Announcement to the Market

Brazil - Português

Disclosure of results for the third quarter and from January to September of 2019, according to International Financial Reporting Standards - IFRS

News provided by

Itaú Unibanco Holding S.A.

Nov 04, 2019, 19:20 ET

SÃO PAULO, Nov. 4, 2019 /PRNewswire/ -- We present below the differences between our financial statements in BRGAAP and in International Financial Reporting Standards – IFRS.

As from January 1^st, 2018, IFRS 9 came into effect, the accounting standard that replaces IAS 39 in the treatment of Financial Instruments. The new standard is structured to encompass the pillars of classification, measurement of financial assets and impairment and was applied retrospectively by Itaú Unibanco Holding.

The complete consolidated financial statements under IFRS from January to September 2019 are available at our website: www.itau.com.br/investor-relations.

Comparison between BRGAAP¹ and IFRS

						R$ million
Balance Sheet	BRGAAP	Adjustments and Reclassifications²	IFRS	BRGAAP	Adjustments and Reclassifications²	IFRS
Balance Sheet		Sep/30/2019			Dec/31/2018
Total Assets	1,738,340	(124,393)	1,613,947	1,649,614	(96,817)	1,552,797
Cash, Compulsory Deposits and Financial Assets At Amortized Cost ^{3 4 6}	1,197,699	(19,094)	1,178,605	1,172,276	(12,837)	1,159,439
(-) Provision for Expected Loss at Amortized Cost⁵	(33,467)	135	(33,332)	(33,326)	(47)	(33,373)
Financial Assets at Fair Value Through Other Comprehensive Income ⁴	132,470	(73,696)	58,774	105,065	(55,657)	49,408
(-) Expected Loss at Fair Value Through Other Comprehensive Income ⁵	(3,069)	2,983	(86)	(3,441)	3,356	(85)
Financial Assets at Fair Value Through Profit or Loss ⁴	341,762	(31,733)	310,029	315,383	(28,737)	286,646
Tax Assets⁷	51,420	(6,089)	45,331	50,242	(7,412)	42,830
Investments in Associates and Joint Ventures, Goodwill, Fixed Assets, Intangible Assets, Assets Held for Sale and Other Assets	51,525	3,101	54,626	43,415	4,517	47,932

Total Liabilities	1,599,808	(129,723)	1,470,085	1,505,490	(103,159)	1,402,331
Financial Assets at Amortized Cost ^{3 6}	1,259,161	(120,365)	1,138,796	1,220,233	(100,499)	1,119,734
Financial Assets at Fair Value Through Profit or Loss ⁴	47,638	80	47,718	27,675	36	27,711
Provision for Expected Loss (Loan Commitments and Financial Guarantees) ⁵	1,124	2,936	4,060	1,265	2,527	3,792
Provision for Insurance and Pension Plan	212,539	1,297	213,837	199,995	1,192	201,187
Provisions	19,068	-	19,068	18,613	-	18,613
Tax Liabilities ⁷	12,888	(5,628)	7,260	10,915	(5,631)	5,284
Other Liabilities	47,390	(8,043)	39,347	26,794	(784)	26,010
Total Stockholders' Equity	138,531	5,331	143,862	144,124	6,342	150,466
Non-controlling Interests	12,812	1,670	14,482	12,367	1,317	13,684
Total Controlling Stockholders' Equity ⁸	125,719	3,661	129,380	131,757	5,025	136,782

¹BRGAAP represents accounting practices in force in Brazil for financial institutions, according to regulation of the Central Bank of Brazil;

²Resulted from reclassification of assets and liabilities and other effects from the adoption of IFRS;

³Resulted from the elimination of transactions between parent company and exclusive funds (particularly PGBL and VGBL funds), which are consolidated under IFRS;

⁴Refer to reclassification of financial assets between measurement categories at fair value and amortized cost;

⁵Application of criterion for calculation of Expected Loss as set forth by IFRS;

⁶Difference in accounting, particularly from Foreign Exchange Portfolio, which are now be presented as net effect between Assets and Liabilities;

⁷Difference in accounting, particularly deffered taxes, which are now accounted for as net effect between Assets and Liabilities in each one of the consolidated companies;

⁸Reconciliation of Controlling Stockholders' Equity is presented in the following table.

Below is the reconciliation of Results to Stockholders' Equity, with the conceptual description of major adjustments.

		R$ million
Reconciliation	Stockholders Equity	Result *
Reconciliation	Sep/30/2019	3rd Q/19	2nd Q/19	3rd Q/18	jan-sep/19	jan-sep/18
BRGAAP - Values Attributable to Controlling Stockholders	125,719	5,576	6,815	6,247	19,101	18,772
(a)Expected Loss - Loan and Lease Operations and Other Financial Assets	203	(240)	(77)	189	(391)	(179)
(b)Adjustment to Fair Value of Financial Assets	(2,113)	(108)	(6)	(129)	11	(261)
(c)Acquisition of Interest in Porto Seguro Itaú Unibanco Participações S.A.	440	(1)	(1)	(2)	(3)	(6)
(d)Criteria for Write-Off of Financial Assets	1,963	(190)	(24)	(17)	(253)	8
(e)Financial Lease Operations	254	(30)	(45)	(40)	(111)	(120)
(f) Other adjustments	2,914	158	(135)	(123)	85	40
IFRS - Values Attributable to Controlling Stockholders	129,380	5,165	6,527	6,125	18,439	18,254
IFRS - Values Attributable to Minority Stockholders	14,482	340	163	206	659	528
IFRS - Values Attributable to Controlling Stockholders and Minority Stockholders	143,862	5,505	6,690	6,331	19,098	18,782
*Events net of tax effects

Differences between IFRS and BRGAAP Financial Statements
	(a)In the adoption of IFRS 9, there was a change in the calculation model of incurred loss (IAS 39) to expected loss, considering forward-looking information. On BRGAAP, the concept of Expected Loss is used, pursuant to BACEN Resolution No. 2,682/99.⁹
	(b) Under IFRS, stocks and quotas classified as permanent investments were measured at fair value and its gains and losses were recorded directly in Result. Additionally, there was a change in the model of classification and measurement of financial assets due to the new categories introduced by IFRS9.
	(c) Under IFRS, the effect of accounting at fair value of the acquisition of interest in Porto Seguro Itaú Unibanco Participações S.A. was recognized.
	(d) Criterion for write-off of financial assets on IFRS considers the recovery expectative.
	(e) Under IFRS (IAS 17) the financial lease operations are recorded as Fixed Assets, as a contra-entry of Other Financial Liabilities. Under BRGAAP, as from September 30^th, 2015, the consideration of these transactions are now recorded in result, in accordance with CMN Resolution No. 3,617/08.
	(f)Other Adjustments is mainly composed of reversal of Amortizations of Goodwill under BRGAAP.
	⁹More details in the Complete Financial Statements for January to September, 2019.

For comparison purposes, we present on the table below the Result and Recurring Result in IFRS and BRGAAP.

				R$ million
Recurring Result	3rd Q/19			3rd Q/18
	BRGAAP	IFRS	Variation	BRGAAP	IFRS	Variation
Result - Attributable to Controlling Stockholders	5,576	5,165	(411)	6,247	6,125	(122)
Exclusion of the Non-Recurring Events	1,580	1,431	(149)	207	1	(206)
Goodwill Amortization	149	-	(149)	206	-	(206)
Impairment	-	-	-	1	1	-
Voluntary Resignation Plan	1,431	1,431	-	-	-	-
Recurring Result - Attributable to Controlling Stockholders	7,156	6,596	(560)	6,454	6,126	(328)