Itaú Unibanco Holding S.A. Announcement to the Market - IFRS - Result for the 2nd Quarter and 1st Half of 2017

Brazil - Português

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Aug 01, 2017, 00:55 ET

SÃO PAULO, Aug. 1, 2017 /PRNewswire/ -- We present below the differences between our financial statements in BRGAAP¹ and in International Financial Reporting Standards - IFRS. We emphasize that the main difference in the result and equity relates to the allowance for loan losses, that uses the concept of incurred loss in IFRS and of expected loss in BRGAAP.

The complete consolidated financial statements under IFRS for the first half of 2017 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
	Jun/30/2017			Dec/31/2016
Total Assets	1,448,335	(87,113)	1,361,222	1,427,084	(73,843)	1,353,241
Cash and Cash Equivalents, Reserve Requirements, Interbank Deposits, Securities Under Repurchase Agreements, Financial Assets and Derivatives³	789,288	(15,630)	773,658	767,222	(16,395)	750,827
Loan Operations	479,875	(5)	479,870	491,225	(859)	490,366
(-) Allowance for Loan Losses⁴	(35,533)	7,872	(27,661)	(35,986)	9,014	(26,972)
Other Financial Assets⁵	114,166	(61,500)	52,666	106,458	(52,541)	53,917
Tax Assets⁶	60,602	(18,076)	42,525	61,210	(16,936)	44,274
Investments in associates and jointly controlled entities, Goodwill, Fixed and Intangible Assets, Assets Held for Sale and Other Assets	39,938	227	40,164	36,954	3,875	40,829

Current Liabilities and Long Term Liabilities	1,318,152	(95,422)	1,222,730	1,299,869	(81,442)	1,218,427
Deposits	352,327	-	352,327	329,414	-	329,414
Deposits Received Under Securities Repurchase Agreements³	339,123	(17,201)	321,922	366,038	(16,874)	349,164
Financial Liabilities Held for Trading, Derivatives, Interbank and Institutional funding	255,777	478	256,255	257,167	(228)	256,939
Other Financial Liabilities⁵	124,486	(60,755)	63,731	123,604	(51,772)	71,832
Reserves for Insurance, Private Pension and Capitalization	169,747	337	170,084	156,656	567 157,223
Provisions and Other Liabilities	59,232	(5,738)	53,494	49,320	(1,301)	48,019
Tax Liabilities⁶	17,460	(12,543)	4,917	17,670	(11,834)	5,836
Total Stockholders' Equity	130,183	8,309	138,492	127,215	7,599	134,814
Non-controlling interests	11,804	745	12,548	11,625	607	12,232
Controlling Stockholders' Equity⁷	118,379	7,564	125,944	115,590	6,992	122,582

¹BRGAAP represents the accounting practices adopted in Brazil for financial institutions, according to regulation of the Brazilian Central Bank; ² Resulted from reclassifications between assets and liabilities and other effects from IFRS adoption; ³ Resulted from the elimination of transactions between the parent company and exclusive funds (mainly PGBL and VGBL fund quotas), which are consolidated under IFRS; ⁴ Implementation of the criteria for calculating the Allowance for Loan Losses as defined in IFRS; ⁵ Difference in accounting, mainly for Foreign Exchange Portfolio, which started to be considered as net effect of Assets and Liabilities; ⁶ Difference in accounting, mainly for deferred taxes, which are now treated as a net effect of Assets and Liabilities in each of the consolidated companies; ⁷ Conciliation of Controlling Stockholders' Equity is presented in the following table.

Below, the conciliation of the Result and Equity, and the conceptual description of the major adjustments.

Conciliation
						R$ million
Adjustments	Equity	Result
	Jun/30/2017	2^ndQ/17	1^stQ/17	2^ndQ/16	1^stH/17	1^stH/16
BRGAAP - Values Attributable to Controlling Stockholders	118,379	6,014	6,052	5,518	12,066	10,702
(a) Allowance for Loan Losses	5,622	71	(149)	470	(78)	1,061
(b) Adjustment to market value of shares and quotas	209	-	-	-	-	-
(c) Acquisition of interest in Porto Seguro Itaú Unibanco Participações S.A	454	(3)	(4)	(3)	(7)	(7)
(d) Effective interest rate	(76)	1	-	8	1	20
(e) Financial Leasing Operation 659	(34)	(24)	38	(58)	86
(f) Other adjustments	697	320	126	(32)	446	(152)
IFRS - Values Attributable to Controlling Stockholders	125,944	6,369	6,001	5,999	12,370	11,710
IFRS - Values Attributable to Minority Stockholders	12,548	423	(123)	323	300	310
IFRS - Values Attributable to Controlling Stockholders and Minority Stockholders	138,492	6,792	5,878	6,322	12,670	12,020
Differences between IFRS and BRGAAP Financial Statements
(a) On IFRS (IAS 39), loan losses allowances must be made when there is objective evidence that loan operations have suffered a reduction in its value (Incurred Loss). On BRGAAP, the expected loss model is used 8. (b) On IFRS (IAS 39 and 32), stocks and quotas classified as permanent investments were measured at fair value and its gains and losses were recorded directly on Equity, with no impact on the income statement of the period (c) On IFRS, the effect of accounting at fair value the acquisition of the participation in Porto Seguro Itaú Unibanco Participações S.A. was recognized (d) On the IFRS (IAS 39), the assets and financial liabilities measured at amortized cost are recognized according to the methodology of effective interest rate, which appropriates the revenues and costs directly attributed to the acquisition, issue or disposal for the period of operation. On BRGAAP, the recognition of expenses and revenues from fees occurs at the time of contracting these operations (e) Under IFRS (IAS 17) the financial leasing operations are recorded as Fixed Assets on the other hand of Other Financial Liabilities. On BRGAAP, as of September 30, 2015, the consideration of these transactions are now recorded in income in accordance with CMN Resolution No. 3,617/08 (f) Other Adjustments mainly comprise the difference in the eligibility of operations of the Cash Flow Hedge for purposes of IFRS and the reversal of the Goodwill Amortizations pursuant the BRGAAP
⁸For more details see our Complete Financial Statements for the first half of 2017

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

												R$ million
Recurring Result	2^ndQ/17			1^stQ/17			1^stH/17			1^stH/16
	BRGAAP	IFRS	Variation	BRGAAP	IFRS	Variation	BRGAAP	IFRS	Variation	BRGAAP	IFRS	Variation
Result - Attributable to Controlling Stockholders	6,014	6,369	355	6,052	6,001	(51)	12,066	12,370	304	10,702	11,710	1,008
Exclusion of the Non-Recurring Events	155	31	(123)	123	(11)	(134)	278	20	(258)	107	59	(48)
Goodwill Amortization	123	-	(123)	125	-	(125)	248	-	(248)	188	-	(188)
Liability Adequacy Test - LAT	-	-	-	-	-	-	-	-	-	(140)	-	140
Provision for Contingencies	55	55	-	18	18	-	73	73	-	63	63	-
Civil Lawsuits - Economic Plans	22	22	-	18	18	-	40	40	-	56	56	-
Tax and Social Security	33	33	-	-	-	-	33	33	-	6	6	-
Impairment	7	7	-	-	-	-	7	7	-	9	9	-
Program for the Settlement or Installment Payment of Taxes	-	-	-	-	-	-	-	-	-	(12)	(12)	-
Others	(31)	(31)	-	(20)	(29)	(10)	(51)	(60)	(10)	-	-	-
Recurring Result - Attributable to Controlling Stockholders	6,169	6,400	231	6,176	5,990	(186)	12,345	12,391	46	10,809	11,769	960