

130,754

72,710

28,364

-

7,860

38,539

3,895

158,587

1,156,141

c) Other operating income

Income from insurance operations

Equity share of subsidiaries and affiliates

not originated from earnings

Recovery of charges and expenses

Reversal of operational provisions

Others

Total

-

-

18,159

66

11,092

29,317

-

-

21,311

96,631

28,169

146,111

1,230,284

1,055,917

442,635

284,231

228,969

74,579

66,623

50,381

44,455

22,798

11,506

362,298

3,874,676

937,105

949,789

326,323

166,199

224,927

104,099

68,860

52,987

43,861

38,539

20,320

374,564

3,307,573

06.30.2000 06.30.1999 06.30.2000 06.30.1999

71,721

26,305

24,513

1,047

66,610

190,196

40,186

24,066

35,205

119,683

101,516

320,656


1st Semester2000

1st Semester1999

1st Semester2000

1st Semester1999


Tax credits (1)

Social Contribution to be offset (2)

Deposits in guarantee

Receivable taxes

Other domestic debtors

Amounts receivable from affiliate companies

Other foreign debtors

Debtors as a result of sale of assets

Recoverable payments

Income taxes recoverable

Salaries advances

Option for taxes incentives

Others

Total

862,081

489,268

178,969

90,819

127,099

24,337

108,089

89,713

11,464

267

33,887

-

23,690

2,039,683

856,227

492,345

223,964

135,447

131,903

101,348

553

20,933

19,978

267

29,298

-

12,474

2,024,737

1,484,537

786,287

661,600

422,305

166,961

149,042

113,259

106,587

46,016

44,657

43,228

30,678

46,239

4,101,396

1,455,891

801,675

669,455

355,743

154,460

123,288

11,056

41,813

130,222

40,130

41,765

35,457

32,404

3,893,359

06.30.2000 06.30.1999 06.30.2000 06.30.1999Itaú Itaú Consolidated

(1) Deferred income tax and social contribution are provided for on the basis of temporary additions and exclusions

(2) Due to the option which is foreseen in the 8th article of Provisional Measure 2037-19 as of June 28, 2000, relating to financial, insurance and similar companies


29

Note 12 - Stockholders' Equity - ITAÚ

a) Shares

A stock split of 1 old share for 9 new share was approvedin the Extraordinary Stockholders' Meeting on August 20,1999. The stock split was approved by BACEN onSeptember 6, 1999 and become effective as of September14, 1999.

As decided in the April 24, 2000 General and ExtraordinaryShareholders Meeting, 398,471,141 common book entryshares that were held in the treasury as of this date werecancelled without reducing capital. As a result, capital isrepresented by 119,336,655,459 nominal book entry shares,comprising 67,977,233,789 common shares and51,359,421,670 preferred shares (currently in the processof being ratified by BACEN).

Pursuant to authorization of the Board of Directors, Itaúrepurchased its own shares to be held in treasury, forsubsequent cancellation, or for future resale. The shareswere repurchased for minimum, weighted average, andmaximum prices of R$ 35,23, R$ 126,92 and R$ 150,26per lot of a thousand shares, respectively, for commonshares and R$ 39,02, R$ 60,84 and R$ 150,26, per lot ofa thousand shares respectively, for preferred shares. Themarket value of these shares as of June 30, 2000 wasR$ 140,87 and R$ 158,07, respectively, per lot of athousand shares.

Quantity

Treasury shares as of December 31, 1999

Common

Preferred

Purchases during the period

Common

Preferred

(-) Cancellations in the period

Common

Treasury shares as of June 30, 2000

Common

Preferred

349,071,353

1,476,486,801

66,262,195

165,999,887

398,471,141

16,862,407

1,642,486,688

1,825,558,154

232,262,082

398,471,141

1,659,349,095

Treasury share changes are shown below:

d) Other operating expenses

Credit card operations expenses

Other tax expenses

Other financial expenses

Insurance operations expenses

Related to real state financing

Equity share of subsidiaries and affiliates not

originated from earnings

Other operational provisions

Monetary correction/interest under

outstanding labor suits

Commission

Others

Total

-

25,197

-

-

9,534

-

-

1

276

23,901

58,909

-

39,946

40

-

16,442

-

16,479

8,914

14,174

37,917

133,912

1st Semester2000

1st Semester1999

1st Semester2000

1st Semester1999


96,509

55,328

16,642

16,496

9,534

6,754

1,067

541

430

48,846

252,147

53,427

81,133

25,201

9,481

16,512

23,929

29,678

11,812

14,591

69,029

334,793


30

II - Interest on capital - Payment provisions

Paid/prepaid:

Monthly - 5 payments of R$ 0,075 per thousand shares lot paid betweenFebruary and June 2000

Provisioned

. Monthly - 7 payments of R$ 0,085 per thousand shares lot to bepaid after July 2000

. Additional amount (R$ 0,90 per thousand share) to be paid onSeptember 1, 2000.

Additional to be declared

Total

Gross Income tax Net

44,183

44,183

281,474

70,014

105,910

105,550

325,657

6,627

6,627

42,221

10,502

15,887

15,832

48,848

37,556

37,556

239,253

59,512

90,023

89,718

276,809

b) Dividends

Stockholders are guaranteed the right to receive aminimum mandatory dividend equal to 25% of net incomewhich is adjusted according to rules set forth in theBrazilian Corporation Law. Both types of shares participateequally after common shares have been guaranteedpayments equal to the minimum preferential payments topreferred shares.

Monthly advances against interest on shareholders' equitywere introduced in 1997, substituting the system of

I - Calculation

Net income for the semester - Itaú

Adjustments:

Legal reserve

Realization of unrealized revenue reserve

Dividend calculation basis

Minimum mandatory dividend

754,162

(37,708)

390,781

1,107,235

276,809


monthly advances against the minimum mandatorydividend. As of June 30, 2000, the amount of thisadvance was R$ 0,075 (seventy-five thousandths of aReal) per thousand share lot. As resolved by the Board ofDirectors in a meeting held on May 8, 2000, the amountof the advance will be raised to R$ 0,085 (eighty-fivethousandths of a Real) per thousand share lot after July3, 2000.


c) Capital, revaluation and revenue reserves

(*) This reserve was established for the purpose of funding the exercise of stockholder subscription rights in capitalincreases of affiliated companies, future capital increases and the payment of interim dividends.

d) Net income and shareholders’ equity reconciliation between ITAÚ and ITAÚ CONSOLIDATED

Note 13 - Related parties

Transactions between related parties were entered into foramounts and terms in accordance with normal marketpractices and terms as well as under reciprocal conditions.Transactions with consolidated companies consolidated

(Note 14) were eliminated from the consolidated financialstatements. Other operations with companies not includedin the consolidation were immaterial.

Note 14 - Relevant Investiments

a) The main direct and indirect ownership in subsidiaries and affiliates are shown below:

06.30.2000

CAPITAL RESERVES:

Special reserve (art. 2nd - Law 8.200/91)

Tax incentive options

Others

REVALUATION RESERVES:

Properties of affiliates

REVENUE RESERVES:

Legal

Statutory - Itaubanco (*)

Unrealized income

06.30.1999

202,215

201,282

-

933

12,423

12,423

3,707,200

382,320

3,324,880

-

263,340

261,282

1,653

405

12,745

12,745

3,285,600

300,294

2,357,555

627,751

Net Income

ITAÚ

Goodwill amortization (*)Unrealized results

ITAÚ CONSOLIDATED

1.069.203

23.872

656

1.093.731

Stockholders’ Equity

(*) Related to the acquisitions of BEMGE S.A. and Banco del Buen Ayre S.A. in 1998 and additional ownershipinterests taken in BPI and IBT in 1999 (Note 2a).

5.965.165

(396.736)

(5.758)

5.562.671

06.30.199906.30.20001st Semester 1999

6.820.046

(461.900)

(5.307)

6.352.839

754.162

45.853

160

800.175

1st Semester 2000

Note 15 - Financial Instruments

a) Derivatives

In relation to transactions involving derivatives, ITAÚ hassough to meet the principal needs of its corporate customersto manage market risks, resulting mainly, from fluctuationsin the interest and exchange rates, and has developed aninternal control systems to monitor these risks in anappropriate manner.

ITAÚ’s policy is to minimize market risks resulting fromderivative operations. As such, the Bank avoids takingpositions which are subject to fluctuations due to marketfactors and only employs instruments that permit risk control,which is the responsibility of an independent area withinITAÚ.

Most derivative contracts negotiated with customers are swapand future operations, which are all registered at the BM&For CETIP, and involve pre-fixed rates, interbank depositsrates, exchange variations or price indices. BM&F futurescontracts involving interbank rates and U.S. dollars are

b) Composition of equity share in income of affiliates - ITAÚ CONSOLIDATED


Exchange variation of investment in subsidiaries

Exchanges variation - Minorities

Equity share in income of affiliates

Equity share in income of affiliates - Minorities

Equity share in income of affiliates

129,793

52,037

181,830

849

13,015

13,864

195,694

1st Semester1999

1st Semester2000

21,867

(6,362)

15,505

13,664

8,214

21,878

37,383

(1) Amounts disclosed in Note 14a.

principally used to hedge financing operations offered tocustomers with maturities or in currencies which aremismatched with the resources used to fund theseoperations.

The notional values for these financial instruments arerecorded in memorandum accounts, and the adjustments/premiums are recorded in balance sheet accounts.

3431

(1)

(1)

CompaniesBanco Itaú S.A. and subsidiaries and affiliatesNet Income for

periodNumber of shares/quotas owned

by Banco Itaú S.A.Book value of

investmentAdjusted

stockholders’equity

CapitalAdjustments resulting from valuation

(*) The adjustments related to indirect interests are realocated to original companies.

(1) Data as of June 30, 2000; (2) New name of Banco Itau Argentina S.A. after merger with Banco del Buen Ayre S.A.; (3) Acquired characteristics of a subsidiary as of May 5, 2000,as a result of the acquisition of the ownership that was held by Itaúsa - Investimentos Itaú S.A; (4) New name of Videira Administração e Participações Ltda, which was established onDecember 8, 2000; (5) Data as of May 31, 2000, company proportionally consolidated beginning in the current year; (6) Investment disposed of on June 29, 2000; (7) Data as of April30, 2000; (8) Relates to direct and indirect investments; (9) a) Interbank deposits and repurchase agreements for settlement; b) Interbank deposits; c) Services rendered receivable and

interbank deposits; d) Loans; e) Fixed income securities - debentures and interbank deposits; f) Foreign borrowings in securities; g) Demand deposits of affiliated companies; h) Dividends andbonuses receivable; (10) a) Expense with interbank deposits; b) Income on interbank deposits, Expense with third party services and other operating expenses; c) Income frominterbank deposits; d) Income from services provided to related parties and loss on operations involving financial activities and commodities - SWAP; e) Income from custody services;f) Income from domestic loans; g) Income from fixed income securities - debentures and expense with interbank deposits; h) Expense with foreign securities; i) Expense withinterbank deposits and expense with repurchase operations - third parties; j) Rental income; (11) Amounts not eliminated in the consolidated.

I - SUBSIDIARIESA) BANKS

Banco Banerj S.A. and its subsidiariesBanco Banerj S.A.Banco Bemge S.A. and its subsidiariesBanco Bemge S.A.

IFE - Banco do Estado de Minas Gerais (Uruguay) S.A.Banco Francês e Brasileiro S.A.Banco Itaú Buen Ayre S.A.Banco Itaú Europa S.A.Banco Itaú Europa Luxembourg S.A.

B) INSURANCEBanerj Seguros S.A.Itaú Capitalização S.A. and its subsidiariesItaú Capitalização S.A.

Itaú Previdência e Seguros S.A.Itaú Seguros S.A.Itausaga Corretora de Seguros Ltda.Other Subsidiaries

C) CREDIT CARDSItaucard Adm. de Cartões de Crédito e Imobiliária Ltda. and its subsidiariesItaucard Adm. de Cartões de Crédito e Imobiliária Ltda.

Credicard S.A. - Administradora de Cartões de CréditoRedecard S.A.

Other SubsidiariesD) OTHER FINANCIAL INSTITUTIONS

Itaucard Financeira S. A . Crédito Financiamento e InvestimentoBFB Leasing S.A. Arrendamento MercantilCia. Itauleasing de Arrendamento MercantilFinanceira Bemge S.A. - Crédito, Financiamento e InvestimentoItaú Banco de Investimento S.A.Itau Bank LtdItauvest Banco de Investimento S.A. and its subsidiariesItauvest Banco de Investimento S.A.

Itauvest Distribuidora de Títulos e Valores Mobiliários S.A.Itaú Corretora de Valores S.A.Other Subsidiaries

E) COMPANIES WITH COMPLEMENTARY ACTIVITIES TO FINANCIAL INSTITUTIONSAfinco Americas Madeira, SGPS Limitada e ControladasBFB Rent Administração e Locação S.A.Focom Total Factoring Ltda.Itaú Gestão de Ativos S.A.Itaú Rent Administração e Participações S.A.Other Subsidiaries

F) OTHERS COMPANIESCia. Itaú de CapitalizaçãoItaú Gráfica Ltda.Itaú Planejamento e Engenharia Ltda.Itaupart Administração e Participações Ltda.Serasa Centr. de Servs. dos Bancos S.A.Other Subsidiaries

G) GAINS ON CURRENCY TRANSLATIONExchange Variation Over Foreign Investments(-) Extraordinary ResultTOTAL OF SUBSIDIARIES

II - AFFILIATESAGF Brasil Seguros S.A.BPI - Sociedade Gestora de Participações Sociais, S.ADuraflora S.A.Itaú Planejamento e Engenharia Ltda.Serasa Centr. de Servs. dos Bancos S.A.Saper Empreendimentos Imobiliários Ltda.Union Carbide do Brasil S.A.

TOTAL OF AFFILIATESTOTAL

(1)

(1)

(1)(1)(2)

(1)

(1)

(1)(1)

(1)(1)

(1)

(1)

(1)

(1)

(1)

(1)(3)(1)(4)(5)

(6)(3)(5)

(7)

381,060

853,000

451,065423,677

21,000

76,643

11,000681,000

27,000 216,000

34,935

100,560

78,538

163,500

291,000

772 2,190,050

88,200

-

130,879

590,743

1,723,016

630,784 252,404

50,970

378,858

22,096 1,078,935

41,983 386,275

41,187

192,926

488,192

210,329

442,053

1,170 2,356,691

99,037

-

176,854

2,965,589

594,559

1,713,691

606,44850,891

-

-

211

211

1,134,478

22,390 439,198

- 42,461

386,275

41,187

192,910 10,057122,725118,690

4,034

12,408,467

8,059

951 2,356,691

32,583 10,183

6,631,470

-

38,05838,058

6,669,528

3,310,940,636

1,531,948,753,468

2,348,882,37283,899,751

4

-

312,989 1,673,749

7,197,594 120,000,000

102,124,166

6,249,500

4,874,160

5,410

- -

600,700

-

58,825,056

-

1,111,507,153,663

-23,128,926

1

-

-991,265

1,585,432-

102,124,160

6,249,500

5,250,289

-

--

578,380

-

-

-

-

--

-

9

--

--

-

-

1

-

-

2,571219,004,999

-

-

99.99

99.8899.85

100.0099.9119.5319.52

95.98

99.9999.9896.0999.99

99.99 33.33 31.94

99.7899.99

99.99 85.07 99.99

100.00

100.00 100.00

99.99

99.99 99.99 99.99 74.41 99.99

99.99 99.99 99.96

100.00 31.64

13.94 6.46

0.00 37.8426.70

3332

(11) (11)

(11) (11)

Participation inVoting capital (%)

(8)

Participationin Capital (%)

(8)

99.99

99.8599.85

100.0099.9919.5319.52

95.98

99.9999.9995.9899.99

99.99 33.33 31.94

99.7899.99

99.99 86.62 99.99

100.00

100.00 100.00

99.99

99.99 99.99 99.99 76.02 99.99

99.99 99.99 99.96

100.00 31.64

13.94 6.46

- 37.8426.70

17,558

77,0592,039

48,514(27,588)

13,9523,652

6,923

118,3308,989

72,16616,258

130,293 219,643 33,054

2,638 1,241

74,150 4,815 2,01322,377

3,920 760

23,032

11,186 1,647 1,847

734 88,478

2,306 97,670

(733) 166,641 23,192

(3,564) 103,330

- 150

26,065

(1,716,121) (9a)

(1,410,344) (9b)

(44,887) (9b)-

39 (9c)

120,245 (9d)

2,352 (9d)

1,945 (9e) (1,252,381) (9e)

(24,020) (9b) (54,891) (9f)

(14,183) (9b)

(144,988) (9a) (919) (9a)

-

(7) (9g)

(5) (9g)

(4) (9g) (2) (9g)

-1,024 (9h)

-

-

(145.839) (10a)

(2.502) (10b)

1.222 (10c)-

889 (10d)

8 (10e)

418 (10f)

(1,401) (10g) (44,783) (10g)

(1,015) (10a) (3,167) (10h)

(3,136) (10a)

(6,174) (10i) (78) (10i)

-

-

-

- --

10 (10j)

-

-

15,22867,477

67,477(45,997)(48,036)

2,03917,190

(27,560) 3,228

890117,733 12,80927,521

18,601 8,92053,120

17,172 7,111

134,909

130,955 40,227 80,179 10,549

3,954126,970

2,7801,245

74,147 4,295 2,098

22,3774,513

3,592 921

14,322 1,19310,329(2,239)

358 2,084 2,284 7,836

613,274

(595) 5,273

(50) 40

7,338 1,26821,867

21,867 -

440,310

(970) 7,783

96 (266)

- 62

6,95913,664

453,974

410,42848,195

48,195332,570

329,965 2,60539,218

(12,284) 2,415

314206,896

7,98998,118

96,467 1,65180,261

17,820 2,70881,115

75,878 19,966 47,054 8,8585,237

118,7354,953

5,500 43,517 9,428 5,159

16,90918,304

11,787 6,51714,260

705121,62429,006

10,778 8,142

57,999 15,716

(17)59,51052,430

(1,432) - - -

8,512129,793

664,476 (534,683)1,128,101

449 (2,881)

26 (93)

1,555 122

1,671849

1,128,950

Ordinarynominative

Preferrednominative Quotas Assets/(liabilities) Income/(expenses) 1st Semester

2000 (*) 1st Semester

1999 (*)

35

4,900,078

2,500,419 263,189

1,956,383 275,432

5,415

2,399,659 811,042 252,088

1,329,764 1,541 5,224

-

14,037,883 680,727

6,534,410 6,734,318

49,513 38,915

13,999,968 2,893,508 6,584,704 4,084,589

369,852 67,315

605,719

223,621 26,200

- 180,297 17,124

-

75,760 47,950

- 27,810

-

66,855 -

47,614 17,928 1,313

239,483 56,875

180,297 1,500

811

Future contracts

Purchase commitments: Foreign currency Interbank market Indices Others

Commitments to sell:Foreign currencyInterbank marketIndicesSharesOthers

Swap contracts

Assets position:Foreign currencyInterbank marketPrefixedIndicesOthers

Liability position:Foreign currencyInterbank marketPrefixedIndicesOthers

Options contracts:

Purchase commitments - Call Position:Foreign currencyInterbank MarketPrefixedSharesOthers

Commitment to sell - Call Position:Foreign currencyIndicesSharesOthers

Purchase commitments - Put Position:Interbank marketIndicesSharesOthers

Commitments to sell - Put position:Foreign CurrencyPrefixedSharesOthers

06.30.2000

Memorandum accountnotional value

Balance sheet account amountreceivable/received (payable/paid)


3,112,853

297,030 81,480 70,324

144,020 1,206

2,815,823 254,279

1,436,429 1,113,566

11,549-

-

11,264,233 442,164

5,213,733 5,007,843

22,109 578,384

11,247,592 2,163,481 5,303,799 3,285,257

41,848 453,207

1,595,782

695,995 14,250

237,200 200,822 84,612

159,111

105,247 --

101,997 3,250

514,339 255,175

- 98,428

160,736

280,201 -

200,822 24,738 54,641

06.30.1999

4,913,578

2,509,419 272,189

1,956,383 275,432

5,415

2,404,159 815,542 252,088

1,329,764 1,541 5,224

-

9,759,951 727,913

4,240,212 4,395,807

49,513 346,506

9,657,673 2,940,671 4,202,463 1,914,180 369,852 230,507

645,093

225,421 26,200

- 180,297 17,124 1,800

94,806 47,950 17,246 27,810 1,800

85,383-

66,142 17,928 1,313

239,483 56,875

180,297 1,500

811

3,112,853

297,030 81,480 70,324

144,020 1,206

2,815,823 254,279

1,436,429 1,113,566

11,549-

-

9,640,141 344,041

3,825,932 4,687,107

23,813 759,248

9,762,337 2,180,653 4,891,752 2,020,382

43,605 625,945

1,572,792

703,065 14,250

237,200 200,822 84,612

166,181

128,203-

- 101,997 26,206

514,339 255,175

- 98,428

160,736

227,185-

200,822 24,738 1,625

7,199

(1,934) 762

(121) (2,418)

(157)

9,133 1,476

45 7,395

43 174

37,915

133,013 2,847

49,467 80,546

17 136

(95,098) (8,398)

(54,059) (25,509) (6,602)

(530)

(3,894)

(1,483) (240)

--

(1,243)-

(4,637) (1,713)

- (2,924)

-

1,952 -

304 1,612

36

274 212

- 41 21


6,640

(1,116) (11)

28 (1,125)

(8)

7,756 1,617 (605) 7,007 (263)

-

16,641

263,497 40,097

204,264 17,135

- 2,001

(246,856) (125,499) (108,419) (11,245) (1,478)

(215)

(21,471)

(17,483) (87)

(264)-

(2,100) (15,032)

(25,137) - -

(24,341) (796)

18,305 243

- 3,881

14,181

2,844 --

2,828 16

7,471

(1,626) 1,070 (121)

(2,418) (157)

9,097 1,440

45 7,395

43 174

102,278

154,561 2,941

49,615 79,770

17 22,218

(52,283) (8,469) (9,553)

(27,129) (6,602)

(530)

(3,944)

(1,483) (240)

- -

(1,243) -

(5,543) (1,713)

(906) (2,924)

-

2,808 -

1,160 1,612

36

274 212

- 41 21

6,640

(1,116) (11)

28 (1,125)

(8)

7,756 1,617 (605) 7,007 (263)

-

(122,196)

135,466 42,954 65,055 17,330

- 10,127

(257,662) (128,353) (116,581) (11,035) (1,478)

(215)

(21,471)

(17,483) (87)

(264) -

(2,100) (15,032)

(25,137)-

- (24,341)

(796)

18,305 243

- 3,881

14,181

2,844 - -

2,828 16

2,676,961

2,376,729

120,238

Total

923,770

4,335,210

91,364

426,215

5,179,104

376,793

4,900,078

13,904,870

605,719

Futures

Swaps

Options

Up to 90 days From 181 to365 days 06.30.2000

From 91 to180 days

More than365 days 06.30.1999

873,132

2,013,827

17,324

ITAÚ

3,112,853

11,000,736

1,595,782

2,685,961

2,608,211

120,238

Total

923,770

4,343,290

116,255

426,215

647,684

380,393

Futures

Swaps

Options

Up to 90 days

877,632

2,006,205

28,207

ITAÚ CONSOLIDATED

3,112,853

9,504,675

1,572,792

Contracts of futures, options and swaps mature as follows:

4,913,578

9,605,390

645,093

06.30.2000 06.30.1999 06.30.2000 06.30.199906.30.2000 06.30.1999

06.30.2000 06.30.1999From 181 to

365 daysFrom 91 to180 days

More than365 days


36

The financial statements were prepared based on theassumption of normal continuity in the operations of ITAÚand its subsidiaries.

The recorded values of each financial instrument whetherincluded or not in the balance sheet, when compared with the

b) Market value

values that might be obtained in an active market, or in theabsence of such markets, using the net present value of adjusteddiscounted future cash flows based on the prevailing marketinterest rate, are close to the corresponding market value, orits value is not available, except for the amounts included:

1,670,812

11,948,162

11,358,637

126,945

9,391,373

101,792

73,744

3,430,491

Recorded value Market value Unrealizedgain/(Loss)

1,683,676

12,824,037

11,372,347

127,138

9,390,198

262,003

232,299

3,294,326

3,078,863

10,232,109

9,676,034

123,031

8,494,400

141,488

108,309

3,587,195

12,864

875,875

13,710

193

1,175

160,211

158,555

136,165

1,358,748

28,499

749,294

(1,362)

-

3,648

44,968

87,550

252,298

1,164,895

Interbank funds applied:

Securities and derivatives (1)

Loan operations

Other investments

Time and interbank deposits anddebentures

Treasury shares

Equity share in income of subsidiaries and affiliates:

Investment in BPI

Time and interbank deposits anddebentures

Total unrealized gain/(Loss)

Itaú

3,050,364

9,482,815

9,677,396

123,031

8,498,048

96,520

20,759

3,839,493

2,740,398

14,287,196

14,814,010

142,596

287,436

6,079,902

101,792

Recorded value Market value Unrealizedgain/(Loss)

2,753,350

15,196,015

14,827,757

449,186

293,230

5,942,562

262,003

2,811,391

15,380,245

12,321,623

440,550

275,688

7,633,486

141,488

12,952

908,819

13,747

306,590

5,794

137,340

160,211

1,545,453

28,499

757,028

950

356,113

(112)

256,315

44,968

1,443,761

Interbank deposits

Securities and derivatives (1)

Loan operations

Investments in BPI

Other investments

Time and interbank deposits and debentures

Treasury shares

Total unrealized gain/(Loss)

(1) Includes R$ 225,688(R$ 178,195 of NTN-D and R$ 47,493 of NBC-E) which are related to securities funded by foreign resources and that will be held tomaturity, in accordance with second article of BACEN Circular 2913 of June 12, 1999, which the market value is not significant.

(2) Includes unrealized gains (losses) relating to minority interests amounting to R$ 154,836 (R$ 268,563 at June 30, 1999).

06.30.2000 06.30.2000 06.30.200006.30.1999 06.30.1999 06.30.1999

Itaú Consolidated

2,782,892

14,623,217

12,320,673

84,437

275,800

7,889,801

96,520

06.30.2000 06.30.2000 06.30.200006.30.1999 06.30.1999 06.30.1999


37

• Interbank deposits, certificates of bank deposit andmortgage securities, the latter two included in "Securities"were determined on the basis of their nominal values,monetarily corrected to maturity and discounted to presentvalue using interest futures market rates, 360-day swapmarket rates for pre-fixed securities, and fixed interestsecurities market rates for post-fixed securities publishedin the Gazeta Mercantil on July 3, 2000;

• Public securities, included in "Securities" were determinedon the basis of actual trades registered with BACEN/DICEL/SELIC (Special System for Settlement and Custody), inaccordance with lists held by ANDIMA (the NationalAssociation of Open Market Institutions);

• Investment fund quotas included in "Securities" weredetermined on the basis of net value per quota on thebalance sheet date;

• Publicly traded shares when included in "Securities" werevalued using the average price quota of the last tradingday of the month if available, or on the basis of the mostrecent quotations for the companies' shares published inthe daily bulletin of each Stock Exchange;

• Loans with maturities over 90 days were calculated on thebasis of their net present value, determined by means offuture cash flows discounted using market interest rateson the balance sheet date, when available; the effects ofhedges (swap contracts) are also taken into account;

To obtain the market values for these Financial Instruments, the following criteria were adopted:

• Other investments and equity shares in foreign subsidiariesand affiliates are determined on the basis of stock marketquotations, book value per share and auction quotation;

• Time and interbank deposits and debentures, when available,were calculated on the basis of their present value,determined by means of future cash flows discounted usinginterest futures market rates, 360-day swap market for pre-fixed securities, and fixed income securities market ratesfor post-fixed securities published in the Gazeta Mercantilon July 3, 2000; the effects of hedges (swap contracts) arealso taken into account.

• Derivatives related to swaps contracted to hedge otherassets and liabilities are determined on the basis ofreference values for each parameter set forth in thecontracts (both parties), monetarily corrected throughmaturity and discounted to present value using interestfutures market rates, according to the characteristics ofeach contract.

• Treasury shares are valued according to the averagequotation available on the last trading day of the month,or if this is not available, according to the most recentquotation on prior trading days, published in the dailybulletin of each Stock Exchange.


38

Note 16 - Additional information

d) Itaúsa and Itauclube Foundations ensure employeesof Banco Itaú S.A. and other companies of theconglomerate, educational development, food andmaterial assistance to improve health and welfareconditions of the beneficiaries. Donations to theseentities which were destined to maintain foundationassets totaled R$ 20,000 (R$ 10,296 at June 30, 1999)with the purpose to maintain its own fund.

e) ITAÚ is the founding partner and patron of InstitutoItaú Cultural - IIC, an entity whose purpose is thepromotion and preservation of Brazilian cultural heritage.During the first half of the semester, ITAÚ and itssubsidiaries made donation to IIC amountingR$ 7,625 (R$ 7,803 at June 30, 1999).

f) ITAÚ and its subsidiaries sponsor complementary pensionplans managed by Fundação Itaubanco (closed privatepension fund), for the purpose of granting lifetimeincome to complement the retirement pension paid bysocial security. The contributions amounted to R$ 30,008(R$ 18,214 in June 30, 1999). The actuarial liabilitiesare calculated in accordance with the actuarial modelsestablished in the plans' Technical Notes, which call forcompound capitalization and defined benefits, and arefully covered by the technical provisions for expired andunexpired risks. The contribution rate increases inaccordance with the participant's salary.

g) ITAÚ has established an Employee Stock Options Planto provide an incentive for executives to focus onthe future success of ITAÚ over the medium and longterms time horizons. As of June 30, 2000 ITAÚ hasgranted 3,021,800,000 preferred shares. These stockoptions may be exercised as follows: 282,000,000 asof January 1, 1998, 597,000,000 shares as of January1, 1999, 533,000,000 shares as of January 1, 2002and 578,500,000 shares as of January 1, 2003 and498,100,000 shares as of January 1, 2004 and533,200,000 shares as of January 1, 2005. Up to June30, 2000, 835,952,060 shares have been exercised.

h) Foreign loans represent foreign exchange operationswhich are basically related to export financing.

i) In accordance with the Brazilian Central instructions, thebalances of floating exchange rate and free exchange ratetransaction excesses are disclosed separately as assets andliabilities, without considering the possibility ofoffsetting.

j) During the first semester of 2000, R$ 776,837 (R$ 846,092in June 30, 1999) were collected and provisioned in ITAÚCONSOLIDATED related to taxes and contributions ofincome, revenues and salaries. Moreover, taxes on financialintermediation were collected from clients in the amountof R$ 1,454,497 (R$ 944,163 in June 30, 1999).


06.30.2000 06.30.1999 06.30.2000 06.30.1999

29,320,470

27,798,624

1,521,846

6,591,762

2,532,997

4,058,765

35,912,232

308

260

48

1,969

1,934

35

2,277

Amount of managedfunds and portfoliosas of June 30, 2000 -

30,739,105

29,124,617

1,614,488

6,591,762

2,532,997

4,058,765

37,330,867

22,028,669

21,060,845

967,824

5,196,298

1,912,388

3,283,910

27,224,967

Mutual funds

Fixed income

Shares and other funds

Managed portfolios

Customers

Itaú Group

Total

21,304,399

20,446,282

858,117

4,755,104

1,471,194

3,283,910

26,059,503

a) Despite the reduced degree of risk, which is due to thefact that it does not physically concentrate its assets,ITAÚ adopts the policy of insuring its assets at amountsconsidered adequate to cover possible risks (against fire,and theft, as applicable).

b) ITAÚ manages the following types of investment funds:privatization, fixed income - domestic and foreign, shares,mutual funds shares open portfolio, investment clubs andits clients' and own portfolios distributed as follows:

c) In June 30, 2000, the balances vinculated to foreign currency were:

In thousands of reais

2,748,153

421,277

3,169,430

Foreign investments

Net value of assets and liabilities indexed in foreign currency including derivatives

Net foreign exchange position


a) Consolidated credit card companies and insurance, capitalization and pension funds companies information

Note 17 - Additional information on affiliates and subsidiaries

In order to permit a better analysis of the financial situation of the group, we present a summary of accounting information,which has been consolidated according to the activities of the respective companies, as well as branches and financialinstitutions which are located overseas and main domestic financial institutions.

Credit CardCompanies (1)

(1) Includes Banerjcard Administradora de Cartões de Crédito Ltda., BFB Administradora de Cartões de Crédito e Serviços Ltda., Itaucard Administradora de Cartões deCrédito e Imobiliária Ltda., Bemge Administradora de Cartões de Crédito Ltda. and proportionally, Credicard Comercial e Importadora Ltda., Credicard S.A.Administradora de Cartões de Crédito, Redecard S.A. and Brascard Processadora de Cartões de Crédito Ltda. (only in June 30, 2000).

(2) Includes Banerj Seguros S.A., Itaú Capitalização S.A., Itaú Previdência e Seguros S.A., Itaú Seguros S.A., Bemge Seguradora S.A. and Investprev Seguros e Previdência S.A.(proportionally consolidated) - Companies regulated by the Insurance Company Regulatory Agency (SUSEP).

06.30.2000 06.30.1999

Assets

Current and long-term assets

Cash and cash equivalents

Securities

Insurance receivable

Card holder purchases

Other receivables

Deposits for tax incentives

Other assets

Permanent assets

Investments

Fixed assets

Deferred

Total

Liabilities

Current and long-term liabilities

Technical provisions – Vinculated

Insurance operations payable

Borrowings

Taxes and social security contributions

Payable amounts - Stores

Banking Financing - Card holders

Credit Card – Annuity revenues

Other liabilities

Technical provisions - Not vinculated

Minority interest in consolidated subsidiaries

Stockholders’ equity

Capital and reserves

Income for the period

Total

10,574

84,792

-

1,130,741

314,431

35,329

2,518

7,967

37,797

15,803

1,639,952

-

-

189,870

41,089

578,533

472,641

72,291

101,991

-

-

103,167

80,370

1,639,952

7,572

2,485,131

361,606

-

134,411

-

191,269

1,863,891

229,498

6,562

5,279,940

352,696

59,927

-

136,960

-

-

-

113,801

1,982,963

1,261

2,441,823

190,509

5,279,940

4,232

2,155,818

367,171

-

183,653

-

189,374

1,843,042

238,012

5,994

4,987,296

258,488

66,211

-

230,025

-

-

-

141,259

1,776,515

1,397

2,190,222

323,179

4,987,296

06.30.2000 06.30.1999

Insurance, capitalization andpension funds companies (2)

7,352

392,763

-

1,482,853

304,330

30,550

7,278

9,666

36,942

16,007

2,287,741

-

-

147,429

58,815

885,670

538,565

81,723

172,337

-

-

269,341

133,861

2,287,741



c) Main financial institutions in the country

Bemge(2)Banerj(1)

(1) Includes Banco Banerj S.A., Banerjcard Administradora de Cartões de Crédito Ltda., Banco Itaú Buen Ayre S.A., Externalizacion Global S.A., Inversora del Buen AyreS.A. and Itaú Sociedad Gerente de Fondos Comunes de Inversion S.A.

(2) Includes Banco BEMGE S.A., BEMGE Administradora de Cartões de Crédito Ltda., Itaú Card Financeira S.A. - Crédito, Financiamento e Investimento, FinanceiraBEMGE S.A. - Crédito, Financiamento e Investimento, IFE - Banco do Estado de Minas Gerais S.A. (Uruguay) and BEMGE Part Ltda. and its subsidiaries (only inJune 30, 2000).

06.30.2000 06.30.1999

281,096

1,945,144

213,041

375,806

2,177

1,093,839

227,909

9,330

9,829

148,034

114,845

4,421,050

2,789,873

237,517

-

172,353

4,449

77,036

764

-

410,290

-

689

137,336

573,185

17,558

4,421,050

228,021

2,885,017

559,233

496,077

47,112

513,551

218,227

4,981

8,746

126,141

130,476

5,217,582

4,075,541

11,747

-

150,874

51,656

23,436

933

-

414,157

-

740

1,910

432,758

53,830

5,217,582

10,700

1,507,574

320,196

132,788

21

90,108

710,309

4,505

13,718

40,903

2,585

2,833,407

699,007

-

-

29,025

802

-

265

-

368,356

-

1,318

11,618

1,645,957

77,059

2,833,407

50,107

1,464,925

4,258,447

1,375,764

2,712,635

1,796,741

1,930,776

209,224

367,408

903,150

25,856

15,095,033

2,795,492

1,657,339

407,594

54,618

2,718,326

193,140

3,338

258,488

3,233,992

1,776,515

74,203

357,189

1,097,678

467,121

15,095,033

06.30.2000 06.30.1999

Assets



Interbank funds applied

Securities

Interbank accounts

Interbranch accounts

Loan and leasing operations

Other receivables

Other assets

Permanent assets

Investments

Fixed assets

Deferred expenses

Total

Liabilities


Deposits

Money market repurchase commitments

Acceptance and endorsements

Interbank accounts

Interbranch accounts

Borrowings

On-lending borrowings from public institutions

Technical provisions for insurance Operations – Vinculated

Other liabilities

Technical provisions for insurance Operations - Not vinculated

Deferred income

Minority interest

Stockholder’s equity


Net income

Total

4239


Foreign Consolidated (6)

06.30.2000

273,723

1,926,314

148,763

1,777,551

3,378,603

2,448,035

1,065,864

1,382,171

930,568

3,102

4,053,895

1,150,036

2,903,859

18,193

520,269

144,200

125,918

14,182

10,458,399

3,112,635

275,576

319,350

249,434

2,268,275

876,722

1,140,813

-

2,034,043

445,698

28,001

72,334

2,662,866

85,287

10,458,399

06.30.1999

253,196

2,347,560

142,112

2,205,448

2,487,244

1,815,666

664,279

1,151,387

671,578

4

3,304,742

1,748,476

1,556,266

35,183

461,038

109,840

127,207

17,732

9,143,746

1,093,965

193,771

315,840

96,086

488,268

2,139,410

1,143,348

131

1,791,393

376,916

19,026

37,485

2,441,934

100,138

9,143,746

Other Nonfinancial (5)

06.30.2000

3,611

4,578

-

4,578

115,342

51,389

-

51,389

63,953

-

564

-

564

45

251,572

761,168

515

67

1,137,462

17,727

-

-

5

17,722

-

-

-

31,075

63,979

1,941

-

980,386

42,354

1,137,462

06.30.1999

736

140,602

-

140,602

25,651

-

-

-

25,651

-

8,944

1,037

7,907

188

379,622

443,241

413

-

999,397

35

-

-

35

-

34,154

8,826

-

3,749

157,173

2,065

-

749,518

43,877

999,397

IFE - Banco do Estado deMinas Gerais S.A.

(Uruguay)

06.30.2000

70

1,678

-

1,678

46,944

46,944

-

46,944

-

925

24,143

22,351

1,792

-

4,379

-

108

13

78,260

19,559

27

-

17,668

1,864

-

-

-

-

4,390

-

-

52,272

2,039

78,260

Itau Bank, Ltd.

06.30.2000

4,221

50,696

-

50,696

544,174

394,834

219,254

175,580

149,340

-

192,949

9,235

183,714

338

71,210

-

127

29

863,744

123,713

37

-

17,284

106,392

259,874

-

-

89,813

55

4,014

-

363,898

22,377

863,744

06.30.1999

11,398

172,248

-

172,248

383,024

293,933

283,719

10,214

89,091

-

243,895

174,090

69,805

16

18,266

-

85

19

828,951

130,289

36

-

130,251

2

259,590

-

-

90,574

45

9,053

-

322,491

16,909

828,951

Banco Itaú EuropaLuxembourg S.A.Consolidated(4)

06.30.2000

14,139

173,058

-

173,058

7,557

4,235

-

4,235

3,322

-

38,763

-

38,763

109

1,144

2,188

681

366

238,005

192,182

103,584

-

-

88,598

-

-

-

-

5,133

-

-

37,038

3,652

238,005

06.30.1999

1

63,156

59,916

3,240

-

-

-

-

-

-

62,499

61,749

750

155

1,910

-

740

402

128,863

100,847

52,817

-

-

48,030

-

-

-

-

4,956

-

-

21,782

1,278

128,863

Banco Itaú Europa S.A.Consolidated (3)

06.30.2000

13,632

746,888

-

746,888

582,285

286,884

-

286,884

295,401

-

878,919

-

878,919

304

223

21,827

4,060

428

2,248,566

1,720,773

37,912

-

101,683

1,581,178

97,743

17,922

-

-

88,552

2,030

-

307,594

13,952

2,248,566

06.30.1999

9,586

910,700

-

910,700

326,384

20,331

-

20,331

306,053

-

498,498

495,630

2,868

26,587

422

13,648

4,290

-

1,790,115

21,608

813

-

-

20,795

1,533,319

-

-

-

34,798

-

-

190,584

9,806

1,790,115

Banco delBuen Ayre S.A. (2)

06.30.2000

233,358

126,332

115,530

10,802

101,774

15,466

-

15,466

86,308

2,177

799,418

-

799,418

3,757

77,825

82

119,460

12,574

1,476,757

970,740

114,877

319,351

123,427

413,085

-

-

-

72,768

180,845

-

-

279,992

(27,588)

1,476,757

06.30.1999

208,931

292,780

70,780

222,000

129,974

-

-

-

129,974

-

633,255

-

633,255

1,197

20,017

177

120,595

17,034

1,423,960

879,853

114,084

315,840

67,689

382,240

-

-

-

83,020

150,731

-

-

322,573

(12,217)

1,423,960

Foreign Branches (1)

6,879

863,868

33,233

830,635

2,173,538

1,648,283

846,610

801,673

525,255

-

2,145,286

1,118,450

1,026,836

13,707

113,917

-

968

588

5,318,751

211,599

19,775

-

30,156

161,668

519,106

1,161,944

-

1,866,189

156,361

20,084

-

1,339,242

44,226

5,318,751

06.30.1999

17,178

1,059,146

135,083

924,063

1,657,939

1,501,402

380,560

1,120,842

156,537

4

1,859,802

1,015,970

843,832

7,697

40,837

-

1,006

255

4,643,864

106,793

26,733

-

27,880

52,180

523,506

1,137,030

131

1,623,934

30,879

7,972

-

1,158,669

54,950

4,643,864

06.30.1999

6,078

4,566

-

4,566

35,825

-

-

-

35,825

-

-

-

-

-

-

912

78

23

47,482

-

-

-

-

-

-

-

-

-

6

-

-

44,891

2,585

47,482

(1) Includes Grand Cayman and New York branches.(2) New name of Banco Itaú Argentina S.A., after merger with Banco del Buen Ayre S.A.(3) Banco Itaú Europa, S.A., BIE - Bank & Trust, Ltd.(4) Banco Itaú Europa Luxembourg S.A., Banco Itaú Europa - Fund Management Company, S.A.

b) Foreign branches/financial institutions

06.30.2000

(5) Afinco - Americas Madeira, SGPS Ltda., Banctec Informática S.A., BFB Overseas Inc., BFB Overseas Cayman, Ltd., Externalizacion Global S.A., Inversora del BuenAyre S.A., Itaú Europa, SGPS, S.A., Itaú Sociedad Gerente de Fondos Comunes de Inversion S.A., Itaúsa Portugal - SGPS, S.A., ITH Zux Cayman Company Ltd., ItaúLeasing de Chile Ltda., Zux Cayman Company Ltd., Zux SGPS, S.A., BIEL Holding AG, IPI Portugal Invest Ltda.(6) The foreign consolidated information are presented net of elimination.

4140

Assets



Interbankfunds applied

Money market

Interbank deposits

Securities

Brazil

Federal government

Financial institutions

Others

Interbank and interbranch accounts

Loans and leasing

Foreign exchange loans

Others

Prepaid expenses

Other Assets

Permanent assets

Investments

Fixed assets

Deferred

Total

Liabilities


Deposits

Demand deposits

Saving deposits

Interbank deposits

Times deposits

Money market

Acceptances and debentures

Interbank and interbranch accounts

Borrowings

Other liabilities

Deferred income

Minority interest in consolidated subsidiaries

Stockholders’ equity


Income for the period

Total

43

Independent Auditors' Report

KPMG Auditores Independentes

São Paulo, August 7, 2000

KPMG Auditores IndependentesCRC 2SP014428/O-6

José Marcelo BessanAccountant CRC 1SP129705/O-0

Alberto Spilborghs NetoAccountant CRC1SP167455/O-0

The Administrative Council and StockholdersBanco Itaú S.A.São Paulo - SP

We have examined the balance sheets of Banco Itaú S.A.and the consolidated balance sheets of Banco Itaú S.A. andits subsidiaries as of June 30, 2000 and 1999 and the relatedstatements of income, changes in stockholders' equity andchanges in financial position for the semesters then ended,which are the responsibility of its management. Ourresponsibility is to express an opinion on these financialstatements.

Our examinations were conducted in accordance withauditing standards generally accepted in Brazil and included:(a) planning of the audit work, considering the materialityof the balances, the volume of transactions and theaccounting systems and internal accounting controls of theBank and its subsidiaries; (b) verification, on a test basis,of the evidence and records which support the amounts andaccounting information disclosed; and (c) evaluation of themost significant accounting policies and estimates adoptedby management of the Bank and its subsidiaries, as well asthe presentation of the financial statements taken as a whole.

In our opinion, the aforementioned financial statementspresent fairly, in all material respects, the financial positionof Banco Itaú S.A. and the consolidated financial positionof Banco Itaú S.A. and its subsidiaries as of June 30, 2000and 1999, and the results of its operations, changes in itsstockholders' equity and changes in its financial positionfor the semesters then ended, in conformity with accountingpractices derived from the Brazilian Corporation Law.

44

Report on the semi-annual reportat June 28, 2000 prepared bythe Internal Audit Committee

In compliance with the disposition in Resolution 2554/98of the Brazilian Central Bank and the determination in art. 7of the Bank’s By-Laws, the Committee has analyzed theactivities related to the internal control system of Itaubancoduring the half year period ended.

In the Committee’s meeting held on August 3, it has receivedthe above referenced semi-annual report, containing theevaluation of the operating conditions of the systemimplemented during 1999.

In our opinion, the recommendations and conclusionscontained therein should be accepted and approved. Wewould like to stress the fact that the system has a structuredesigned to ensure an efficient control of risks andcompliance.

This is the OPINION which we submit, in the terms of item 3of art. 7 of the By-Laws, which is to be recorded in theMeeting of the Board of Directors.

São Paulo, August 3, 2000

Carlos da Câmara Pestana

Jairo Cupertino

Luiz Assumpção Queiroz Guimarães

(Recorded during the Meeting of the Board of Directors held at August 7)

Mana

DiscussionAna

lysisJune 2000

The Information of the Management’sDiscussion & Analysis are available in English,Potuguese and Spanish at our site:

http://www.itau.com.br

gement’s

and

46

Highlights

Total AssetsLoan and Leasing Portfolio + Advances on Exchange ContractsSureties, Endorsements and GuaranteesSecurities + Interbank AccountsStockholders’ equity of Itaú Consolidated

R$ Million (except where indicated)

Jun 30,1999

Dec 31, 1999

Jun 30,2000

54,52918,233

3,33917,832

6,353

51,91117,299

2,70618,070

5,907

56,27815,408

2,21718,392

5,563

Consolidated Balance Sheet

2nd Q2000

1st Q2000Statements of Income

Net Income Recurring

Net Income Extraordinary

Net Income

Net Interest Income

Net Interest Income after Provision for Loan Losses

Banking Service Fees

Income per Shares ( R$ / thousand shares )

Consolidated Net Income (per thousand shares)

Number of Outstanding Share (in Million)

Book Value (per thousand shares)

Offered Dividends / JCP (**) (R$ Million)

Offered Dividends / JCP (**) per thousand shares

Market Capitalization (R$ Million)

Market Capitalization (US$ Million)

Performance Ratios ( % )

ROE Recurring (annualized)

ROE Extraordinary (annualized)

ROE (annualized)

ROA (annualized)

Risk - Based Capital Ratio

Efficiency Ratio (***)

Relevant Data

Assets Under Management

Employees

Active Customers ( Million )

Branches

CSBs

Automated Teller Machines

Ratings

Fitch IBCA Ltd. (London)

Short Term

Long Term

Individual

Legal Entity

Moody’s ( New York )

Financial Strength

Bank Deposits

Short Term

Long Term Debts

Standard & Poor’s (New York)

Local Currency

Thomson Financial BankWatch (New York)

Intra-Country Issuer

Atlantic Rating ( Rio de Janeiro )

435

-

435

1,169

1,006

871

3.70

117,677

53.99

187

1.59

17,395

9,664

30.3%

-

30.3%

3.2%

19.6%

58.6%

37,331

39,230

6.9

1,754

722

11,672

National

F1+

AA+

-

-

365

-

365

1,179

1,026

802

3.10

117,844

51.97

139

1.18

16,566

9,481

26.1%

-

26.1%

2.7%

20.8%

56.6%

34,135

39,072

6.9

1,761

757

11,746

International

B

BB–

B/C

2T

800

-

800

2,348

2,032

1,673

6.80

117,677

53.99

326

2.77

17,395

9,664

26.8%

-

26.8%

3.0%

19.6%

57.6%

37,331

39,230

6.9

1,754

722

11,672

C

B3

NP

B2

BB pi

A

AAA

959

(184)

776

2,235

1,954

1,723

6.58

117,910

50.09

426

3.61

17,834

9,969

35.1%

-6,1%

28.0%

3.0%

21.0%

59.8%

31,994

39,011

6.9

1,765

780

11,715

559

535

1,094

2,394

1,860

1,436

9.28

117,931

47.17

176

1.50

9,914

5,601

21.1%

20.1%

43.2%

3.9%

24.0%

56.2%

27,225

39,430

6.8

1,771

825

11,135

(*) To provide comparable figures, the Number of Outstanding Shares were adjusted considering the split of bank´s shares occurred in September 16, 1999.

(* *) JCP (Interest on Capital Amounting).

(* * *) Efficiency ratio was calculated using the recurring income.

1st Sem.2000

2nd Sem.1999

1st Sem.1999

47

Future expectations related to the reading of this analisys must take into consideration the external risks and uncertainties involved in any business activities such as changes inpolitical and economic conditions, exchange and interest rate fluctuations, technological changes, inflation, customer desintermediation, competitive presure over products andservices, changes in law.

Management Discussion and Analysis

The net income of Banco Itaú amounted to R$ 435 millionin the second quarter of 2000, corresponding to a 19.1%increase over the first quarter.

Shareholders’ Equity reached R$ 6,353 million, representinga 3.7% increase over the prior quarter.

The annualized return on Shareholders’ Equity was 30.3%and the annualized return on Total Assets reached 3.2%.

The increase in the results of Banco Itaú in thesecond quarter of 2000 is due to recurring events,related to certain policies which have beensuccessfully adopted and implemented by thecompany. Some of the several importantinitiatives are:

• The increase in volume of credit operations,associated with a strict control of the risksinvolved, is bringing significant results, inspite of the declining base interest rate inthe last months. In the first half of 2000the volume of credit operations, includingendorsements, sureties and guarantees,increased 7.8% from R$ 20,005 million toR$ 21,572 million.

• The incentives to the expansion and popularizationof the use of credit cards as a mean of payment havebeen contributing to the favorable results of the creditcard companies.

• Commercial campaigns aimed at the sale of capitalizationplans and pension funds had a positive impact on thepartial result from insurance, capitalization and pensionfunds.

• The financial evaluation of the investments made by theBank abroad has contributed to the increase in the secondquarter results, due to the higher dollar exchange rate.

In this quarter the rating of Banco Itaú by the agency Fitch– IBCA was improved, changing from “B +” to “BB – ”(long-term).

Net Income (R$ Million)

ROE (%)

535

360415

435522

437

333

1st Q 99

365

761

(77) (107)

2nd Q 99 3rd Q 99 4th Q 99 1st Q 00 2nd Q 00

226

48.1%

27.3%31.2%

30.3%

40.3%33.8%

26.2% 26.1%

72.9%

-5.2% -7.0%

18.6%

ROA(%)

4.0%

2.7%3.2%

3.2%

4.1%

3.3%

2.4%2.7%

5.7%

-0.6% -0.8%

1.7%

Net Income ExtraordinaryNet Income Recurring

ROE ExtraordinaryROE Recurring

ROA ExtraordinaryROA Recurring

1st Q 99 2nd Q 99 3rd Q 99 4th Q 99 1st Q 00 2nd Q 00

1st Q 99 2nd Q 99 3rd Q 99 4th Q 99 1st Q 00 2nd Q 00

Analysis of the Consolidated Performance

48


The efficiency, performance and several initiatives of BancoItaú received awards during the second quarter of 2000,consolidating the public recognition towards the policies of

Marketing and Sales, Social and Community actions and InvestorRelations implemented by the bank. We present below a chartcontaining the awards received in the period.

Awards Received in the Second Quarter 2000

Organization (*) Reason

"Top Social" - "Itaú Social" Program

"Top de Marketing" - "Flexprev Itaú" Product

"Top de Marketing" - "Itaucard" Product

"Top de Marketing" - "Super PIC do Milênio" Product

Columnists Award - Advertiser of the Year

The Most Successful - granted to Roberto Setubal

Highest Transparency Award 1999

Capital Market Spotlights - Publicly-traded Company 1999

Capital Market Spotlights - Publicly-traded Company 1999

Walter Fredrich Award 1999 - Investor Relations Professional - granted to Alfredo Setubal

Investor Relations Professional 1999 - granted to Alfredo Setubal

Investor Relations Professional 1999 - granted to Alfredo Setubal

Marketing Best of the Century - Work History

Awards for Excellence - Best Domestic Bank in Brazil

Awards for Excellence - Best Domestic Bank in Latin America

Awards for Excellence - Best Domestic Equity House

ADVB

ADVB

ADVB

ADVB

ABRACOMP

Banco Hoje Magazine

Atlantic Rating

ABAMEC - SP

ABAMEC - NACIONAL

ABAMEC - SUL

ABAMEC - NE

ABAMEC - NACIONAL

FGV, Ed Referência e Madia Assoc.

Euromoney Magazine

Euromoney Magazine

Euromoney Magazine

Social and Community Action

Marketing and Sales

Marketing and Sales

Marketing and Sales

Marketing and Sales

Performance and Efficiency

Investor Relations

Investor Relations

Investor Relations

Investor Relations

Investor Relations

Investor Relations

Marketing and Sales




(* ) ABAMEC - Associação Brasileira de Analistas do Mercado de Capitais (Brazilian Association of Capital Market Analysts)

ADVB - Associação dos Dirigentes de Vendas e Marketing do Brasil (Brazilian Association of Sales and Marketing Managers)

BRACOMP - Associação Brasileira dos Colunistas em Marketing e Propaganda (Brazilian Association of Advertising and Marketing Columnists)

Awards/Prizes

49


Strategic Alliance with AmericaOnline Latin America (AOLA)

Itaú considers the Internet the mainopportunity for development.

As a consequence, Itaú has given priority toits strategy for establishing a high degree ofcompetitiveness also in the virtual world, inline with its tradition in advanced researchand state-of-the art technology.

What we are seeing is the superposition ofthe traditional and virtual businessenvironments, in a period of strategic transitionwhere swift and aggressive moves establishstrong competitive positions. However, the

acquisition of qualifications in the virtual world occur morerapidly, efficiently and cost-effectively when a policy ofstrategic alliances with first-class partners is adopted.

On June 12, Itaú established a strategic alliance withAmerica Online Latin America, Inc. (AOLA) and itssubsidiary America Online Brasil Ltda. (AOLB), throughwhich Itaú will receive a 12% equity stake in AOLA. AOLAis in the process of going public, through an IPO to beheld at Nasdaq.

Note that Itaú will receive the shares without any cashdisbursement, because there will be the anticipatedreceipt of funds as set forth in the services agreementwith AOLB, simultaneously to the subscription of shares.This amount will be allocated to the income statementof Itaú for a five-year period, while the services areprovided.

3.2

Dec/97

Mar/98

Sep/98

Jun/98Dec/

99Sep

/99Dec/

98Mar/

99Jun/99

Jun/00Mar/

00

2.5

5.7

2.9

3.2

3.1

3.7

3.7

3.9

4.0

4.4

4.7

4.4

4.7

4.7

5.0

5.2

5.8

5.3

6.7

5.5

7.0

12.5

Individuals (Thousand)

Businesses (Thousand)

997

176

Customers1,067

196

June 00 March 00

PC and Internet Banking Transactions(Million)

Businesses

Individuals3.4

50


The agreement provides for the offering of all products andservices of AOLB to Itaú clients, with the right to a certainnumber of free access hours for Internet services. Itaú clientswill also have access to an Exclusive Financial Portal and tothe technology innovations which AOL, world leader on theInternet, may bring to Brazil.

While providing its clients with the best technology andcontents through AOLB, Itaú will keep focusing on thefinancial services and its policy of generation of value tothe shareholders and clients without deviating from itscore business.

The adoption of this strategy in cyberspace strengthens theBank’s aggressive position in offering on-line services inBrazil. With this strategy Itaú intensifies the attraction ofbusiness traffic generated by the distinctive solidity and

confidence it inspires. Clearly the consequences willbe the expansion of the client base and reduction inoperating costs.

In addition to this initiative, Itaú continues todevelop increasing improvements in its websites,introducing unique features and services to itsindividual and corporate clients. Through its ongoingresearch, the Bank has been striving to conform itsservices and products to the true needs and wishes ofits clients.

As part of its Internet strategy, Itaú continuously seeksalliances in B2B and B2C initiatives.

Dec/97

Mar/98

Sep/98

Jun/98Dec/

99Sep

/99Dec/

98Mar/

99Jun/99

Jun/00Mar/

00

3.5 2.3 1.9 1.5

5,5

5.5 5.6 5.8

3.1 4.4 5.2

14,000

12,000

10,000

8,000

6,000

4,000

2,000

-

(Thousand Transactions / Month)

Windows

DOS

Internet

Mar/97

Jun/97Sep

/97

Home & Office Banking Transactions

51

Economic Outlook

The month of April was marked by strong fluctuations ininternational markets, due to the fear of a large increase inthe American interest rates, the significant corrections inthe share price of technology companies in the United Statesand the increase in oil prices in the international market.This had a negative impact on the stock exchanges, foreignexchange and interest rates, and the brazilian risk perception.

However, domestic financial indicators continued to presenta positive evolution with the increase in the rate of GDP,the compliance with the inflation targets established withthe IMF and advancements in tax surplus achieved by thegovernment.

The tension which marked the month of April continuedduring most of May. The Federal Reserve increased theAmerican interest rates by 0.5%, Nasdaq continued tofluctuate and there was a deterioration in economicexpectations in Argentina, influencing the performance ofdomestic markets.

However, at the end of May, the first signs of slowing downin the American economy, the reduction of Nasdaq volatility,the announcement of new restrictive tax measures inArgentina and the good internal economic environmentimproved the expectations.

Except for the trade balance, which has been falling belowthe expectations, most of domestic financial indicatorscontinued to rise during the month of June, making itpossible for the Central Bank to reduce the base yearly interestrate from 18.5 % to 17.5 % during the meeting held onJune 20, also adopting a low bias.


343

3,160 3,337

4,9783,842

6,275

4,198

2,000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

-

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

-

6,786

17,395

4,6515,907

6,353592

721

880

17,834

1,869

1995 1996 1997 1998 1999 2000(*)

Market Capitalization Consolidated Net Income Consolidated Stockholder´s Equity

R$ Million

(*) Net Income refers to 1st half 2000 only.

800

Market Capitalization, Consolidated Stockholder´s Equityand Consolidated Net Income

52


Stock Market Performance

Banco Itaú preferred shares were trading at the end ofJune at R$158.50 per lot of 1,000 shares, a 2.3%increase over the prior quarter. Ordinary shares closedthe month valued at R$ 140.00 per lot of 1,000 shares,rising 7.7% over the value for the first quarter. Thus,the market capitalization amounted to R$17,395 millionat June 30, 2000, a 5% increase over March 31, 2000.

Consolidated net income per thousand shares amountedto R$ 3.70 for the quarter. Share book value perthousand reached R$ 53.99.

In the first half of 2000, there was a total payment inadvance of Interest on Shareholders’ Equity Net ofIncome Tax in the amount of R$ 38 million.

In this period, R$ 239 million were also placed under provision,corresponding to seven monthly payments to be made startingin July 2000 for a total of R$ 60 million; an additional paymentto be made on September 1, 2000 in the amount of R$ 90million and a complementary payment to be stated and completedin the future, amounting to R$ 89 million.

The Board of Directors, in a meeting held on May 8, 2000,determined that as of July 3, 2000, the monthly payment inadvance of Interest on Shareholders’ Equity will be raised fromR$ 0.075 to R$ 0.085 per lot of thousand shares.

The number of outstanding shares is adjusted due to the split performed in September 1999.

Consolidated Net Income (Per Thousand Shares)and Dividends / JCP (*)

( * ) Interest on Capital amounting.

( ** ) Thru June 30, 2000.

18

1995

16

14

12

10

8

6

4

2

0

700

600

500

400

300

200

100

01996 1997 1998 1999 2000 (**)

2.88

4.95

6.04

7.46

15.85

6.80

119 148 362 343 602 326

Dividends / JCP Consolidated Net Income (per thousand shares)

R$ R$ Million

53


1995 1996 1997 1998 1999 2000 (*)

3,249

4,7895,620 5,614

9,969 9,664

Market Capitalization

US$ Million

Itaú preferred shares have achieved a growingmarket share in trade volume at BOVESPAstock exchange. The monthly transactionsaveraged 3.7 thousand in the first half ofthe year, as compared to 1.8 thousand inthe same period last year, indicating anincrease in trading. The average monthlyvolume traded in the first half of the yearwas R$ 175.1 million, against to R$ 106.7million in the same period of 1999.

Preferred Shares - Appreciation (*)Evolution of US$ 100 invested in June 1990

6,962

1,173

Jun/90 Dec/91 Dec/92 Dec/93 Dec/94 Dec/95 Dec/96 Dec/97 Dec/98 Dec/99 Jun/00

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

US$

Itaú

Bovespa

10 years (Average)

5 years (Average)

12 Months (Average)

2000

52.80%

28.80%

78.17%

1.97%

Annual Appreciation

100

(*) In June 30, 2000

(*) Without Reinvestment

54


Balance Sheet Consolidated

Current and Long-Term Assets

Cash and Cash EquivalentsInterbank Funds AppliedSecurities

Own PortfolioOther

Interbank and Interbranch AccountsLoans

Loans:(Provision for Loan Losses)

Leasing OperationsOthers Assets

Foreign Exchange PortfolioOthers

Permanent AssetsInvestmentsFixed AssetsDeferred Expenses

Total Assets

R$ Million

%VariationMar 31, 00

51,092

1,4964,013

15,83114,071

1,7606,371

13,89115,123(1,232)

5548,9363,1175,819

3,002594

2,226182

54,094

447

612,594

(1,642)(2,394)

751(758)

9201,064(144)

46(774)(396)(379)

(11)(27)

124

436

0.9%

4.1%64.6%

-10.4%-17.0%42.7%

-11.9%6.6%7.0%

11.7%8.2%

-8.7%-12.7%

-6.5%

-0.4%-4.5%0.5%2.3%

0.8%

Assets Jun 30, 00

51,539

1,5576,608

14,18811,677

2,5115,613

14,81116,187(1,376)

6008,1622,7225,440

2,991567

2,237186

54,529

Current and Long-Term Liabilities

DepositsDemand DepositsSavings AccountsInterbank DepositsTime Deposits

Money Market Repurchase CommitmentsAcceptances and DebenturesInterbank and Interbranch AccountsBorrowingsOn-Lending Borrowings from Public InstitutionsOthers Liabilities

Foreign Exchange PortfolioOthers

Technical Provisions of Insurance, Pension Plansand Capitalization - Not VinculatedDeferred IncomeMinoritary Interest in Consolidated SubsidiariesStockholders’s Equity

Total Liabilities

%VariationMar 31, 00

45,527

22,1314,164

14,67417

3,2764,2893,1402,5043,5701,9007,9931,9896,004

1,904143395

6,125

54,094

97

(243)70

(184)234

(363)383

(223)648

(295)16

(189)(404)

215

79(18)

50228

436

0.2%

-1.1%1.7%

-1.3%1.401.8%-11.1%

8.9%-7.1%25.9%-8.3%0.8%

-2.4%-20.3%

3.6%

4.1%-12.7%12.8%3.7%

0.8%

Liabilities Jun 30, 00

45,624

21,8884,234

14,490251

2,9134,6722,9163,1523,2751,9167,8051,5866,219

1,983125445

6,353

54,529

55

Statements of Income

Interest IncomeLoansLeasesSecurities PortfolioTrade Finance and Foreign Exchange PortfolioCompulsory Deposits

Interest ExpenseDeposits, Money Market and Interbank FundsBorrowings and On-lendingLeasesProvision for Loan Losses


Other Operating Income (Expenses)Banking Service FeesCapitalization, Insurance and Pension Plans PremiumsExpenses in Constituting Technical Provisions of Insurance, PensionPlan Operations and CapitalizationInsurance ClaimsSelling Expenses - InsurancePension Plan Benefits ExpenseSalaries and Emploee BenefitsOther Administrative ExpensesTax ExpensesEquity Share in Income of Subsidiaries and AffiliatesOther Operating IncomeOther Operating Expenses

Operating Income

Non Operating Income

Income Before Income Tax and Social Contribution and Profit Sharing

Income Tax and Social Contribution

Extraordinary Results

Profit Sharing

Minority Interest

Net Income

Number of Outstanding SharesNet Income per Thousand Shares - R$

R$ Million

% Variation 1st Q/ 00

1,965902145863

749

(939)(588)(82)

(116)(153)

1,026

(486)802466

(103)(182)(50)(42)

(517)(639)(141)(53)100

(126)

540

10

550

(158)

(29)

2

365

117,844,337 3.10

13493101320(1)

(154)(93)(48)(3)

(10)

(20)

15070

118

(97)(10)

2(1)

(10)(68)

12144(9)

-

130

(14)

116

(16)

(12)

(18)

70

(167,031)0.6

6.8%10.3%6.9%1.5%

273.6%-2.8%

16.4%15.8%58.4%2.9%6.8%

-1.9%

-30.8%8.7%

25.3%

93.9%5.7%

-4.5%1.8%2.0%

10.7%-8.6%

-270.4%-9.4%

-

24.0%

-141.0%

21.1%

10.2%

41.1%

-836.4%

19.1%

- 0.1%19.4%

Corporation Law 2nd Q/ 00

2,0999951558752747

(1,093)(681)(129)(119)(163)

1,006

(337)871584

(201)(192)(48)(43)

(527)(707)(129)

9090

(126)

670

(4)

666

(174)

(40)

(16)

435

117,677,306 3.70


56

Analysis of the 2000 Second QuarterConsolidated Results

Banco Itaú’s result in the second quarter of 2000 waspositively influenced by the growth in volume of creditoperations, the increase in banking service fees and the

Net Interest Income

The net interest income chart shown above does not providefor a comprehensive financial analysis. In order to have abetter understanding, from a more managerial standpoint,we have reclassified accounts under Revenues and Expensesfrom Financial Intermediation as follows:


Credit Operations

We have netted the income and expenses from CommercialLeasing Operations, since they are the product of loans andfinancing granted to third parties, and added the resultingnet balance to the Credit Operations.

The income from foreign trade financing was also added tothe Credit Operations, as described in the item Income fromForeign Exchange.

Income from Securities

Income from Securities comprises the revenue from cashsurplus and revenue from its operations as dealer for theCentral Bank in the trade of government securities. However,the costs linked to the placement of those securities on themarket are allocated as Expenses from RepurchaseCommitments together with Deposits, Money Market andInterbank Funds. In order to provide a better assessment ofthe income from government security transactions, fixedand variable income securities, investment fund quotas andderivatives, among other securities, we have subtractedExpenses from Repurchase Commitments to the Income fromSecurities.

effects of the higher dollar exchange rate, reflected mainlyin investments abroad. Below, we will analyse in detail thevarious factors which contributed to the result in the period.

Net Interest Income “ Corporation Law”

R$ Million

2nd Q/ 00 1st Q/ 00 Variation %

Interest Income

Loans

Leases

Securities Portfolio

Trade Finance and Foreign Exchange Portfolio

Compulsory Deposits

Interest Expense (*)

Deposits, Money Market and Interbank Funds

Borrowings and On-Lending

Leases

Net Interest Income (* *)

Provision for Loan Losses


2,099

995

155

875

27

47

(930)

(681)

(129)

(119)

1,169

(163)

1,006

1,965

902

145

863

7

49

(786)

(588)

(82)

(116)

1,179

(153)

1,026

134

93

10

13

20

(1)

(144)

(93)

(48)

(3)

(10)

(10)

(20)

6.8%

10.3%

6.9%

1.5%

273.6%

-2.8%

18.3%

15.8%

58.4%

2.9%

-0.8%

6.8%

-1.9%

(*) Expenses of Financial Operations exclude Provision for Loan Losses.

(**) Financial Margin is the result of the difference between Financial Income and Expenses of Financial Operations.

57


Income from Foreign Exchange

Revenues and expenses linked to the foreign trade financingare usually accounted for under Income from ForeignExchange. However, such operations are essentiallyperceived as loan operations. Thus, for the purposes ofour analysis, we have subtracted foreign trade financingrevenues and expenses from Income from ForeignExchange and added them to Credit Operations andDeposits, Money Market and Interbank Funds,respectively.

Deposits, Money Marketand Interbank Funds

The expenses with Deposits, Money Market and InterbankFunds were added to Loan, Assignment and On-lendingOperations expenses, for being the result of the marketfunding efforts. We have subtracted the Expenses from

Repurchase Commitments from Deposits, Money Market andInterbank Funds, as described in item Income fromSecurities.

Income from Compulsory Deposits consists of the revenuefrom part of the Bank’s deposits, which are unavailablefor use as determined by the Central Bank. Those resourcesare remunerated at the same levels of their funding costs,without spread and, therefore, there is no gainassociated with such operations. Therefore, in ouranalysis, we compare the revenue earned through theapplication of those resources with the total fundingexpenses. In this way, the Income from CompulsoryDeposits is added to Deposits, Money Market andInterbank Funds.

Finally, we added to Deposits, Money Market andInterbank Funds the expenses from funding of foreigntrade operations, which used to be allocated to the itemIncome from Foreign Exchange.

Reallocated Net Interest Income

R$ Million


Loans

Leases

Foreign Trade Financing

Total of Loans


Repurchase Commitments Expenses

Total of Securities Portfolio



Total of Trade Finance and Foreign Exchange Portfolio

Adjusted Expenses of Deposits, Money Market andInterbank Funds

Compulsory Deposits

Borrowings and On-Lending


Total of Funding Expenses

Net Interest Income

902

29

20

951

863

(163)

699

7

(2)

5

(425)

49

(82)

(18)

(476)

1,179

93

7

7

106

13

(1)

12

20

(19)

2

(92)

(1)

(48)

12

(129)

(9)

10.3%

22.7%

34.8%

11.2%

1.5%

0.5%

1.7%

273.6%

973.8%

28.2%

21.6%

-2.8%

58.4%

-66.0%

27.1%

-0.8%

995

35

27

1,057

875

(164)

711

27

(20)

7

(517)

47

(129)

(6)

(605)

1,170

58


Net Interest Income remained steady, showing a slightreduction of 0.8% in the previous quarter, for a totalamount of R$ 1,169 million.

In credit operations, after the necessary adjustmentswere made, we verified the contribution of thegrowing volume of credit operations in a spreaddecrease environment, associated with the lowerinterest rates and the increased competition.

In order to increase the competitiveness of itsproducts, Itaú extended the maturity of someoperations and reduced the interest rate for loansand financing during the quarter, adopting a moreaggressive posture in granting credit, withoutneglecting the strictness in regard to the controlover assumed risks. The change in the mix of creditproducts, carried out through several marketingcampaigns in the last quarter, has favorablycontributed to the Bank’s efforts to increase itsmarket share.

We also observed an R$ 11.7 million increase inreallocated interest income, which reflects thesituation arising from the improved macroeconomicenvironment.

Income from Foreign Exchange kept in line with theexpectations, considering the low volatility of themarkets and the realized volume. In the secondquarter of 2000 the volume of foreign exchangetransactions amounted to US$ 27,100 million, theequivalent of a 2.1% decrease over the prior quarter.

The Annualized Net Interest Income reached 10.7% inthe quarter as compared to 11.0% in the prior quarter.



Loans

1,057,040

950,557

753,320

1,110,693

1,054,819

1,461,030

R$ Thousand


710,887

699,171

715,185

870,245

873,245

1,378,639

R$ Thousand


6,576

5,443

30,937

4,493

58,523

22,981

R$ Thousand

Borrowing Expense

2nd Q / 00

1st Q / 00

4th Q / 99

3rd Q / 99

2nd Q / 99

1st Q / 99

605,183476,203

379,537870,626

785,3391,649,123

R$ Thousand

2nd Q / 00

1st Q / 00

4th Q / 99

3rd Q / 99

2nd Q / 99

1st Q / 99

2nd Q / 00

1st Q / 00

4th Q / 99

3rd Q / 99

2nd Q / 99

1st Q / 99

2nd Q / 00

1st Q / 00

4th Q / 99

3rd Q / 99

2nd Q / 99

1st Q / 99

59


Analysis of Reallocated Net Interest Income

Income from Loans

Income from Leases

A ) Income from Loans and Leases



B ) Income from Securities + Trade Finance and Foreign Exchange

C ) Interest Income

D ) Interest Expenses

E ) Net Interest Income

Average Loans

Average Leases

Average Other Loans

Average Advances on Exchange Contrats

F ) Average Loans (*)

Average Cash and Cash Equivalents + Interbank Funds Applied

Average Securities Portfolio

Average Interbank and Interbranch Accounts

Average Loans Operations

G ) Average Earning Assets

Average Deposits

Average Acceptances and Debentures

Average Interbank and Interbranch Accounts

Average Borrowings

Average On-Lending Borrowings

H ) Average Funding Resources

Annual Average Ratio of Income from Loans and Leases

Annual Average Ratio of Interest Income

Annual Average Ratio of Interest Expense

Annual Ratio of Financial Margin

Net Interest Income

R$ Million

2nd Q / 00 1st Q / 00

Operation Volumes Average

Average Rates

1,022

35

1,057

711

7

717

1,775

(605)

1,169

15,655

618

167

1,373

17,646

6,837

15,009

5,992

17,646

45,485

22,009

3,028

2,828

3,423

1,908

33,196

= A/F

= C/G

= D/H

= E/G

26.2%

16.5%

7.5%

10.7%

922

29

951

699

5

705

1,655

(476)

1,179

15,088

553

178

1,435

17,077

7,186

14,856

5,415

17,077

44,533

22,678

3,046

1,499

3,487

1,883

32,593

24.2%

15.7%

6.0%

11.0%

(* ) Loans Operations : Include Loans, Leasing and Advances on Exchange Contracts

60

Provision for Loan Losses


The expenses with Provision for Loan Losses rose by 6.8%,totalling R$163 million in the second quarter of 2000. Theexpenses with provision for mortgage operations, securitizedrural loans and credit cards represent 2/3 of this total.

The balance of the Provision for Loan Losses amounted toR$1,443 million at the end of June, rising 12.1% over thebalance in March 2000.

As a consequence of the application of Resolution 2682,the write-offs were restricted to R$ 7.8 million in the period,linked only to deductible operations. The new regulationsdetermined that the write-offs can only be effected 360days after the loan due date, for operations with maturityof up to 36 months. The operations with maturity longerthan 3 years imply the realization of write-offs 720 daysafter the maturity date.

The reduction in volume of write-offs in the first monthsafter the publication of Resolution 2682 has caused, as aconsequence, an increasing balance of the Specific Provision.In the second quarter of 2000 the Specific Provision roseby 36.1% over the previous quarter, changing from R$ 322million in March to R$ 438 million in June. In the sameperiod, the balance of the Generic Provision rose by 14.0%,reaching R$ 389 million, and the Surplus Provision wasreduced by 1.4%, amounting to R$ 616 million.

The efficacy and efficiency of the risk controls of the creditportfolio are evidenced in the delinquency rate which wasstabilized at 2.5% in the second quarter, a slight improvementover the 2.6% in the previous quarter. Also, in the secondquarter of 2000 we had the recovery of R$ 45 million inloans which had been written-off as losses. In the previousquarter, this number had amounted to R$ 92 million. Thevolume of renegotiated loans was R$ 320 million.

Provision for Loan Losses by Risk Level

R$ Million

% Provided

0.0%

0.5%

1.0%

3.0%

10.0%

30.0%

50.0%

70.0%

100.0%

Minimum Provision RequiredLevel

Specific GenericCredit Portfolio

ExcessProvision

ExistingProvision

AA

A

B

C

D

E

F

G

H

Total

4,932

6,769

3,456

1,514

514

275

339

80

353

18,233

-

-

4

7

12

25

53

55

281

438

-

34

30

38

39

58

116

2

72

389

0

34

30

38

39

58

116

2

72

616

0

34

30

38

39

58

116

2

72

1,443

June 30, 2000

% Provided

0.0%

0.5%

1.0%

3.0%

10.0%

30.0%

50.0%

70.0%

100.0%

Minimum Provision RequiredLevel

Specific GenericCredit Portfolio

ExcessProvision

ExistingProvision

AA

A

B

C

D

E

F

G

H

Total

4,907

6,022

3,507

1,530

723

90

298

40

275

17,393

0

0

2

8

12

26

41

26

207

322

0

30

33

38

61

1

108

2

69

341

0

34

30

38

39

58

116

2

72

625

0

34

30

38

39

58

116

2

72

1,287

March 31, 2000

R$ Million

61


Ratio of Default (%)(*)

16

14

12

10

8

6

4

2

0Mar95

Jun95

Sep95

Dec95

Mar96

Jun96

Sep96

Dec96

Mar97

Jun97

Sep97

Dec97

Mar98

Jun98

Sep98

Dec98

Mar99

Jun99

Sep99

Dec99

3.2

15.2

6.8

5.74.9 4.5

3.7 3.22.63.0

2.3 2.3 2.0

Mar00

Jun00

2.5

Both indexes are calculated the same way and show the ratio between the value of overdue and unpaid installments in agiven period and the total installments due in the same period.

The difference is that the first one (blue line) includes in the two terms of the division all those contracts that has or notbeen written off against Provision for Loan Losses; whereas the second one (red line) extracts from the two terms of thedivision those contracts that have been written off against Provision for Loan Losses.

(*) Credit Card Companies are not included.

Not taken in account portion of credits receivables that is issued in Provision for Loan Losses

400

300

200

100

0

113

Jun/95

Individuals Businesses

Jun/00Dec/95 Jun/96 Dec/96 Jun/97 Dec/97 Jun/98 Dec/98 Jun/99 Dec/99

9963

38 33 56143

96 96111

224 248

180

136112 98

74

163

211 209

Balance of Renegotiated Credits

R$ Million

Ratio of Default = percentage of credits that are 11 to 30 days overdue in relation credits that are 11 to 30 days

62


Banking Service Fees earned in the second quarter of 2000amounted to R$ 871 million, showing a 8.6 % increase ascompared to R$ 802 million in the first quarter.

From the total increase, R$ 69 million, we stress the item“Other Services,” as shown in the table above, which wasrecorded for the inclusion in the quarter of Serasa -Centralização de Serviços dos Bancos S.A. in consolidatedresults.

Banking Service Fees

The coverage ratio, obtained with the division of BankingService Fees by Total Administrative Expenses (Salaries andEmployee Benefits + Other Expenses), was 71% in the secondquarter of 2000, as shown in the chart above and, takingonly Salaries and Employee Benefits, this ratio is 165%.

Banking Service Fees - June 2000

Current Account

Other Services

Mutual Fund Fees

Credit Cards

R$ Million

207

52

140

41

35

45

190

92

802

Mutual Fund Management Fees

Collection Fees

Current and Savings Account Service Fees

Collection Fees Agreements whith Public Co.

Interbank Tariff

Credit Operations

Credit Cards

Other Services

Total

2nd Q/00 1st Q/00 Variation %

208

52

145

37

37

48

214

130

871

1

-

5

(4)

2

3

24

38

69

0.5%

-

3.6%

-9.8%

5.7%

6.7%

12.6%

41.3%

8.6%

34%

17%

25%

24%

Service Fees Coverage Index over AdministrativeExpenses (*)

Active Customers (*) by Product

Overdraft Protection

Loan Operations

Credit Cards

Insurance

Capitalization Plans

Pension Plans

47%

18%

32%

12%

16%

6%

(*) Conceptually, a customer (represented by a CPF/CGC) is considered activewhen performing one or more transactions in a current account per month orhas a 3-month average balance not null in cash deposits.

Products and Services

In order to serve clients better, Itaú has been developing newservices and products, as well as improving existing ones. Inthis half year, the highlights were, in home banking alone:recharge of prepaid mobile phones, payment of municipaltaxes to participating municipal governments, registrationof preferred beneficiaries in setting up future electronictransfers of funds and electronic bank transfers (DOC), Itaucardcredit card invoice, statements of investment funds, fullwithdrawal from investment funds, bank statements for incometax returns for individuals or legal entities and registrationof automatic debits.

The percentage of clients per product in the month of June,2000, is represented as follows:

71%2nd Q/00

1st Q/00

1999

1998 55%

69%

69%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

(*) Salaries and Employee Benefits + Other Administrative Expenses

63


Mutual Funds Management

The Income from Mutual Funds Management amounted toR$ 208 million in the second quarter, showing a 0.5 % increaseover the first quarter of 2000.

The funds managed by Itaú rose by 9.4 % in the period,corresponding to a volume of R$ 3.2 billion. The market sharein June was 11.6 %, which gives the Bank the third positionfor managed funds in Brazil. In March the market share ininvestment funds was 11.3 %.

During the second quarter there was the actual transferof Matrix funds to Itaú. The agreement for co-management of investment funds entered between thetwo institutions was another important step of BancoItaú in segmenting its products and in its efforts toincrease the client base.

Collection

Collection fees did not show changes when comparingthe second with the first quarter. The volume ofsettlements operated in the first quarter of 2000amounted to R$ 24.9 billion and in the second quarterit was R$ 25.4 billion.

In this same quarter, the exchange of electronic fileswas implemented with registry for protest services in33 large collection regions, covering 45% of the totalvolume of bills protest in Brazil.

Current and Savings Accounts

The R$ 5 million variation is mainly due to the additionof 215 thousand current accounts comparing thesecond quarter with the January-March period. Sucheffect may also be associated with the impact verifiedin the quantities of MaxiConta - a system of paymentand banking services, which allows the client to selectthe best way of fulfilling its current account needs –which, as shown in the following chart, also evidences

10%

Institutional Investors

31%

9%

48%

1%

Private Foreign

Others Retail

1%

Corporate

Assets Under Management by Investor Category

In the thirty-party assets management, Itaú is distinguishedboth by the diversified client base and its capacity in assetmanagement, having a segmented and specialized internalstructure.

The total funds managed amounted to R$ 37.3 billion in June,and are shown below segmented into categories.

6.9

Dec/96

Dec/97

Dec/98

Jun/00Mar/

00Dec/

99Dec/

94Dec/

95

in R$ Billion

2.0

4.9

14.2

2.7

11.5

10.32.1

8.2

17.7

3.9

13.8

21.1

4.1

17.0

32.0

6.2

25.8

37.3

6.6

30.7

34.1

5.4

28.7

Assets Under Management

Portfolio Under Management Mutual Fund

64


the increase of 213 thousand new accounts fromMarch to June of 2000.

Note that Itaú, at the beginning of April thisyear, launched the institutional campaign “Itaúhas everything. Come join us” aimed at theincrease in client base.

Reassuring its commitment to be always presentin the Brazilian economy, Itaú currentlyoperates with 6.9 million savings accounts and9.6 million current accounts.

Payments through the Bank

The 9.8 % decrease in income from Paymentsthrough the Bank in the second quarter is dueto the concentration of payments occurred inthe first quarter. In the first quarter of 2000,51 million documents were processed and inthe second quarter, 42 million. Among thepayments types, there are the state taxes, fromwhich 83 % of the processed volume occurredin the first quarter, mainly due to IPVA(Automobile Tax) collection.

We stress the fact that 30 % of the paymentswere performed through self-service, during thefirst half of 2000.

Credit Operations

The increase of R$ 3 million observed in thefees from credit operations, reflect Itaú’s effortsfor leveraging its volume of lendings, especiallythe creation of new products in the past sixmonths, such as: special line of credit forPersonnalité clients, loans secured by checksas collateral and pre-approved credit for publicservants, as well as the availability of theproducts already operated by Banco Itaú forBanerj.

5,5135,578 5,567

5,6405,716

5,780

Jan/00

Feb/00

Mar/00

Apr/00

May/00

Jun/00

Quantity of Maxiconta

Thousands

Current Accounts Time

up to one year

54%

11%

14%

21%

more than 5 years

from 3 to 5 anos

from 2 to 3 years

Customers Profile

from 36 a 50 years

32%

21%

30%

17%up to 25 years

from 26 a 35 years

more than 50 years

65


Quantity of Credit Cards

Credit Cards by Brand

Diners2%

Visa30%

Mastercard68%

in million

1.1

1.8 1.8 1.9 1.9 2.02.2

2.4 2.5

Dec/96

Dec/97

Mar/99

Dec/98

Jun/00Mar/

00Jun/99

Sep/99

Dec/99

Credit Cards

In the second quarter of 2000, the bankingservice fees related to management andprocessing of credit cards amounted to R$ 214million, representing a 12.6 % increased overthe R$ 190 million in the first quarter, mainlydue to large number of credit cards issued inthe period. In the second quarter, a total of2,528 thousand cards was reached, whichcorresponds to a 6.3 % increase as comparedto the total of 2,380 thousand cards verifiedin March.

This increase, associated with the 14% rise innumber of transactions, reinforces the use ofcredit cards as a means of payment.

In compliance with Itaú’s strategy to intensifythe use of the resources available on theInternet, Itaucard has been striving to offer anincreasing volume of information to itsassociates, such as the balance of the invoicestatement updated online. This fact, associatedwith the aggressive strategy of credit card sales,integrating the main alternative sales channels,contributed to a 10.2 % market share of Itaúin June. The start of commercialization of creditcards through the ATMs, since December 1999,increased the sales in approximately 50 % and,starting in March 2000, Itaú began to offerthe Itaucard Electronic credit card to pre-selected individual clients withpre-approved credit limits,reaching 206 cards in June.

66


The chart above shows the evolution of the partial results ofinsurance, capitalization and pension plan operations, inwhich there was an increase of R$ 12 million in the secondquarter of 2000, the equivalent to 13%, as compared to thefirst quarter of 2000.

Note that those amounts do not reflect the net profits of the

Insurance, Capitalization and Pension Plan Operations

companies, because the income from the application ofreserves is allocated in the net interest income, and thecorresponding overhead is consolidated with the othercompanies of the conglomerate.

We present next a history of the evolution of the itemswhich make up the partial results of insurance,capitalization and pension plan operations.

Capitalization Premiums, Insurance and Pension Plans

Expenses in Constituting Technical Provisions of Capitalization

Insurance Claims

Selling Expenses

Pension Plans Benefits Expenses

Partial Result of Insurance, Capitalization and Pension Plans

R$ Million


584

(201)

(192)

(48)

(43)

100

466

(103)

(182)

(50)

(42)

88

118

(97)

(10)

2

(1)

12

25.3%

93.9%

5.7%

-4.5%

1.8%

13.3%

Technical Provisions of Insurance,Capitalization and Pension Plans - Not Vinculated

Insurance

Capitalization

Pension Plans

Total

Jun 30, 2000 Mar 31, 2000

537

834

612

1,983

524

822

558

1,904

R$ Million

Variation (%)

2.5%

1.5%

9.7%

4.1%

Technical Provisions of Insurance,Capitalization and Pension Plans - Vinculated

Insurance

Capitalization

Pension Plans

Total

Jun 30, 2000 Mar 31, 2000

283

2

67

352

268

1

63

332

R$ Million

Variation (%)

5.6%

100.0%

6.3%

6.0%

67


Insurance Operations

The Partial Result from Insurance showed areduction of 12% in the second quarter of 2000as compared to the previous quarter.

The reduction in this result is due mainly to theincrease in Expenses from Insurance Claims, causedby the updating of Legal Insurance Claims andIBNR Provision (caused by the revaluation of theparameters used in its constitution).

The Combined Ratio (Note 1) of the Itaú Group’sinsurance companies increased from 97.5% in thefirst quarter of 2000 to 101.6%, mainly as aconsequence of the evolution in Insurance Claims.Considering the semi-annual results, the CombinedRatio showed a significant improvement,changing from 105.6% in the first half of 1999to 99.6% in the first half of 2000.

With the implementation of improvements in riskacceptance and insurance fraud detection, theinsurance operations of the companies of Itaú Grouphave been showing a continuing improvement, whichis evidenced by the reduction in Combined Ratio.

The consolidated net income from insurancecompanies rose by 47.9%, changing from R$ 29million in the first quarter of 2000 to R$ 43 millionin the second quarter.

We highlight three items as the main reasons for thisimprovement:

1) Extraordinary Results: arising from the restitutionof the reinsurance catastrophe funds GL / PA(group life / personal accidents) managed by IRB.

2) Other Non-Operating Income (Expenses): arisingmainly from the revenue from reallocation of IRBshares and income from the sale of sharesoriginated in tax incentives.

3) The gains obtained from the items above werereduced in part by the increase in insurance claimscosts due to the updating of legal insuranceclaims and IBNR provision.

Note 1 :

Combined Ratio =( Insurance Claims + Commercialization Expenses + Administrative Expenses + Other Operating Expenses/Income )

(Earned Premiums )

Revenues from Insurance Premiums

Expenses in constituting technical provisions of insurance

Earned Premiums

Insurance Claims

Selling expenses - Insurance

Partial Result of Insurance

R$ Million


290

8

298

(192)

(48)

58

281

17

298

(182)

(50)

65

9

(9)

-

(10)

2

(8)

3.3%

-53.3%

0.1%

5.7%

-4.5%

-12.0%

68


Statements of Income - Consolidation of Insurance Operation(Itau Seguros, Banerj Seguros and Bemge Seguradora)

Retained Premiums

Changes in Technical Provisions

Earned Premiums

Insurance Claims

Sales Expenses

Administrative Expenses

Other Operating Expenses/Income

Result from Insurance Activities

Net Investment Income and Capital Gain

Financial revenues

Equity Share in Income of Subsidiaries and Affiliates

Real Estate Revenues (Expenses)

Tax Expenses (COFINS and others)

Operating Income

Other Non Operating Income (Expenses)

Income Tax and Social Contribution

Profit Sharing of Administration

Extraordinary Results

Minority Interest in Consolidated Subsidiaries

Net Income of the Period

Stockholders' Equity

ROE (Annualized) - Calculated with Acumulated Results

Insurance Claims / Premiums Earned

Sales Expenses / Premiums Earned

Administrative Expenses and Other Operating Expenses / Premiums Earned

Combined Ratio

Technical Provisions - Not Vinculated

R$ Million


287

9

296

(191)

(58)

(54)

2

(5)

34

43

-

-

(9)

30

12

(12)

(2)

15

(0)

43

661

23.0%

64.6%

19.5%

17.5%

101.6%

535

278

18

297

(181)

(60)

(46)

(3)

7

39

50

-

-

(11)

47

(1)

(17)

(0)

-

(0)

29

615

20.3%

60.9%

20.3%

16.2%

97.5%

525

9

(9)

(1)

(10)

2

(8)

5

(12)

(5)

(7)

-

-

2

(17)

12

5

(2)

15

-

14

46

2.7%

3.6%

-0.8%

1.3%

4.1%

11

3.1%

-50.3%

-0.2%

5.8%

-4.1%

18.1%

-173.1%

-164.8%

-12.4%

-14.7%

-

12.3%

-21.6%

-36.6%

-1.887.6%

-31.0%

1.109.7%

-

-27.4%

47.9%

-

7.4%

Statements of Income

69


90%

85%

80%

75%

70%

65%

60%

55%

Market

Claims Changes - Vehicles

In the chart above the evolution of the insurance claimsratio (*) for the automobile segment is shown, which inItaú Group presents better than market average behavior.The improvement shown is due to the ongoing revisions

2nd Quarter/2000

90%

85%

80%

75%

70%

65%

60%

55%

Itaú Group

Adjusted Average Monthly

15%

7%

9%

41%

28%

and perfection of the risk acceptance policies andsettlement of claims.

The automobile portfolio represents 41% of the totalpremiums earned in the Itaú Group insurance companies.

1st Quarter/2000

14%

5%

9%

45%

27%

Vehicles

Property

Life

Transportation Other

(*) Insurance Claim Ratio = Insurance Claim

Earned Premiums

Mar/98

Jun/

98

Sep/

98

Dec/

98

Mar/99

Jun/

99Se

p/99

Dec/

99

Mar/00

Mar/98

Jun/

98

Sep/

98

Dec/

98

Mar/99

Jun/

99Se

p/99

Dec/

99

Mar/00

Adjusted Average Monthly

70


Capitalization Operations

The Partial Result from Capitalization in the second quarter of 2000 showed a73% increase over the first quarter of 2000.

The “Super PIC 10 Million” campaign (single payment of R$1,000.00), carriedout in the months of May and June 2000, with the placement of 96 thousandplans, was the main reason for the 86% increase in the Results fromCapitalization.

Another highlight was the “PIC Carnaval” campaign (monthly payments ofR$40.00), carried out in January and February 2000, with the placement of220 thousand plans.

Capitalization Premiuns

Expenses in constituting technical provisions of Capitalization

Partial Result of Capitalization

Total Assets

R$ Million

2nd Q./00 1st Q./00 Variation %

202

(164)

38

2,851

109

(87)

22

2,744

85.7%

89.0%

73.1%

3.9%

93

(77)

16

107

900800700600500400300200100

0

Dec/96

Technical Provisions - Capitalization Plans

Jun/97 Dec/97 Jun/98 Dec/98 Jun/99 Dec/99 Jun/00

R$ Million

1,700

1,600

1,500

1,400

1,300

1,200

1,100

1,000

Dec/96

Number of Capitalization Plans

Jun/97 Dec/97 Jun/98 Dec/98 Jun/99 Dec/99 Jun/00

Thousand

836788

1,5621,552

71


Pension Plans Operations

The Partial Result from Pension Plans in the second quarterof 2000 was 384% higher than the result recorded in thefirst quarter of 2000.

Also deserves attention the 20% growth in the Resultsfrom Pension Plans, due to the successful campaign carriedout in May 2000, focussed on the PGBL products, whichcontributed to Itaú’s growth above the market average,doubling its market share in this segment of PrivatePension Funds.

Revenues from Pension Plans

Expenses in constituting technical provisions of Pension Plan

Pension Plans benefits expenses

Partial Result of Pension Plans

Total Assets

R$ Million


92

(45)

(42)

4

745

76

(34)

(42)

1

673

15

(11)

(1)

3

72

20.2%

33.3%

1.5%

383.7%

10.7%

800700600500400300200100

0

Dec/96 Jun/97 Dec/97 Jun/98 Dec/98 Jun/99 Dec/99 Jun/00

300

250

200

150

100

50

0

Dec/96 Jun/97 Dec/97 Jun/98 Dec/98 Jun/99 Dec/99 Jun/00

R$ Million

Thousand

569678

259 268

Technical Provisions - Pension Plans

Number of Pension Plans

72


78

7073

69

57 5864

58 58 57 59

Eficiency Ratio (%) (1)

1991 1992 1993 1994 1995 1996 1997 1998 1999

1st Q

/00

2nd Q

/00

Administrative Expenses grew R$ 78 million between thefirst and the second quarters of 2000. From this total, 12.8%relates to the Salaries and Employee Benefits and 87.2% toOther Administrative Expenses.

The efficiency ratio, which takes into account only recurringresults, changed from 57% to 59%, as shown on the chartto the right.

This variation was influenced mainly by the increase inAdministrative Expenses which we will discuss in detail next.

Salaries and Employee Benefits

The increase of R$ 10 million in Salaries and EmployeeBenefits, between the analyzed periods stems from theinclusion, in the second quarter, of Serasa - Centralizaçãodos Serviços dos Bancos S.A. - in Consolidated Results, whichcontributed with a R$ 11 million increase. In addition to this, more resources were invested in training, in the amount

of R$ 5.7 million and there was a reduction of R$ 5.0 millionin labor claims expenses, due to a larger number ofproceedings provisioned in the first quarter.

Human Resources Development Programs

The investments in training of personnel increased 114 %from the first to the second quarter of 2000, changing fromR$ 5.0 million to R$ 10.7 million.

The increase in training programs can be verified by thelarger number of employees being trained, which changedfrom 18,268 participants in the first quarter to 31,589 inthe second.

Among the main events in the period are the program forteam qualification to use the Internet at the branches andthe Commercial and Operational Areas Managers AnnualMeeting, aimed at the integration between those areas,planning of activities and the expectation of results for theupcoming periods.

Salaries and Employee Benefits

Other Administrative Expenses

Total Administrative Expenses

R$ Million


527

707

1,234

517

639

1,156

10

68

78

1.9%

10.6%

6.7%

Administrative Expenses

Salaries and Employee Benefits Breakdown

Obrigatory Benefits

62%

18%

11%

9%

Provision Social Taxes

Spontâneous Benefits

(1)Efficiency Ratio =(Salaries and Employee Benefits + Other Administrative Expenses)

(Net Income From Financial Operations + Provision for Loan Losses + Banking Services Fees + CapitalizationPremiums, Insurance and Pension Plans Premiums - Expenses in Constituing Techinical Provisions of

Insurance, Capitalization and Pension Plan Operations - Insurance Claims - Commercialization Expenses -Pension Plan Benefits Expenses + Other Operating Income)

73


Employee Benefits

The benefits offered to the employees totaled R$ 105.0million in the second quarter of 2000, from which R$47.2 million were spent on spontaneous benefits, suchas health care, supplemental pension plan and thetraining activities mentioned above.

Characteristics of the Workforce

Itaú had 39,230 employees in June 2000, as shownin the table below.

Age

more than 50

56%

3% 6%

35%

from 30 to 45

Up to 30

from 45 to 50

Sex

48%

52%

Men

Women

Education Level

60%

10%

30%High School Degree

Other

Bachelor’s Degree

Working Time in the Company

from 5 to 10

43%

13%24%

20%

from 10 to 20

up to 5

more than 20

Remuneration

47%

53%

Non Comissioned

Comissioned

The charts to the right present the characteristics of Itaú’sworkforce; especially the percentage of employees withbachelor’s degree, totaling 30.2 % in June, over the 29.6 %registered in March. The number of years worked is alsosignificant; 56 % of the employees have worked for morethan 10 years in the company. In addition, 53% of theworkforce correspond to employees on commission.

The average total of Salaries and Employee Benefits peremployee was R$ 3,904 in the second quarter of 2000, ascompared to R$ 4,251 shown in the first quarter.

Banco Itaú Buen Ayre

Bemge

Banerj

Itaú and Others

Total

Dec/96Company

Number of Employees

(in unities)

Dec/97 Dec/98 Dec/99 Mar/00 Jun/00

414

-

-

30,954

31,368

641

-

5,624

29,998

36,263

1,598

6,296

3,463

30,273

41,630

1,696

2,557

2,873

31,885

39,011

1,657

1,951

2,780

32,684

39,072

1,685

1,585

2,777

33,183

39,230

74


The inclusion of Serasa in the Consolidated Results also hadan impact on the increase in Other Administrative Expenses,totaling R$ 12 million.

In the second quarter of 2000, there was a 10 % increase inPremises expenses as compared to the accumulated amountin March. It is necessary to mention the higher number ofadaptations in lay-out at customer service sites, as well asrepairs in administrative areas, which had an impact of R$3.7 million on the expenses for asset maintenance andconservation.

The AOL (America On Line) agreement project, through whichItaú clients will have the benefit of free access to theInternet, as well as the consulting services aimed at themarket positioning in the several areas of activity of Itaú,were the main causes for the R$ 21 million increase shownunder Expenses for Third-Party Services.

Marketing expenses rose by R$ 6 million in the period. Thisis mainly the result of the increased mass mailing campaignsand the marketing campaigns for the products Itaucard,PIC (Itaú´s Capitalization Plan) and Pension Plans (Prevlineand PGBL - Independent Benefit Generating Plan) in additionto other corporate campaigns, aimed at attracting newcustomers.

In regard to the Depreciation/Amortization Expenses, whichrose by R$ 8 million, we would like to stress the cost ofacquisition of software.

The increased volume of documents involved in the processof brokerage, custody and clearance of checks, commercialinvoices and bank transfers (DOC), contributed for a R$ 2.7million increase shown under Expenses for Financial SystemServices.

Network BranchesItaú had 1,754 branches, 722 CSB (customer site branches)and 11,672 ATM (automated teller machine) in June 2000,representing a 0.8 % reduction in the total customer servicesites as compared to March. This slight variation is related toan optimization process of the distribution network, throughthe merger of Bemge units.

Other Administrative Expenses

Premises

Materials

Data Processing and Telecom.

Third Part Services

Transportation

Security

Marketing

Contributions and Donations

Depreciation and Amortization

Financial System’s Services

Other

Total Other Administrative Expenses

R$ Million


85

24

113

97

43

22

56

29

105

61

72

707

77

22

110

76

45

22

50

8

97

58

74

639

8

2

3

21

(2)

-

6

21

8

3

(2)

68

10.4%

9.1%

2.7%

27.6%

-4.4%

-

12.0%

262.5%

8.2%

5.2%

-2.7%

10.6%

Points of Sale by Geographic Region

North

79%

Southeast

Center-West

21%

8%

3%

2%

3%

5%

South

10,771Dec/98

ATM (own network) Branches Customer Site Branches

Mar/99

Jun/99

Sep/99

Dec/99

Mar/00

Jun/00

10,870

11,135

11,345

11,715

11,746

11,672

1,762 835

1,780

1,771

1,767

1,765

1,761

1,754

831

825

814

780

757

722

The geographical distribution of Itaú’s network is shownin the chart below.

Points of Sale (in unities)

Foreign

Northeast

75


Volume of Transactions Without Employee Intermediation (*)

PeriodInternet

Itaufax Position Sale/Redeshop

Total

-

-

-

-

-

-

-

-

-

-

8

24

11

15

-

-

-

-

1

4

10

13

13

14

15

16

4

4

-

-

-

-

-

-

1

3

7

14

23

34

11

12

142

232

272

276

401

561

730

749

813

875

971

1,107

322

322

ATM AutomatedProgramed Debit

Itaufone BankfoneDirect Conection

2

3

6

9

16

26

36

42

41

50

68

83

22

22

-

-

-

-

6

24

59

54

53

44

41

41

11

10

23

31

36

37

42

46

46

66

75

97

119

125

35

34

10

12

12

19

27

39

54

78

98

123

138

160

48

50

107

186

218

211

309

422

524

493

526

533

559

624

180

175

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

1st Q/00

2nd Q/00

Quantily in Million

(*) Only Banco Itaú up to 1999. In 2000, it was considered Banco Itaú, Banerj and Bemge.

Home & Office Banking

From the total number of transactions which could be transferredto self-service, 70 % were performed by the clients without theintervention from employees, totaling 322 million transactions.

Through Home & Office Banking, 37 million transactions werecompleted, 15 million of which were made through the Internethome banking, showing a 36 % increase as compared to thefirst quarter. The Internet home banking service is available to1.3 million registered clients. Community Actions

Itaú has been showing its social responsibilitythrough activities of support to several socialorganizations and community actions. In the secondquarter, Itaú donated R$ 20 million to the FundaçãoItaú Social, which contributed to the increase shownunder Contributions and Donations, on the OtherAdministrative Expenses table.

Itaú received the “Top Social” award for its communityactions through the Programa Itaú Social. In thisprogram, R$ 3.1 million were invested both in thefirst and second quarters, in a total of 103 projectsin several areas such as education, health and culture.

Points of Sale Equipaments

Computers and Others

Telecommunication

Bemge

Total Geral

R$ Million

1st Sem./00

89

30

10

15

144

Investments in Technology and Quality

Investments in Infrastructure of Data Processing /Telecommunications amounted to R$ 144 million in the firsthalf of 2000. This resulted in improvements on the ATM network,in addition to the use of Windows2000 on the equipment,which will improve the ease of use and increase the number offunctions.

In terms of processing capacity, we stress that Itaú has 3 mainprocessing centers with 16 CPU reaching a capacity of 8.2billion instructions per second and more than 1,500 disk unitscapable of storing 33 Terabytes in information. In order toprovide for processing efficiency, Itaú has a telecommunicationnetwork with 12 satellite loops, 11.6 thousand telephone linesand 38 thousand extensions.

76


Equity Share in Income of Subsidiaries and Affiliates

BPI SGPS

Variation in exchage rates for permanent investments abroad

Others

Total

R$ Million


7

84

(1)

90

9

(69)

7

(53)

(2)

153

(8)

143

-22.2%

-221.7%

-114.3%

-269.8%

RATING DOLLAR PTAX 800 (SALE )

Date

06/30/99

09/30/99

12/31/99

03/31/00

06/30/00

Rating

1.770

1.922

1.789

1.747

1.800

Variation

8.6%

-6.9%

-2.3%

3.0%

Tax Expenses

Tax Expenses in the second quarter of 2000 amounted to R$129million, an 8.6% decrease as compared to the first quarter. Theexpenses in the first three months of 2000 were higher basicallydue to the payment in full with discount of Municipal RealEstate Tax - IPTU on Itaú’s own properties.

Equity Share in the Income of Subsidiaries andAffiliates

The results from Equity Share in the Income of Subsidiaries andAffiliates were influenced by the devaluation of the real againstthe dollar during the second quarter as compared to the previousquarter. As a consequence, the accounting valuation ofinvestments abroad generated a significant portion of theR$90 million positive result in the period, in contrast to theR$53 million negative result obtained in the first quarter, periodin which the Brazilian currency foreign exchange rate wasincreased against the American dollar.

Itaú Corretora

Itaú Corretora de Valores intermediated a stockvolume of R$11.2 billion at BOVESPA in the firsthalf of 2000. This volume corresponds to a marketshare of 5.35%, ranking Itaú Corretora as the secondlargest in terms of intermediated volume, with anincrease of 87% over the same period in the previousyear and of 50% as compared to the second half of1999.

At BMF – Futures and Commodities Exchange –Itaú Corretora moved up from the nineteenthposition in financial volume in the second half of1999 to the fifth position in the first half of 2000.

Itaú Corretora is investing in hiring professionalsin all of its areas, especially the investment analysisarea and stock brokerage through the Internet(Home Broker), paving the way for the launch ofthe Internet brokerage operations website whichwill take place in the second half of 2000.

R$

77


Balance Sheet

Cash and Cash Equivalents, Interbank FundsApplied and Securities

Banco Itaú’s total assets amounted to R$ 54,529 million.

The sum of the balances of Cash and Cash Equivalents,Interbank Funds Applied and Securities (excluding repurchasecommitments) was R$ 17,914 million in June 2000,representing a 2.4% change over the total amount ofR$ 17,489 million in March. This balance which in Marchcorresponded to 32.3% of total assets, represented 32.8%of the total in June.

In order to readily determinate the liquidity ratio of BancoItaú, note that said balances are net of the obligationsrelated to repurchase agreements, listed in the chart below.

In this context, the investments on the Open Market andGovernment Securities – Brazil represent positions net oftheir relative funding linked to repurchase.

Cash and Cash Equivalents

Interbank Funds Applied

Money Market

Interbank deposits

Securities

Total - R$ million

Total - US$ million

Brazil Abroad

1,283

3,284

2,321

963

9,850

14,417

274

1,926

149

1,778

2,200

4,400

2,445

R$ MillionJun 30, 2000

Total

1,557

5,210

2,470

2,740

12,050

18,817

Brazil Abroad

1,266

1,355

248

1,107

10,968

13,589

230

795

145

650

3,763

4,788

2,740

Mar 31, 2000

Total

1,496

2,150

393

1,757

14,731

18,377

Securities + Interbank Deposits

(+) Cash and Cash Equivalents

(+) Money Market

Total Liquidity

(-) Money Market - Subject to repurchase commitments

(-) Public Securities - Subject to repurchase commitments

Total Liquidity (Not including repurchase commitments)

17,832

1,557

3,867

23,256

(1,398)

(3,042)

18,817

Reconciliation

Liquidity (Not including repurchase commitments)

R$ Million

78


Cash and Cash EquivalentsInterbank Funds Applied

Money MarketInterbank Deposits

SecuritiesPublic Securities - Brazil

Fixed Income Indexes Foreign Currency DCB - Debt conversion bond and other brazilian debt securities Privatization Currencies Others

Public Securities - Other Countries Bond's Argentina

Bond's Portugal Others

Private Securities Bank certificates of deposit

Shares in publicly traded companies Debentures Mortgages Options Premiums Euro Bond’s and others OthersSubtotalValuation AllowanceTotal

Variation

1,557 5,210 2,470 2,740

12,050 7,001 1,709

838 3,593

749 47 64

317 97

214 6

4,732 2,838

180 375 283 10

295 752

18,817 (903)

17,914

61 3,060 2,076

984 (2,681)

(748) (509)

254 (321) (145)

(45) 17 6

(41) 47 (0)

(1,939) (1,483)

(289) 36

(91) (2)

(45) (64) 440

(15) 425

4.1%142.3%527.8%

56.0%-18.2%

-9.7%-22.9%43.4%-8.2%

-16.3%-48.6%37.3%2.0%

-29.5%28.0%-1.6%

-29.1%-34.3%-61.7%10.5%

-24.3%-18.4%-13.2%

-7.9%2.4%1.7%2.4%

R$ Million

%

1,496 2,150

393 1,757

14,731 7,750 2,218

584 3,914

894 92 47

311 138 167

6 6,671 4,321

469 339 374 12

340 817

18,377 (889)

17,489

Liquidity (Not including repurchase commitments)

During the period analyzed, even though the portfolio doesnot present significant changes in its composition, we notea migration from the private securities portfolio, based onCDs totalling R$ 1,483 million, to investments mainly in theopen market.

In addition, the Government Securities - Brazil portfoliodecreased 9.7% in the period, especially in the foreignexchange and over positions.

The private securities portfolio amounted to R$ 4,732 millionat the end of June, a 29.1% decrease as compared to March2000. The credit area performs analyses and provides supportto the decision-making process for the acquisition ofprivately-issued securities which make up the Bank’sportfolio.

Jun 30, 2000 Mar 31, 2000

79


Credit Operations

Credit Operations represented 33.5% of the total assets at June 30, 2000; inMarch the percentage was 32.2%. The volume of the credit operations isgrowing significantly, as a reaction to the lower spread due to the fallinginterest rates and increased competition. The balance at June 30 was 4.8%higher than at March 31, totalling R$ 18,236 million. This increase is happeningespecially in connection with individual clients and the Corporate segment(companies with annual sales in excess of R$ 20 million). The pulverizationand the low volumes associated with the retail operations significantly reducethe credit risk. The operations in the Corporate segment, on the other hand,represent the assumption of a higher risk due to its concentration and thevolumes involved. However, those operations have a low delinquency ratehistory, arising from the high quality of the borrowing companies, and thetechniques and analyses applied by the Bank in granting loans and financing.

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 2000

R$ Million*

Credit Operations (1) Credit Operations and Garantees (2)

(*) In constant currency of December 31, 1995 up to this date; nominal valuesthereafter.

(**) June 30, 2000

(1) Credit Operations: Loans, Leasings, Advances on Exchange Contracts(AEC) and receivables.

(2) Garantees: Endorsements, Sureties and Other Garantees.

Credit Operations

Loans

Leasing

Others Receivables

AEC

Subtotal

Guarantees

Total

6,366

6,328

11,798

11,572

5,846

5,531

4,634

3,958

9,0578,022

12,325

14,12716,890

19,596

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

21,572

18,233

(**)

Credit Operations

16,187

647

166

1,234

18,233

3,339

21,572

15,123

589

168

1,513

17,393

2,848

20,241

Jun/00 Mar/00 %

7.0%

9.8%

-1.2%

-18.4%

4.8%

17.2%

6.6%

80


We present below analytical charts containing the compositionof the credit portfolio by industry sector, credit operationsby risk levels and the composition by maturity and risk.

The chart below presents the balances for the several typesof credit granted and collateral by industry sector.

Composition of the Portfolio by Business Sector(*)

Public Sector

Private Sector

617

20

636

577

706

766

272

304

278

148

66

140

69

526

3,851

778

669

1,595

756

3,020

2,479

363

2,842

384

176

560

2,851

1,619

195

15,717

16,353

38

-

38

238

111

199

122

60

21

27

24

7

1

100

909

32

-

-

4

4

-

-

-

12

237

249

-

-

1

1,195

1,234

-

--

2

10

6

0

0

1

1

1

0

0

6

27

19

1

0

38

38

-

-

-

3

1

3

551

-

8

647

647

Mar 31,2000

30

1242

548

147

74

16

159

146

23

14

2

8

136

1,273

145

366

812

381

1,560

-

-

-

54

221

274

12

-

32

3,297

3,339

6950

696

1,426 936

1,065 507 452 427 199 121 218 99

692 6,142

996

1,077 1,453 1,174 3,704

2,488 401

2,889

400 546 945

3,016

1,442

412

19,545

20,241

Jun 30, 2000

TotalTotal

68532

716

1,365 974

1,045 410 523 446 200 104 149 78

767 6,061

975

1,037 2,407 1,179 4,623

2,479 363

2,842

452 635

1,086

3,414

1,619

236

20,856

21,572

EndorsementsLeasesAECLoans

IndustryChemicals and Petrochemicals

Others

IndustryMetalurgy, Siderurgy and Mechanics

Chemicals and Petrochemicals

Food and Beverage

Pulping and Paper

Light and Heavy Vehicles

Electronic

Textil and Footwear

Autoparts and Acessories

Fetilizer, Insecticide and Defensive

Pharmaceutical

Others

Subtotal

Commerce

ServicesFinance

Energy, Telecommunications, Others

Others

Subtotal

Real EstateIndividual

Companies

Subtotal

Primary SectorAgriculture

Mining

Subtotal

Consumer

Credit CardsConsumer

Others

Total of Public Sector

Private Sector

Private Sector

Private Sector

Private Sector

Private Sector

Private Sector

Total of Private Sector

Total

(*) Endorsements and sureties included

Obs.: According to the new standards, the position on 03/31/00 already includes past due operations, wich by the previous standards were accounted for as BadDebts, in a addittion to “others credits”. This amount was R$ 409 million in Dec/99, R$ 351 million in Sep/99 and R$ 338 million in Jun/99.

Private Sector

R$ Million

81

The table below shows the risk rating for the several types of credit granted and collateral.

We present below the composition of risk of the credit portfolio by maturity.

Risk Level Total

269

51

15

170

32

6

-

-

275

28

303

327

202

7

6

112

10

2

-

339

23

361

76

36

1

-

40

4

-

-

80

-

80

16,187

9,974

2,539

832

2,842

647

166

1,234

18,233

3,339

21,572

AA

484

361

35

3

85

23

1

7

514

21

535

1,382

687

114

23

558

61

7

65

1,514

85

1,599

3,045

1,453

442

108

1,042

71

49

292

3,456

265

3,721

5,966

3,992

862

328

784

450

76

277

6,769

703

7,472

4,300

3,054

1,057

187

2

13

27

592

4,932

2,214

7,146

Loans Operations

Loans and trade receivables discounted

Financing

Farm and agribusiness financing

Real estate financing


Credit card financing

Leasing Operations

Advances on exchange contracts

Total

Endorsements and sureties

Total with endorsements and sureties

R$ Million

A B C D E F G

339

138

6

6

188

10

4

1

353

1

354

H

Range (days) Total

17

32

1

9

60

135

1

1

2

2

42

1

-

-

-

303

27

26

21

39

50

120

4

8

5

4

5

50

1

-

-

361

2

5

1

4

5

24

1

1

2

2

2

31

1

-

-

80

4,626

2,021

1,213

3,087

2,510

7,321

108

241

94

68

70

102

32

21

57

21,572

AA

115

68

22

37

76

136

7

11

13

51

1

-

-

-

-

535

324

164

79

135

162

647

11

12

64

1

-

-

-

-

-

1,599

679

405

246

428

417

1,328

14

203

-

-

-

-

-

-

-

3,721

2,557

558

443

995

860

2,038

21

1

-

-

-

-

-

-

-

7,472

895

757

393

1,422

856

2,774

49

-

-

-

-

-

-

-

-

7,146

Amounts Coming Due

0 to 30

31 to 60

61 to 90

91 to 180

181 to 360

over 360

Amounts Past Due

1 to 14

15 to 30

31 to 60

61 to 90

91 to 120

121 to 180

181 to 240

241 to 360

over 360

Total

R$ Million

Distribution by Age and Risk Level(*)

A B C D E F G

10

6

6

18

25

119

1

4

7

7

21

20

30

21

57

354

H

Obs.: According to the new standards, the position on the 03/31/00 already includes past due operations, which by the previous standards were accounted for as BadDebts, in addition to “other credits”. This amount was R$ 409 million in Dec/99, R$ 351 million in Sep/99 and R$ 338 million in Jun/99.

(*) Endorsements and sureties included

OBS: According to the new standards, the position on 03/31/00 already includes past due operations, which by the previous standards were accounted for as BadDebts, in addition to "other credits". This amount was R$409 million in Dec/99, R$ 351 million in Sep/99 and R$ 338 million in Jun/99.

Risk Level


82


The Large Companies portfolio showed a growth of R$ 729million (6.2%) in the second quarter, a reflection of theincreased economic activity.

The Individual Clients portfolio rose by 13.2% in the secondquarter of 2000, with a significant increase of R$ 398 million.This development evidences the result of the efforts to expand the portfolio through pre-approved loans which

simplifies the process of granting credit and makes it possibleto place orders for products through electronic media.

The Credit Card portfolio presented a 12.2% increase, whichrepresented a change of R$ 177 million, driven by thepopularization of the use of credit cards.

Credit Portfolio Development Consolidated by Client Type

Corporate

Small and Medium-Sized Companies

Individuals

Mortgage Individuals

Businesses

Total

Credit Card

Total

% % Variation %

11,680

1,214

3,016

2,488

401

2,889

1,442

20,241

57.7%

6.0%

14.9%

12.3%

2.0%

14.3%

7.1%

100.0%

729

73

398

(9)

(38)

(47)

177

1,331

6.2%

6.0%

13.2%

-0.3%

-9.4%

-1.6%

12.2%

6.6%

Risk Risk

12,409

1,287

3,414

2,479

363

2,842

1,619

21,572

Mar 31, 2000Jun 30, 2000Client

R$ Million

57.5%

6.0%

15.8%

11.5%

1.7%

13.2%

7.5%

100.0%

83

We present below comparative charts of the consolidated resources and the credits and collateral in local currency andforeign currency.

Loans / Financing

Loans / Financing - Real estate

Farm Financing

Leases

On-Lending BNDES

Other Credits (1)

Interbank Fund Applied

Public securities and Money market

Endorsements and Sureties

Total

R$ Million

Jun 30, 2000 Mar 31, 2000 Variation %

6,264

2,795

832

632

1,395

4,355

944

6,269

2,763

26,249

5,479

2,885

885

566

1,364

4,847

1,089

4,681

2,300

24,096

784

(90)

(53)

66

32

(492)

(144)

1,588

463

2,153

14.3%

-3.1%

-6.0%

11.6%

2.3%

-10.1%

-13.3%

33.9%

20.1%

8.9%

(1) Include: Securities (except public securities), endorsement and sureties and income receivable.

Financing and Guarantees to Trade-Related - Export

Financing and Guarantees to Trade-Related - Import

Other Local Financing of Foreign Subsidiaries

Bond's Portugal

Private Securities (OECD)

Interbank Deposits (OECD)

DCB's / EIB's / IDU's / Global Bond's

Bonus / CD's / Securities and Investment Funds (*)

Bond's Argentina

On-Lending - Resolution 63 / 2148 / 2312

Clients

NTN-D

Bonus / Clients

Total

US$ Million

Loans and Guarantees in Local Currency

Main Loans and Guarantee in Foreign Currency

Jun 30, 2000 %

1,563

664

695

118

51

1,154

534

424

57

724

388

138

198

5,984

-3.2%

2.1%

27.8%

24.2%

-17.4%

-10.6%

-3.4%

-16.4%

-28.3%

-4.4%

49.4%

-53.4%

-2.2%

-2.8%

Mar 31, 2000

1,615

651

544

95

61

1,291

553

507

79

757

260

295

202

6,154

Variation

(52)

14

151

23

(11)

(137)

(19)

(83)

(22)

(34)

128

(158)

(4)

(170)

Note (*) These 2 items were reclassified, changing the position for 03/31/2000 which had been published already, but the total was not changed.


84

Deposits

The balance of Deposits fell by 1.1% in the secondquarter of 2000, amounting to R$ 21,888million. During the period there was a continuingmigration of resources from savings deposits andtime deposits to investment funds, noticeablystarting in the second half of 1999, when therequirement of mandatory deposits on theresources applied to funds was eliminated. Thus,at the end of June, the balance of resourcesapplied to investment funds and managedportfolios totalled R$ 37,331 million, rising by9.4% as compared to the first quarter.

The Brazilian Central Bank reduced thepercentage of the compulsory set-asides fordemand deposits to 45%, starting on June 19(effective date for the group B institutions towhich Banco Itaú belongs), giving continuityto the process of increasing liquidity in thenational financial system and contributing toa decline in interest rates.

Breakdown of Deposits by Maturity

Demand deposits (*)

Saving deposits

Interbank deposits

Time deposits

Total

Maturity in Days31-180 + 365 Total Total

-

-

-

362

362

-

-

1

113

114

4,234

14,490

251

2,913

21,888

4,164

14,674

17

3,276

22,131

Jun 30, 2000 Mar 31, 2000

0-30 181-365

-

15

135

1,101

1,251

4,234

14,475

115

1,336

20,160

( * ) Demand Deposits Include Local and Foreign Currency Deposits.

R$ Million


85

Funding

During the month of April, Itaú tapped fromthe international market US$ 150 millionthrough Fixed Rate Notes with an 8.0%coupon per year, 8.08% annual yield and166 basic spread points over the AmericanTreasure Bonds. An additional US$ 30 millionwere tapped in May through Promissory

Notes issued by the Gran Cayman branch,with an 8.43% coupon per year, and 120 basicspread points over the American Treasury Bonds.A commercial paper program was completed in Junein the American market totalling US$ 300 millionwith two years maturity, and US$ 50 million ofwhich have already been issued.

Main Programes and Funding in Foreign Currency

Instrument Spread Over Treasury at Issue (%)

07/11/97

05/17/99

08/23/99

01/19/00

06/07/00

04/28/00

03/14/00

07/11/00

11/17/00

02/23/01

02/23/01

05/04/01

05/14/01

03/14/02

7.50000

10.00000

9.25000

9.25000

8.43000

8.00000

8.75000

1.37500

5.15700

4.10200

2.85000

1.20000

1.66000

2.35000

IssueCoordinator

100,000,000

100,000,000

100,000,000

100,000,000

30,000,000

150,000,000

100,000,000

680,000,000

Bankers Trust Co.

ABN Amro

Barclays Capital

Barclays Capital (*)

Banco Itaú S.A., Grand Cayman

ABN Amro

Merrill Lynch

Fixed Rate Notes

Fixed Rate Notes

Fixed Rate Notes

Fixed Rate Notes

Promissory Notes

Fixed Rate Notes

Fixed Rate Notes

Total

External Funding of Banco Itaú S.A. (Operations With Parties)

(*) Re-opening of the issuing of 08/23/99

AmountUS$

IssueDate

ExpiryDate

Coupon(%)

Commercial Lines and Structural Funding to Trade Related

Money Market Funding

Structural and Fianancial Internacional Funding

Funding from Brazilian Interbank Market

Own Working Capital

Total

US$ Million

Jun 30, 2000 %

1,875

571

2,189

9

1,409

6,053

-10.2%

30.1%

-5.2%

-4.2%

2.0%

-2.8%

Mar 31, 2000

2,088

439

2,309

10

1,381

6,227

Variation

(214)

132

(120)

(0)

28

(174)

US$ Million

Position in Jun 30, 2000


86

Stockholders’ Equity

Stockholders’ Equity of Banco Itaú amounted toR$ 6,353 million in the second quarter of 2000,corresponding to a 3.7% increase over the first quarter.The main reason for this growth is the accumulationof part of the income for the period. The Tier I capitalis 99.8% of this total. Net working capital wasR$ 3,807 million, an 8.3% increase over March 2000.The capitalization ratio, calculated through thedivision of Stockholders’ Equity by Total Assets,reached 11.7% in the second quarter.

The Central Bank issued new criteria for determiningthe minimum limits of shareholders’ equity over risk-weighted assets, establishing limits for riskdiversification and fixed asset ratio. Risks arising fromthe structural gap between interest rates of assetsand liabilities are now accounted for in determiningthe Capital Requirements. Also consolidated financialstatements are now mandatory, comprising allcontrolled companies (company consolidation) andnot only financial companies (financial consolidation).The company consolidation includes insurance,pension plans and capitalization companies, as wellas equity in companies the control of which isrepresented by the sum of the equity interest owned

by the whole corporation, notwithstanding the percentage,including equity owned by its administrators, controllingand affiliated companies, as well as the interest acquiredeither directly or indirectly through investment funds.

Therefore, the solvency ratio calculated on the financialconsolidation reached 19.6%. The same ratio calculated basedon the company consolidation was 17.9%, and both ratiosare well above the 11% minimum established by the BrazilianCentral Bank.

In order to conform to the fixed asset limit, the equityinterest recorded under current assets were included,including equity acquired through investment funds or givenas collateral for technical reserves. Investments in fixed assetsover 70% of the Stockholders’ Equity are now excluded fromthe calculation of the limits.

The fixed asset ratio was 63.1% in the second quarter of2000, based on the financial consolidation. The ratio was45.3% if based on the company consolidation. Thispercentage is below the 50% limit established by the CentralBank, effective on December 31, 2002.


Ratio determined by the previous standards

Changes in the weights

Increase in the weight of tax credits

Excess of foreign currency assets

Interest rate risk

Ratio determined by the previous standards

Jun 30,2000

23.3%

0.7%

-2.1%

-2.0%

-0.4%

19.6%

Risk - Based Capital Ratio (Bis Ratio)

23.9%

03.31.99 06.30.99 09.30.99 12.31.99 03.31.00 06.30.00

23.9% 23.3%24.2%

20.9% 21.0% 19.6%20.8%21.3% 24.0%

Ratio calculated in accordance with previus criteria, applied up in August 1999

Ratio calculated in accordance with criteria in place

87


Balance Sheet by Currency(*)

We present below the balance sheet by currency, showingthe financial position in local and foreign currency. Net

foreign exchange position at June 30, 2000 amountedto R$ 3,169 million, including the investments abroad.

R$ Million

TotalConsolidated Local Currency

Cash and Cash EquivalentsInterbank Funds Applied

Money Market

Interbank deposits

SecuritiesInterbank and interbranch accountsLoan and Leasing OperationsOther Assets

Foreign Exchange Portfólio

Other

Permanent AssetsInvestiments

Fixed Assets

Deferred Expenses

TotalDerivatives - Call Position

Futures

Options

Swaps

Total Assets after Adjustaments

1,5576,6083,867

2,740

14,1885,613

15,4118,1622,722

5,440

2,991567

2,237

186

54,529

1,3024,6813,719

963

11,9865,610

12,5157,8822,663

5,219

5,4563,173

2,111

172

49,432

5454,6633,719

944

6,3095,610

10,5815,802

623

5,179

2,708424

2,111

172

36,217

March 31, 2000

75618

-

18

5,678-

1,9342,0802,040

40

2,7482,748

-

-

13,215

284

10

681

14,190

BusinessAbroad

2741,926

149

1,778

3,3793

4,05453859

480

284144

126

14

10,458

Consolidated

1,4964,0132,257

1,757

15,8316,371

14,4458,9363,117

5,819

3,002594

2,226

182

54,094

Business in Brazil

June 30, 2000

R$ Million

DepositsDemand Deposits

Savings

Interbank

Time

Money Market Repurchase CommitmentAcceptances and DebenturesInterbank and interbranch accountsBorrowingsOn-Lending BorrowingsOther Liabilities

Foreign Exchange Portfolio

Others

Technical Provisions of Insurance, Pension Plansand Capitalization - Not VinculatedDeferred IncomeMinoritary Interest in Consolidated Subsidiaries

Stockholders' EquityCapital and reserves

Net Income

TotalDerivatives - Put Positions

Futures (Included Funds under Management)

Options

Swap (Included Funds under Management)

Total Liabilities after Adjustment

21,8884,234

14,490

251

2,913

4,6722,9163,1523,2751,9167,8051,586

6,219

1,983125445

6,3535,553

800

54,529

18,7933,972

14,171

1

649

3,7962,9543,1522,3011,9267,7061,527

6,180

1,98397

3736,3535,553

800

49,432

--

-

-

-

-1,943

1742,164

5161,185

762

422

-----

-

5,982

2,520

9

2,509

11,020

3,113276

319

249

2,268

8771,141

-2,034

-44659

387

-2872

2,7482,663

85

10,458

22,1314,164

14,674

17

3,276

4,2893,1402,5043,5701,9007,9931,989

6,004

1,904143395

6,1255,760

365

54,094

Assets

Liabilities

18,7933,972

14,171

1

649

3,7961,0102,977

1371,4106,522

764

5,757

1,98397

3736,3535,553

800

43,450

Foreign Currency

TotalConsolidated Local Currency

March 31, 2000

BusinessAbroad

ConsolidatedBusiness in Brazil

June 30, 2000

Foreign Currency

( * ) It does not exclude transactions between local and foreign businesses.

88

In the first half of 2000 Itaú increased the supply offinancial products and services on the Internet. Newwebsites were launched aimed at several market segments,such as:

• Corporate Investors, for the management of resourcesof corporate investors;

• Itaucred, which provides credit information forfinancing and leasing of new and used vehicles;

• Itaú Investnet Personnalité, with information oninvestment funds;

• Itaú Prevline, for the sale of Itaú’s pension plans; • Itaú International, containing information onproducts and services for foreign trade andinternational business offered by Itaú;

• Itaú Small Companies, for companies with annualsales below R$ 4 million;

• And finally, the Investor Relations website,designed to maintain an open comunicationschannel with the market and investors.

In addition, new services have been provided, whereclients are able to receive their bank statementsfor demand deposit and savings accounts by e-mailand mobile phone.

Internet

Source: Offline Bulletin Boardroom, Inc., New York

1st Quarter of 2000

89

Risk Management

The Central Bank of Brazil has been establishing regulations,standards and limits aimed at the compliance of theefficiency and solvency ratio of the institutions whichmake up the financial system. Similarly to Resolution 2606,published in July 1999, which determines the allocationof capital for foreign exchange rate risks, the Central Bankestablished, through Memorandum 2972, the requirementof capital for the coverage of risks arising from fixedinterest rate operations.

Even though such resolutions are conservative as comparedto the Itaú proprietary models, they prescribe conditionswhich limit the exposure to risk and/or leverage andprovide to the market a certain level of desired financialsoundness.

Banco Itaú has been continuously and elaborately improvedits complex proprietary models, always seeking to conformthem to the practices adopted by the global financialmarkets. As a consequence the Bank is in full compliance,not only in regard to the regulations from the CentralBank for market risks, liquidity, credit and operations,but also to the international risk management requirementsand standards.

Market Risk

The market risk management at Banco Itaú is subject tothe Economic Control Area which acts independently fromthe commercial and trading desk areas. This activity isbeing continuously improved through the developmentof internal control policies and the use of the latestanalytical methodology available for the assessment andmanagement of the assumed risks.

Analyses by risk factors are performed, e.g. analysis of the

Risk Management

gap between assets and liabilities (Structural Gap); analysisof estimated potential losses based on the statisticalbehavior of risk factors within a confidence range of 99%(Value at Risk or VaR); and potential risks from extremelyunfavorable market conditions (VaR-stress). The maintechnique for quantifying risk is to measure the potentialincrease (or decrease) of the value of assets (liabilities) dueto a change in market factors, which can be estimatedstatistically or projected through a poor market outlook.Statistical models are validated on a daily basis throughbacktesting and high-risk scenarios are frequently reviewedin order to guarantee that market risks are neverunderestimated.

As previously mentioned, the Central Bank, throughMemorandum 2972, established standards determining thelevel of capital for coverage of the risks from exposure tointerest rate variations, conforming the domestic market tointernational regulations.

On the other hand, the Central Bank reduced the factor ofexposure to foreign exchange risks from 50.0% to 33.3%,which had been previously defined by Resolution 2606,decreasing the capital requirement for financial institutions.

The combined effect resulting from the implementation ofMemorandum 2972 and the change in Resolution 2606 (viaMemorandum 2976) is shown in Table I. It is clear that thecapital requirement relative to the fixed interest rates is ata level which is lower than the capital surplus generated bythe reduction in weighting factor for foreign exchangeexposure, resulting in a decrease of R$ 206.9 million in theCapital requirement.

(970.4)

(646.3)

324.1

(117.2)

206.9

Resol. 2606 (50.0 % Ratio)

Circ. 2976 (33.3 % Ratio)

Decrease in Equity Requirement

Table I - Combined Effect - Required Shareholder's Equity

(Base Date 06/03/2000 - Amounts in R$ Million)

Increase in Equity Requirement

Decrease in Equity Requirement

Foreign Exchange Exposure

Prefixed Interest Rate Exposure

Combined Effect

90

Risk Management

We present below an analysis of the risk positionsarising from the Structural Gap of Itaú’s portfolio,based on proprietary models and the model defined bythe Central Bank.

In regard to VaR of Structural Gap (Table II), there wasa significant reduction in Global Risk in the secondquarter of 2000, changing from R$ 58.8 million at March31 to R$ 41.3 million at June 30, 2000. The determiningfactor for this decrease is the Foreign Exchange CouponRisk, due especially to the decrease in volatility risksat the end of June.

The risk position represented by the Structural Gaphas the tendency to become more stable, for beingdefined mainly by assets and liabilities linked tooperations with clients. As a consequence, the VaRlinked to the Structural Gap is more influenced by thefluctuations in market parameters.

In the case of the Proprietary Trading Desk, shown inChart III, the risk positions are fully manageable andcan vary substantially from one day to the next,depending on market conditions and expectations ofthe portfolio managers. Therefore, even if the marketexpectations significantly increase the risk of theportfolio, the positions can be reversed in the shortterm, thus reducing the VaR.

In this manner, at the end of the first half of 2000,the Global VaR (R$ 1.8 million) and its variation range(R$ 4.2 million and R$ 1.0 million) presentedsignificant reductions as compared to the previousquarter, basically due to a higher market stability andthe adoption of a more conservative risk managementstrategy.

In establishing a model for the assessment of aminimum capital for the coverage of risk from exposureto fixed interest rates, the Central Bank has chosen aStandard Model which foresees in its methodology theuse of the Standard VaR average in the previous 60business days, plus a safety multiplier determined as adecreasing function of the volatility. In addition, theStandard Model adopted a period of 10 business daysfor the liquidation of the positions in order to improvemarket liquidity.

Even though the allocation of capital calculated usingthe Standard Model of the Central Bank represents anextremely low value (around 1.7% of Stockholders’Equity), its use caused a substantial VaR increase ascompared to Itaú’s proprietary model. Therefore, it isclear that some criteria defined by the Central Bankdiverge from the proprietary model. The maindifferences stem from the disregard, in the Standardmodel, of the non-remunerated resources (demanddeposits, floatings and corresponding compulsory set-asides) and the use of much higher safety factors thanthose applied to the proprietary model.

National Currency Desk

Foreign Currency Desk

Floating Rate Desk

Impact of Diversification

Global VaRMaximum Global VaRMinimum Global VaR

0.5

1.8

0.5

(1.0)

1.84.21.0

0.4

4.6

4.9

(3.6)

6.37.11.1

Jun 30, 2000 Mar 31, 2000Trading Desk

Table III - VaR(*) of Proprietary Trading Desk

(*) VaR is related to the maximum potential loss of 1 day, withina confidence interval of 99%.

Fixed Rate

Referential Rate (TR)

Foreign Exchange

Impact of Diversification

Global VaR

2.2

23.4

24.2

(8.5)

41.3

3.8

28.7

40.5

(14.2)

58.8

Jun 30, 2000 Mar 31, 2000Risk Factor

Table II - VaR(*) of Structural GAP

R$ Million

R$ Million

(*) VaR is related to the maximum potential loss of 1 day, withina confidence interval of 99%.

91

Independent auditors' report onsupplementary information


August 7, 2000


CRC 2SP014428/O-6

José Marcelo BessanAccountant CRC 1SP129705/O-0

Alberto Spilborghs NetoAccountant CRC 1SP167455/O-0

We have examined, in accordance with auditing standardsgenerally accepted in Brazil, the financial statements of BancoItaú S.A. and the consolidated financial statements of BancoItaú S.A. and its subsidiaries as of and for the semestersended June 30, 2000 and 1999 and have issued our reportthereon dated August 7, 2000.

Our examinations were made for the purpose of forming anopinion on the basic financial statements of Banco ItaúS.A., and on the consolidated financial statements of BancoItaú S.A. and its subsidiaries taken as a whole. Thesupplementary information included in the Management'sDiscussion and Analysis is prepared for purposes of additionalanalysis and is not a required part of the basic financialstatements. Such information has been subjected to theauditing procedures applied in the audits of the basicfinancial statements and, in our opinion, is fairly stated, inall material respects, in relation to the basic financialstatements taken as a whole.

The AdministrativeCouncil and Stockholders

Banco Itaú S.A.

São Paulo - SP

The Management's Discussion and Analysis and this reportare intended solely for the information of the AdministrativeCouncil, and others who have received the financialstatements referred to in the first paragraph, for use inanalyzing those financial statements and should not to beused for any other purpose.

92

Executive BankingCommittee (CEB)

Estratégia Comercial

Executive FinancialCommittee

Operation CommitteeProcessamento de Dados

Credit Committee

Comission onManagement of

Financial Assets (CAAF)

Presidente andCEO

Roberto Egydio Setubal

Chairman of theBoard

Olavo Egydio Setubal

Human ResourcesExecutive CommitteeHuman Resources Policy

Audit Committee

Comunity - OrientedProgram ExecutiveCommittee (CEAC)

Processes and CostsCommittee (CRPC)

Financial AreaInvestment Area

Alfredo Egydio Setubal

Middle MarketBanking Operations

Ronald Anton de Jongh

Corporate BankingOperations

Sergio Silva de Freitas

EDP & BackOffice

Renato Roberto Cuoco

Account &Control Area

Henri Penchas

Human Resources &Administrative Area

Luiz Cristiano de Lima Alves

Products AreaMilton Luís Ubach

Monteiro

Legal ConsultantLuciano da Silva Amaro

Internacional AreaAlberto Dias de

Mattos Barretto

Banco Itaú ArgentinaAntonio Carlos

Barbosa de Oliveira

Personnalité (BFB) &Direct Channels

Ruy Villela Moraes Abreu

Audit & Credit AreaHumberto Fábio

Fischer Pinotti

MarketingAntonio Jacinto Matias

Retail BankingOperations

João Jacó Hazarabedian

Comissão de Administraçãode Ativos Financeiros

(CAAF)

Credit CommitteeImobiliary (CCI)

Platform DevelopmentCommittee

Itaú Empresas(Midlle Market)

Organization of Banco Itaú

93

ADMINISTRATIVE COUNCIL

ChairmanOlavo Egydio Setubal

Vice-PresidentsEudoro VillelaJosé Carlos Moraes Abreu

Members of the CouncilAna Lúcia de Mattos Barretto VillelaAntonio Gomes da CostaAntónio Tomás CorreiaCarlos da Câmara PestanaHenri PenchasJairo CupertinoLuiz Assumpção Queiroz GuimarãesLuiz de Moraes BarrosMaria de Lourdes Egydio VillelaMaurício Libanio VillelaRoberto Egydio SetubalSergio Silva de Freitas

EXECUTIVE BOARD

President and Chief Executive Officer (CEO)Roberto Egydio Setubal

Senior Vice-PresidentsHenri PenchasSergio Silva de Freitas

Executive Vice-PresidentsAlberto Dias de Mattos BarrettoAlfredo Egydio SetubalAntonio Jacinto MatiasHumberto Fábio Fischer PinottiMilton Luís Ubach MonteiroRenato Roberto Cuoco

Legal ConsultantLuciano da Silva Amaro

Executives DirectorsAntonio Carlos B. de OliveiraJoão Jacó HazarabedianLuiz Cristiano de Lima AlvesRodolfo Henrique FischerRonald Anton de JonghRuy Villela Moraes Abreu

Senior Managing DirectorsOsvaldo do NascimentoPaulo Roberto SoaresSilvio Aparecido de Carvalho

Managing DirectorsAldous Albuquerque GallettiAlexandre de BarrosAlexandre Zákia AlbertAluísio Paulino da CostaAntonio Carlos MorelliAntonio Pedro da CostaAntônio Sivaldi Roberti FilhoCarlos Henrique MussoliniCláudio Rudge OrtenbladEdelver CarnovaliFernando Antonio Neves LimaFernando de Assis PereiraHitoshi SuzukiJackson Ricardo GomesJoão Antonio Dantas Bezerra LeiteJoão Batista Videira MartinsJoão CostaJoaquim Marcondes de Andrade WestinJosé Antonio LopesJosé Caruso Cruz HenriquesJosé Cláudio AroucaJosé Geraldo Borges FerreiraJúlio Abel de Lima TabuaçoLuiz Antonio Fernandes ValenteLuiz Antonio Nogueira de FrançaLuiz Antonio RibeiroLuiz Antonio RodriguesLuiz Eduardo ZagoLuiz Fernando de Assumpção FariaLuiz Henrique CampígliaManoel Antonio GranadoMarco Ambrogio Crespi BonomiMarco Antonio AntunesMarco Antonio Monteiro SampaioMarcus Aurélio ManginiMaria Cristina LassMarta AlvesMáximo Hernández GonzálezPaschoal Pipolo BaptistaPatrick Pierre DelfossePedro de Alcântara Nabuco de AbreuRicardo Reisen de PinhoRonaldo FioriniVilson Gomes de Brito

ADVISORY COUNCIL

Daniel Machado de CamposFernando de Almeida Nobre FilhoJoaquim Francisco M. de CarvalhoLício Meirelles FerreiraLuiz Eduardo CampelloOlavo de Queiroz Guimarães Filho

INTERNACIONAL ADVISORY COMMITTEE

Olavo Egydio SetubalRoberto Egydio SetubalAlberto Dias de Mattos BarrettoAntonio Carlos Barbosa de OliveiraAntónio Tomás CorreiaCarlos da Câmara PestanaDieter RamplHenri PenchasJosé Carlos Moraes AbreuLorenzo David WeismanMaria de Lourdes Egydio VillelaRenato Roberto CuocoSergio Silva de FreitasYukio Yanase

INTERNAL CONTROLS COMMITTEE

PresidentCarlos da Câmara Pestana

Effective MembersJairo CupertinoLuiz Assumpção Queiroz Guimarães

Organization of Banco Itaú

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