Consolidated Financial Statementsww13.itau.com.br/novori/ing/download/demon/dcc310301.pdf · The...

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ConsolidatedFinancial

Statements1st Quarter 2001

2

Management Report

To our Stockholders:

We are pleased to present the Management Report andfinancial statements of Banco Itaú S.A. and its controlledcompanies for the first quarter of 2001 in accordance withthe regulations established by the Central Bank of Brazil(BACEN) and the Brazilian Securities and ExchangeCommission (Comissão de Valores Mobiliários) - CVM.

Relevant Events

Note of Condolence

It is with great sadness that we have to report the death on April18, 2001 of Dr. Eudoro Villela, Vice-chairman of the AdministrativeCouncil of Banco Itaú and Chairman of the Administrative Councilof Itaúsa, the holding company of the Itaú Group. Dr. Villellaplayed a key role as Chairman of Itaú between 1961 and 1975,and also as founder of Duratex S.A. and as an active counselor ofone of the largest companies in the Group.

His biography is one of impressive achievements in businessand medicine, having ren-dered important services to thecommunity in medical research. Particularly notable was Dr.Villela's time at the Curie Foundation, where he worked underthe direct guidance of Madame Curie herself.

In recognizing the debt of gratitude we owe to him, we cannotunderestimate the immense loss his absence will mean to allof us.

Changes in the Administrative Council

On April 23, 2001, at the Annual General Meeting and theExtraordinary General Meeting, tributes were paid to Dr. EudoroVillela, whose dedication and work for the Bank were un-derlined. A portrait of this leading figure in the Group's historywas unveiled in the stock-holders' meeting room and it wasfurther decided to name the fifth office block of the CEI -Centro Empresarial Itaúsa (The Itaúsa Business Center) - tobe occupied by Banco Itaú - after Dr Villela.

The Administrative Council will be strengthened by theelection of new well-known mem-bers with no previousconnections to the organization and prominent in their fieldsof busi-ness: Pérsio Arida, with a PhD from the MassachussetsInstitute of Technology and an ex-president of the CentralBank of Brazil and Roberto Teixeira da Costa, economist andfirst president of the CVM.

José Vilarasau Salat, president of the Caja de Ahorros yPensiones de Barcelona ("la Caixa") - with a 3% stake in Itaú- also becomes a member of the Administrative Council.

The contribution of these new members is a clear indicationof the priority the Bank is plac-ing on its model of corporategovernance, which is line with modern methods of administra-tion and underlines the importance placed on the creationof stockholder value.

Alfredo Egydio Arruda Villela Filho and Roberto Egydio Setubalwere elected as vice-chairmen of the Administrative Council.

Tributes were also paid to Counselors Mauricio Libânio Villelaand Jairo Cupertino, retiring members of the Council, bothof whom have contributed much to the development of theBank.

Creation of a Specialized Structure for SmallBusinesses

Banco Itaú has set up a Small Business Unit (UPE) to providespecialized services in the small business segment (sales ofup to R$ 4 million). Plans have been made to establishexclusive areas in the branches located in the principalBrazilian cities to provide complete privacy and a tailor madeservice.

Results, Stockholders' Equity and MarketCapitalization

Banco Itaú posted an accumulated net income on aconsolidated basis of R$625 million for the quarter, anannualized return on consolidated stockholders' equity of42.1% and growth of 71.2% compared to the same period in2000. This profit incorporates the positive impact of R$154million, a reflection of the exchange rate gain (10.6%) netof the basic Selic inter-est rate (3.6%) on unhedged overseasinvestments.

Consolidated net income per batch of one thousand shareswas R$5.51 a year on year growth of 77.7% (and 9.6%compared to the fourth quarter 2000). The book value wasR$60.06. The consolidated stockholders' equity was R$6,816million, an evolution of 11.3% in relation to March 2000(2.6% over December 2000).

Banco Itaú's preferred shares traded at R$168.01 per batchof one thousand shares at the end of the first quarter 2001,an appreciation of 8.4% against a depreciation of 19.0%registered by the Bovespa index compared with March 2000.Thanks to this, market capitalization totaled R$19,323 million(US$8,939 million), the largest among the entire universe ofLatin American banks.

Third Party Funding and Fund Management

At the end of the period, Itaú reported R$103,422 million inconsolidated own free funds plus those funded from thirdparties or managed by the bank 33.7% higher than in March2000 (4.6% over the period ending December 2000). Of thistotal, R$44,366 million corre-sponded to mutual funds andother managed funds which in turn grew by 30.0%.

During the quarter, the Bank raised a total of US$766 millionin the international capital markets, of particular note beingan 18 month Eurobond issue amounting to US$125 mil-lion

First quarter 2001

3

Management Report

and a Syndicated Loan Facility of US$275 million withmaturities of one and three years.

Assets and Loans

Itaú's consolidated assets were R$74,563 million at the endof the quarter, an increase of 37.8% over March 2000 (and7.2% compared to December 2000).

The credit portfolio grew by 47.9% over March 2000 (9.8%compared to December 2000). The portfolio of majorcorporates continued to grow strongly reporting an increaseof 48.7% over March 2000 (14.2% compared to December2000). The small business and middle market portfolio grewby 68.8% over March 2000 (-3.1%, compared to December2000). The private individual credit segment posted anincrease of 79.2% over March 2000 (20.5% over December2000), with a particularly strong demand coming frompersonal credit operations and consumer goods finance.

There was a 6.0% increase in the number of credit cardsissued while the number of clients accessing the bank viahome or office banking rose by 11.2%. The Itaú-AOL, servicelaunched in January had already surpassed 100,000subscribers by the end of the quarter.

The International structure continued to operate on the basisof separate structures for trade finance and operations fundedthrough overseas lines of credit. The consolidatedportfolio amounted to R$5,603 million (US$ 2,592 million),an increase of 41.5% in relation to March 2000.

Credit portfolio quality remained unchanged. Managementadopted a conservative policy and opted to increase the excessprovision for overdue credits by R$27 million to R$630million. The cost of provisioning for overdue credits fellcompared to the previous quarter in spite of the overallincrease in the outstanding balance of the portfolio.

Insurance, Private Pension Plans andCapitalization

Itauseg and its subsidiaries posted a net income of R$38million for the quarter, an annual-ized return of 23.3%.Earnings from insurance premiums registered R$375 millionwhile technical reserves stood at R$942 million. Itauseg'sclaims index was 59.6%, against 60.9% posted for the sameperiod in 2000. Thanks to this, the combined ratio was 93.2%,an improvement of 4.3 percentage points.

Itaucap and Itauprev posted technical reserves at the end ofthe period of R$821 million and R$971 million, respectively.

International Presence

Banco Itaú Buen Ayre (IBA) closed the period with US$728million in assets and US$319 million in loans. Due to theArgentine economic crisis and a revision of the Bank's creditportfolio using risk management monitoring, IBA decided toadopt a more restrictive ap-proach to credit. This decisionhowever, in no way reflected any relevant event related to adeterioration in the bank's credit portfolio. IBA continues tohave an extremely low expo-sure to the public sector andenjoy very high levels of liquidity. Deposits were US$510mil-lion, an increase of 3.5% over the same period in 2000.

Banco Itaú Europa, S.A. (BIE), controlled by Itaúsa Portugaland regulated by the Bank of Portugal, continues to focuson trade finance and provide support to European companiesinvesting in Brazil. The bank closed the quarter with totalassets of Eur. 1,686 million (US$1,483 million) andstockholders' equity of Eur. 194 million (US$171 million), ayear-on-year growth of 37.3% and 6.7%, respectively. Netincome was Eur. 5 million (US$4 million), an increase of69.3%, representing an annualized return of 10.9% onstockholders' equity.

Banco Itaú Europa Luxembourg, also controlled by Itaúsa Portugaland regulated by the Central Bank of Luxembourg, - a bankwhich operates exclusively in the area of private banking -reported net profits of Eur. 1.9 million (US$1.7 millions) withan annualized return of 28.8% on stockholders' equity. Totalfunds managed by the Bank were in excess of US$796 million.

Human Resources

Payroll (fixed and variable) together with labor charges andfringe benefits amounted to R$612 million. Of this amount,spontaneous benefits were R$34 million, the most notableitem of which were contributions to the SupplementaryPension Plan provided by the Itaubanco Foundation at a totalcost in the quarter of R$7 million.

Acknowledgements

We wish to thank our stockholders and clients for the supportand trust which are indispensable for Itaú's continueddevelopment. To our employees and service suppliers, wealso wish to express our appreciation for their endeavor, whichhas enabled the Bank to achieve outstanding results inaddition to the constant improvement in our products andservices.

(Approved at the Meeting of the AdministrativeCouncil of May 2, 2001)

4

Board of Directors

Administrative Council

Chairman

Olavo Egydio Setubal

Vice Chairmen

Alfredo Egydio Arruda Villela Filho (*)

Eudoro Villela (in Memoriam)

José Carlos Moraes Abreu

Roberto Egydio Setubal

Directors

Ana Lúcia de Mattos Barretto Villela

Carlos da Câmara Pestana

Henri Penchas

Jairo Cupertino

José Vilarasau Salat (*)

Luiz Assumpção Queiroz Guimarães

Luiz de Moraes Barros

Maria de Lourdes Egydio Villela

Maurício Libanio Villela

Pérsio Arida (*)

Roberto Teixeira da Costa (*)

Sergio Silva de Freitas

Executive Board

I - Executive Committee

President and CEO


Senior Vice Presidents

Henri Penchas

Sergio Silva de Freitas

Executive Vice Presidents

Alberto Dias de Mattos Barretto

Alfredo Egydio Setubal

Antonio Jacinto Matias

Humberto Fábio Fischer Pinotti

Milton Luís Ubach Monteiro

Renato Roberto Cuoco

Legal Advisor

Luciano da Silva Amaro

Executive Officers

Antonio Carlos Barbosa De Oliveira

João Jacó Hazarabedian

Luiz Cristiano de Lima Alves

Rodolfo Henrique Fischer

Ronald Anton de Jongh

Ruy Villela Moraes Abreu

Silvio Aparecido de Carvalho

II - Managing Directors

Senior Managing Directors

Carlos Henrique Mussolini

Cláudio Rudge Ortenblad

Marco Ambrogio Crespi Bonomi

Osvaldo do Nascimento

Paulo Roberto Soares

Managing Directors

Alberto Fernandes

Aldous Albuquerque Galletti

Alexandre de Barros

Alexandre Zákia Albert

Aluísio Paulino da Costa

Anibal Malgueiro Moreira

Antonio Carlos Morelli

Antonio Pedro da Costa

Antonio Sivaldi Roberti Filho

Arnaldo Pereira Pinto

Dieter Rudloff (*)

Edelver Carnovali

Fernando Antonio Neves Lima

Fernando de Assis Pereira

Gian Paolo Aslan

Heli de Andrade

Hitoshi Suzuki

Jackson Ricardo Gomes

Jaime Augusto Chaves

João Antonio Dantas Bezerra Leite

João Batista Videira Martins

João Costa

Joaquim Marcondes De Andrade Westin

José Antonio Lopes

José Caruso Cruz Henriques

5

Board of Directors

José Cláudio Arouca

José Geraldo Borges Ferreira

José Valério Macucci (*)

Júlio Abel de Lima Tabuaço

Luiz Antonio Fernandes Valente

Luiz Antonio Nogueira de França

Luiz Antonio Ribeiro

Luiz Antonio Rodrigues

Luiz Eduardo Zago

Luiz Fernando de Assumpção Faria

Luiz Henrique Campíglia

Manoel Antonio Granado

Marcelo Habice da Motta

Marco Antonio Antunes

Marco Antonio Monteiro Sampaio

Marcus Aurélio Mangini

Maria Cristina Lass

Maria Elizabete Vilaça Lopes

Marta Alves

Máximo Hernández González

Paschoal Pipolo Baptista

Patrick Pierre Delfosse

Pedro de Alcântara Nabuco De Abreu

Ricardo Reisen de Pinho

Ronaldo Fiorini

Vilson Gomes de Brito

Audit Committee

Sitting Members

Gustavo Jorge Laboissiere Loyola

Alberto Sozin Furuguem

Iran Siqueira Lima

Respective Substitute Members

José Marcos Konder Comparato

José Roberto Brant de Carvalho

Walter Dos Santos

Advisory Committee

Daniel Machado de Campos

Fernando de Almeida Nobre Filho

Joaquim Francisco Monteiro De Carvalho

Lício Meirelles Ferreira

Luiz Eduardo Campello

Olavo de Queiroz Guimarães Filho

International Advisory Committee



Alberto Dias de Mattos Barretto

Antonio Carlos Barbosa de Oliveira

Artur Eduardo Brochado dos Santos Silva (*)

Carlos da Câmara Pestana

Dieter Rampl

Henri Penchas

Isidro Fainé Casas (*)

José Carlos Moraes Abreu

Keiji Yokooji

Lorenzo David Weisman

Maria de Lourdes Egydio Villela

Renato Roberto Cuoco

Roberto Teixeira da Costa (*)

Sergio Silva De Freitas

Itaubanco Share Options Committee

Chairman


Sitting Members

Carlos Da Câmara Pestana

José Carlos Moraes De Abreu


Roberto Teixeira Da Costa (*)

Internal Control Committee

Chairman

Carlos Da Câmara Pestana

Sitting Members

Henri Penchas (*)

Jairo Cupertino

Luiz Assumpção Queiroz Guimarães

(*) Effected by the Shareholder' Meeting and the Board of Directors on April 23, 2001. Awaiting formed registration by the Central Bank of Brazil.

6

Consolidated Balance Sheets Three-month periods ended on March 31, 2001 and 2000(In thousands of reais)

ASSETS 03/31/2001 03/31/2000

CURRENT AND LONG-TERM ASSETS ............................................................................................................ 71,345,104 51,091,878 Cash and cash equivalents ........................................................................................................................... 1,529,899 1,496,118 SHORT-TERM INTERBANK DEPOSITS ........................................................................................................ 7,172,710 4,013,295 Money market........................................................................................................................................................................................................ 4,292,137 2,256,735 Interbank deposits............................................................................................................................................................................................. 2,885,690 1,756,560 (Valuation allowance).............................................................................................................................................................................................................. (5,117) - SECURITIES.................................................................................................................................................... 19,642,292 15,830,564 Own portfolio .............................................................................................................................................................................................................................. 13,114,721 14,070,863 Subject to repurchase commitments .............................................................................................................................. 6,418,081 1,988,046 Pledged in guarantee .............................................................................................................................. 761,124 - Subject to forward commitments: Unexercised contracts and premiums ......................................................................................................................................................................... 166,609 11,284 Subject to external funding ................................................................................................................................................................................................... - 228,578 Deposited with the Central Bank ........................................................................................................................................................................................ 152,759 324,473 Privatization certificates ................................................................................................................................................................................................... 2 95,894 (Valuation allowance) .............................................................................................................................................................................................................. (971,004) (888,574) INTERBANK ACCOUNTS............................................................................................................................... 7,816,034 6,367,653 Pending settlements ................................................................................................................................................................................................ 3,396,140 2,225,729 Compulsory deposits: Central Bank of Brazil ..................................................................................................................................................................................................... 4,146,073 4,078,068 National Housing System .......................................................................................................................................................................................... 268,100 63,527 Correspondents ..................................................................................................................................................................................................................... 5,721 329 INTERBRANCH ACCOUNTS ........................................................................................................................ 23,401 3,333 Third-party funds in transit ................................................................................................................................................................................................… 2,135 1,569 Own funds in transit................................................................................................................................................................................................. 21,266 1,764 LOAN OPERATIONS ..................................................................................................................................... 20,116,304 13,890,694 Loans: Public sector ....................................................................................................................................................................................... 544,679 619,170 Private sector .................................................................................................................................................................................................................. 21,427,559 14,503,757 (Allowance for loan losses) .................................................................................................................................................................................................. (1,855,934) (1,232,233) LEASING OPERATIONS ................................................................................................................................ 1,018,695 554,328 Lease receivables: Private sector .................................................................................................................................................................................................................. 1,109,702 588,574 (Allowance for leasing losses)....................................................................................................................................................................... (91,007) (34,246) OTHER RECEIVABLES ................................................................................................................................. 13,493,206 8,550,802 Foreign exchange portfolio.................................................................................................................................................................................................... 4,204,241 3,117,351 Income receivable .................................................................................................................................................................................................................... 541,909 468,685 Securities clearing accounts ................................................................................................................................... 582,041 632,754 Specific credits ....................................................................................................................................................................... 42,343 3,518 Others ............................................................................................................................................................................. 8,212,058 4,349,403 (Allowance for losses) ........................................................................................................ (89,386) (20,909) OTHER ASSETS ............................................................................................................................................ 532,563 385,091 Short-term investments ...................................................................................................................................................................................... 3,640 3,993 (Allowance for losses)............................................................................................................................................................................................................. (3,639) - Other assets ............................................................................................................................................................................................................... 460,421 323,112 (Valuation allowance) .................................................................................................................................................................................................... (173,499) (151,725) Prepaid expenses ................................................................................................................................................................................................................ 245,640 209,711

PERM ANENT ASSETS ..................................................................................................................................... 3,218,122 3,001,663 INVESTM ENTS .............................................................................................................................................. 691,981 594,054 Investments in subsidiaries and affiliates: Domestic ................................................................................................................................................................................ 99,515 173,903 Foreign ................................................................................................................................................................................................ 274,144 142,443 Other investments ...................................................................................................................................................................................... 329,908 282,436 (Allowance for losses)............................................................................................................................................................................ (11,586) (4,728) PROPERTY AND EQUIPM ENT .................................................................................................................... 2,350,616 2,225,649 Property for own use ................................................................................................................................................................................................ 2,582,058 2,473,296 Other property and equipement ......................................................................................................................................................................................... 1,968,751 1,676,843 (Accumulated depreciation) .......................................................................................................................................................... (2,200,193) (1,924,490) DEFERRED CHARGES ................................................................................................................................. 175,525 181,960 Goodwill to be amortized ......................................................................................................................................................................... 140 2,120 Deferred installation expenses ............................................................................................................................................................................................ 357,057 317,617 (Accumulated amortization) ................................................................................................................................................. (181,672) (137,777)

TOTAL ASSETS 74,563,226 54,093,541

7


LIA B ILIT IES A N D ST OC KH OLD ER S' EQUIT Y 03/ 31 / 2001 03/ 31 / 2000

C UR R EN T A N D LON G-T ER M LIA B ILIT IES ..................................................................................................... 64,714 ,650 45,527 ,219

D EP OSIT S ...................................................................................................................................................... 27,158 ,852 22,131 ,021

Demand deposits ..................................................................................................................................................................................................................... 5,875,044 4,163,950

Savings deposits ...................................................................................................................................................................................................................... 15,751,315 14,674,345

Interbank deposits ................................................................................................................................................................................................................... 354,357 16,696

Time deposits ........................................................................................................................................................................................................................... 5,178,136 3,276,030

D EP OSIT S R EC EIVED UN D ER SEC UR IT Y R EP UR C H A SE A GR EEM EN T ............................................... 10,278 ,877 4 ,289,307

Own portfo lio ............................................................................................................................................................................................................................. 6,951,280 2,425,951

Third-party portfo lio ................................................................................................................................................................................................................ 3,327,597 1,863,356

F UN D S F R OM A C C EP T A N C ES A N D ISSUE OF SEC UR IT IES .................................................................. 3 ,114,557 3 ,139,584

M ortgage notes ............................................................................................................................................................................................................... 384,961 -

Debentures............................................................................................................................................................................................................... 742,787 1,140,486

Foreign borrowings in securities ............................................................................................................................................................................. 1,986,809 1,999,098

IN T ER B A N K A C C OUN T S .............................................................................................................................. 3 ,326,220 2 ,170,674

Pending settlement .........................................................................................................................................................................… 3,208,718 2,064,035

Interbank on-lending ...................................................................................................................................................................................... 647 1,026

Correspondents ....................................................................................................................................................................................... 116,855 105,613

IN T ER B R A N C H A C C OUN T S ........................................................................................................................ 427 ,496 332 ,899

Third-party funds in transit ................................................................................................................................................................................................... 420,331 321,753

Own funds in transit ................................................................................................................................................................................................. 7,165 11,146

B OR R OWIN GS ............................................................................................................................................... 5 ,284,300 3 ,570,308

Domestic - public institutions ....................................................................................................................................… 6,498 -

Domestic - other institutions .......................................................................................................................................... 684,774 460,748

Foreign currency trade finance borrowings .................................................................................................................................................................... 4,593,028 3,109,560

ON -LEN D IN G B OR R OWIN GS F R OM P UB LIC IN ST IT UT ION S ............................................................ 3 ,276,598 1 ,899,840

Federal Development Bank - BNDES .............................................................................................................................................................................. 2,324,886 1,226,497

CEF ............................................................................................................................................................................................................................... 131,239 1

Federal Capital Goods Financing Agency - FINAM E ................................................................................................................................................ 819,848 672,535

Other institutions ....................................................................................................................................................................................................................... 625 807

F OR EIGN ON -LEN D IN G................................................................................................................................. - 161

Foreign on-lending ................................................................................................................................................................................................................ - 161

OT H ER LIA B ILIT IES ...................................................................................................................................... 11,847 ,750 7 ,993,425

Co llection of taxes and contributions .............................................................................................................................................................................. 601,636 456,771

Foreign exchange portfo lio ................................................................................................................................................................................................... 2,382,366 1,989,092

Corporate and statutory contributions ............................................................................................................................................................................ 205,127 174,200

Taxes and social security contributions .......................................................................................................................................................................... 1,198,019 817,239

Negotiation and intermediation o f securities ............................................................................................................................................................... 1,111,743 503,904

Technical provisions for insurance, pension plan and capitalization operations - restricted ................................................................... 444,531 331,980

Financial and Development Funds..................................................................................................................................................................................... - 98

Others ........................................................................................................................................................................................................................................... 5,904,328 3,720,141

T EC H N IC A L P R OVISION S F OR IN SUR A N C E, P EN SION P LA N A N D

C A P IT A LIZ A T ION OP ER A T ION S - N ON -R EST R IC T ED ................................................................................. 2 ,344,225 1 ,904,201

D EF ER R ED IN C OM E ......................................................................................................................................... 116 ,609 142 ,581

Deferred income ...................................................................................................................................................................................................................... 116,609 142,581

M IN OR IT Y IN T ER EST IN SUB SID IA R IES ....................................................................................................... 572 ,116 394 ,722

ST OC KH OLD ER S' EQUIT Y ................................................................................................................................ 6 ,815,626 6 ,124,818

Capital:

Domestic ................................................................................................................................................................................................................................. 2,423,350 1,975,208

Foreign ..................................................................................................................................................................................................................................... 576,650 524,792

Capital reserves ....................................................................................................................................................................................................................... 202,219 264,394

Revaluation reserves ............................................................................................................................................................................................................. - 12,434

Retained income ...................................................................................................................................................................................................................... 3,792,455 3,458,703

(Treasury shares)....................................................................................................................................................................................................................... (179,048) (110,713)

T OT A L LIA B ILIT IES A N D ST OC KH OLD ER S' EQUIT Y 74,563 ,226 54,093 ,541

8


Consolidated Statementsof Income

Three-month periods ended on March 31, 2001 and 2000(In of thousands of reais)

01.01 to 01.01 to03.31.2001 03.31.2000

INCOME FROM FINANCIAL OPERATIONS ....................................................................................................... 3,676,492 1,614,332 Loans.................................................................................................................................................................. 1,823,039 767,978

Leases ............................................................................................................................................................... 180,993 144,576

Securities portfolio ............................................................................................................................................. 1,584,943 651,629

Foreign exchange portfolio ................................................................................................................................ 20,082 1,622

Compulsory deposits ....................................................................................................................................... 67,435 48,527

EXPENSES ON FINANCIAL OPERATIONS ......................................................................................................... (2,446,237) (663,258) Deposits, money market and interbank funds .................................................................................................... (1,615,174) (370,081)

Borrow ings and assignments and on-lendings ................................................................................................. (454,925) (26,622)

Leases ............................................................................................................................................................... (141,856) (115,967)

Provision for loan losses ...................................................................................... (234,282) (150,588)

GROSS PROFIT FROM FINANCIAL OPERATIONS ........................................................................................... 1,230,255 951,074

OTHER FINANCIAL INCOME (EXPENSES) ........................................................................................................ (448,382) (410,056) Banking service fees ......................................................................................................................................... 982,466 801,635

Capitalization, insurance and pension plan premiums ....................................................................................... 624,770 465,884

Expenses on Technical provisions for insurance, pension plan and capitalization operations ........................ (196,557) (103,480)

Insurance Claims ................................................................................................................................................ (199,699) (181,952)

Selling expenses ................................................................................................................................................ (43,182) (50,260)

Pension plan benefit expenses .......................................................................................................................... (53,618) (41,796)

Salaries and benefits to employees ................................................................................................................... (612,390) (516,626)

Other administrative expenses ....................................................................................................................... (789,282) (636,007)

Tax expenses .................................................................................................................................................... (152,616) (141,141)

Equity in income of subsidiaries and aff iliates ........................................................................................... 9,596 11,525

Other operating income ............................................................................................................... 167,646 88,489

Other operating expenses ................................................................................................................ (185,516) (106,327)

OPERATING INCOME ......................................................................................................................................... 781,873 541,018

NON-OPERATING INCOME ................................................................................................................................ 36,043 10,053

INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION AND PROFIT SHARING .................................................................................................................................................... 817,916 551,071

INCOME TAX AND SOCIAL CONTRIBUTION Due on operations for the period .........................................................................................… (163,118) (163,311)

Deferred related to temporary additions ..................................................................................... 86,459 3,864

EXTRAORDINARY RESULTS (Note 15) ........................................................................................................... (25,454) -

PROFIT SHARING ............................................................................................................................................... Employees ...................................................................................................................................................... (53,854) (23,150)

Directors - Statutories ..................................................................................................................................... (6,597) (5,381)

MINORITY INTEREST .................................................................................................................................… (30,139) 2,182

NET INCOME ..................................................................................................................................................... 625,213 365,275

NUMBER OF OUTSTANDING SHARES ............................................................................................................. 113,484,949,140 117,844,337,341 NET INCOME PER THOUSAND SHARES - R$ .............................................................................................. 5.51 3.10 STOCKHOLDERS' EQUITY PER THOUSAND SHARES - R$ ................................................................ 60.06 51.97

RECURRING NET INCOME ...................................................................................... 650,667 365,275

EXTRAORDINARY RESULT ......................................................................................... (25,454)

TOTAL - parent + company 625,213 365,275

9

Notes to the ConsolidatedFinancial Statements

Three-month periods ended on March 31, 2001 and 2000(In thousands of reais)

The financial statements of Banco Itaú S.A. and its subsidiaries(ITAÚ CONSOLIDATED) have been prepared in accordance withaccounting policies derived from the Brazilian Corporate Lawand instructions issued by the Brazilian Securities andExchange Commission (CVM) and the Central Bank of Brazil(BACEN), which include the use of estimates necessary tocalculate accounting provisions.

The consolidated financial statements have been presentedwithout the classification of balances between current andlong-term amounts, consistent with the presentation withthe comparable period.

Management considers the current risk based capital ratio(13.4% based on economic-financial consolidated) to beadequate, considering that:

a) It is higher than the minimum required by authorities(11%);

b) This rate increases to 14.7%, when all of the tax credits ofBANESTADO are recorded in the financial statements basis(ITAÚ) used to establish limits;

c) This ratio would increase to 17.8% after considering theremaining realization values of assets (Note 13 b) and theprovision in excess to the minimum requirements and thetax credits not recorded.

Note 1 - Presentation of the Financial Statements

For comparison purposes, the notes to the financialstatements include information on ITAÚ CONSOLIDATED "withBANESTADO" and "without BANESTADO", with the lattercomparable with the balances at March 31, 2000.

The main indicators at March 31, 2001 obtained from thenon-consolidated financial statements (the initial basis fordetermination of the financial system consolidated amountsand pro forma economic-financial consolidated amounts),according to current legislation are as follows:

(1) In accordance with Note 1 II(2) In accordance with Note 1 III

Financial system Economic-financial

amounts (1) amounts (1)

Stockholders’ equity (2) 7,906,912 7,835,628

Risk based capital ratio 14.4 13.4

Fixed asset ratio 66.5 47.7

Excess capital in relation to f ixed assets 272,776 1,742,778

10



Evolution of Basle rate

(1) In accordance with Note 1 II.(2) In accordance with Note 1 III.(3) In effect as from July 2000.(4) Because of the increased volatility of the interest rate market.

I- Risk based capital ratio (Basle ratio)

At March 31, 2001, the risk based capital ratio was 14.4%(20.8% at March 31, 2000) based on the Financial SystemConsolidated financial statements and 13.4%, based onEconomic-Financial Consolidated financial statementamounts.

The effects resulting from the changes during the last fourquarters, due to changes in the legislation or variation inthe balances are shown below:

Economic-financial consolidated (1) (3)

Referential Weighted Referential Weighted

equity (2) asset Effect equity (2) asset Effect

Rate of March 2000 6,511,659 31,310,707 20.8%

Calculation of interest rate risk (117,152) - -0.4%Quarterly results 427,217 - 1.4%Interest on ow n capital (187,040) - -0.6%Increase in foreign exchange exposure (172,047) - -0.5%Other increases (reductions) in referential equity (1,089) - 0.0%Increase in w eighted tax credit from 200% to 250% - 1,006,305 -0.6%Increase in w eighted asset - 590,830 -0.4%

Rate of June 2000 6,461,548 32,907,842 19.6%

Quarterly results 470,775 - 1.4%Interest on ow n capital (127,947) - -0.4%Increase in foreign exchange exposure 128,841 - 0.4%Other increases (reductions) in referential equity (2,150) - 0.0%Increase in w eighted asset - 1,397,276 -0.9%

Rate of September 2000 6,931,067 34,305,118 20.2% 6,854,989 37,360,184 18.3%

Quarterly results 627,234 - 1.8% 655,085 - 1.8%Interest on ow n capital (175,160) - -0.5% (175,160) - -0.5%Increase in foreign exchange exposure (122,873) - -0.4% (122,873) - -0.3%Purchase of treasury shares (454,842) - -1.3% (454,842) - -1.2%Other increases (reductions) in referential equity 36,619 - 0.1% 18,580 - 0.0%Increase in w eighted tax credit from 250% to 300% - 956,182 -0.5% - 1,107,819 -0.5%Increase in w eighted asset - 8,381,560 -3.7% - 8,652,424 -3.2%

Rate of December 2000 6,842,045 43,642,860 15.7% 6,775,779 47,120,427 14.4%

Quarterly results 602,880 - 1.4% 613,726 - 1.3%Interest on ow n capital (163,369) - -0.4% (163,369) - -0.4%Increase in interest rate risk (4) (252,404) - -0.6% (252,404) - -0.5%Reduction in foreign exchange exposure (5) 297,013 - 0.7% 297,013 - 0.6%Purchase of treasury shares (288,297) - -0.7% (288,297) - -0.6%Other increase (reductions) in referential equity (6,642) - 0.0% (22,462) - 0.0%Increase in w eighted asset - 5,107,794 -1.7% - 4,972,872 -1.4%

Rate of March 2001 7,031,266 48,750,654 14.4% 6,959,986 52,093,299 13.4%

Financial system consolidated (1)

11



II - Resolution Nº2.723/2000

On May 31, 2000, the Brazilian Central Bank issued ResolutionNº 2.723 / 2000 which modified the criteria for minimumstockholders' equity related to the degree of risk in a financialinstitution of assets structure (Basle Agreement). It alsochanged the maximum limits for risk diversification andinvestment of resources in fixed assets, by means of thefollowing changes:

• Mandatory presentation, as from July 2000, of consolidatedfinancial statements, comprising all subsidiary companies(termed as the Economic-Financial Consolidated financialstatements), including insurance, pension andcapitalization companies and all those in which control isthe 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 effects in the operating limits resulting from the above-mentioned changes are as follows:

• The above-mentioned limits must also be calculated basedon these consolidated financial statements. Until now, theselimits have been calculated based on the consolidatedfinancial statements of Financial subsidiary companies(termed as the Financial - System Consolidated financialstatements);

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

• Deduction of investments in fixed assets which exceed 70%of stockholders' equity from the calculation basis of BasleAgreement limits. This percentage will be gradually reducedto 50% by December 31, 2002.

III - Resolution Nº2.802/2000

The Brazilian Central Bank through Resolution Nº 2.802 ofDecember 21, 2000 determined the Referential Equity forpurposes of calculating operating limits as being the sum ofboth Tier I and Tier II levels, following internationalexperience, each of them comprising items from stockholders'equity, as well as subordinated debts, hybrid capital and debtinstruments.

The adoption of this calculation basis did not change ITAÚ'soperating limits.

(*) The difference between the fixed asset ratio of the Financial System Consolidated financial statements and the Economic-Financial Consolidated financialstatements refers to investments in non financial subsidiaries which have a high liquidity rate and low level of fixed assets, enabling, when possible, resourcesto be distributed to the financial companies and consequent reduction in the fixed asset limit for the Economic-Financial Consolidated financial statements.

Prior situation

Financial system Financial system Economic-financial

consolidated consolidated consolidated

Risk based capital ratio 14.4% 14.4% 13.4%

Fixed asset rate (*) 63.6% 66.5% 47.7%

Capital excess in relation to f ixed assets ratio 503,545 272,776 1,742,778

Current situation (Resolution 2.723)

12



The consolidated financial statements include Banco Itaú S.A. (ITAÚ) and its direct and indirect subsidiaries, includingthose listed below:

Note 2 - Consolidated Financial Statements

(a) New name of Banco do Estado do Paraná S.A., investment acquired in October 17, 2000. The main consolidated balances at March 31, 2001 are presentedin Note 17C.

(b) Subsidiaries of investments Itaú S.A. (ITAÚSA) which are included in the consolidation to enhance the presentation of the Group's operations, withapproval from the Brazilian Securities and Exchange Commission (CVM).

(c) Investments proportionally included in the consolidation.(d) Investment

proportionally included in the consolidation as from June 30, 2000.

3.31.2001 3.31.2000

FINANCIAL INSTITUTIONS Banco Banerj S.A. and subsidiaries 99.99 99.99

Banco Bemge S.A. and subsidiaries 99.85 99.85

Banco Banestado S.A. and subsidiaries (a) 89.54 -

Banco Francês e Brasileiro S.A. 100.00 100.00 Banco Itaú Buen Ayre S.A. 99.99 99.99

Banco Itaú Europa Luxembourg S.A. and subsidiaries (b) 19.52 24.57

Banco Itaú Europa, S.A. and subsidiaries (b) 19.53 24.59

BFB Leasing S.A. Arrendamento Mercantil 99.99 99.99 Cia. Itauleasing de Arrendamento Mercantil 99.99 99.99

Intrag Distribuidora de Títulos e Valores Mobiliários Ltda. 99.99 99.99 Itaú Banco de Investimento S.A. 99.99 99.99 Itau Bank, Ltd. 100.00 100.00

Itauvest Banco de Investimento S.A. and subsidiaries 100.00 100.00

Itaú Corretora de Valores S.A. 99.99 99.99

NON-FINANCIAL INSTITUTIONS Afinco Americas Madeira, SGPS Limitada and subsidiaries 99.99 99.88

Armazéns Gerais Itaú Ltda. 99.99 99.78

Credicard S.A. Administradora de Cartões de Crédito and (c) 33.33 33.28

Itaú Capitalização S.A. 99.99 99.85

Itaucard Administradora de Cartões de Crédito e Imobiliária Ltda. 99.99 99.85

Itaú Gráf ica Ltda. - Grupo Itaú 99.99 99.85

Itaú Previdência e Seguros S.A. 99.99 99.85

Itaú Rent Administração e Participações S.A. 99.99 99.85

Itaú Seguros S.A. and subsidiaries 95.78 95.83

Itaúsa Export S.A. and subsidiaries (b) 22.23 27.98

Redecard S.A. (c) 31.94 31.89

Serasa - Centralização de Serviços dos Bancos S.A. (d) 31.71 31.64

Participation %

13



a) Basis of consolidation - All material intercompany profits,transactions and balances have been eliminated onconsolidation.

The difference between Itaú and Itaú Consolidated in netincome and Shareholders' Equity results from the effectson the differing policies for the amortization of goodwillon acquisitions, the recognition of deferred tax assetsand the elimination of unrealized results of a transactionsanong group companies, together with correspondingdeferred taxation effects.

b) Interbank funds applied, loans, discounted tradereceivables, financing, remunerated deposits, fundsobtained in the open market and other receivablesand payables - Transactions subject to monetarycorrection or foreign exchange rates are recorded at presentvalue, calculated "pro rata die" based on the variation ofcontracted index. Real estate loans are adjusted to presentvalue of future installments. Transactions withpredetermined remuneration rates are recorded at theirredemption value, adjusted for any unearned income/expenses.

Note 3 - Summary of Significant Accounting Policies

c) Securities - These are recorded at restated cost andadjusted by a provision to reflect its market value, whenthis is lower.

d) Allowance for loan losses - The balance of the allowancefor loan losses was constituted based on an analysis ofthe credit risk in the loan portfolio, in amounts consideredsufficient to cover loan losses.

e) Investments - In subsidiary and associated companies,investments are using the equity method. The financialstatements of foreign branches and subsidiaries, includedin ITAÚ CONSOLIDATED, are adapted to comply withBrazilian accounting policies and converted into reais.Other investments are recorded at cost, restated up toDecember 31, 1995.

f) Fixed assets - These are stated at cost of acquisition orconstruction, less accumulated depreciation, restated upto December 31, 1995. For insurance operations, privatepension and capitalization, property and equipment areadjusted to market value supported by appraisal reports.Depreciation is calculated using the straight line method,based on monetarily corrected cost at the following annualrates:

g) Deferred expenses - Deferred organization and expansionexpenses represent improvements in third party propertiesand are amortized on a straight line over the respectiverental periods, and acquisition and development of logisticare amortized on a straight line basis over five years.

h) Income tax and social contribution, PIS and COFINSThe provisions were calculated according to the currentlegislation at the rates shown below.

(*) Period from May 1, 1999 to January 31, 2000 calculated at the rate of4%. As from February 1, 2000 up to December 31, 2002 the rate wasreduced to 1%.

Amounts subject to litigation have been fully provided.

%

Buildings in use 4

Installations, furnishings, equipment and security and communication systems 10 to 25

EDP systems 20 to 50

Income tax 15.00%

Additional income tax 10.00%

Social contribution 8.00%

Additional social contribution (*) 1.00%

PIS 0.65%

COFINS 3.00%

14



a) Summary

Note 4 - Securities and Interbank Deposits

3.31.2001 3.31.2000With Without

BANESTADO BANESTADO

Securities and interbank deposits 23,498,986 22,359,591 18,475,698

Devaluation allow ances (976,121) (905,734) (888,574)

Net book amount 22,522,865 21,453,857 17,587,124

15

b) Portfolio composition and maturities

Notes to the Consolidated Financial Statements

(1) Includes R$ 140,555 (R$ 107,960 on March 31, 2000) relating to Fixed Income Funds managed by third parties.Securities and investments comprising the investment funds portfolio in which ITAÚ and subsidiary companies hold an interest are placed in the above statement by maturity rate.

Maturity in days

PUBLIC SECURITIES - DOMESTIC Financial Treasury Bills Treasury Bills Treasury Notes Central Bank Notes Central Bank Bills

DCB - Debt Conversion Bond and other Brazilian External Debt Securities Others

PUBLIC SECURITIES - FOREIGN Bonds Argentina Bonds Portugal Others

PRIVATE SECURITIES - ISSUED BY COMPANIES Interbank Deposits Applied Bank Certif icates of Deposit Shares in Publicly Traded Companies Debentures Mortgage Bills Option Premiums Overseas Investment Funds Euro Bonds and Other Others (1)

Total

% by Maturity Date - 03.31.2001% by Maturity Date - 03.31.2000

Total w ith Total w ithout0-30 31-180 181-365 Over 365 BANESTADO % BANESTADO % Total %

604,552 3,450,766 1,517,875 8,084,752 13,657,945 58.1% 12,621,755 56.4% 9,737,555 52.8%44,358 1,836,629 319,764 1,536,381 3,737,132 15.9% 2,792,689 12.5% 2,418,968 13.1%56,003 662,786 374,904 170,885 1,264,578 5.4% 1,260,366 5.6% 584,477 3.2%77,100 163,455 436,608 1,950,043 2,627,206 11.2% 2,626,009 11.7% 3,807,684 20.6%

312,687 724,741 166,058 3,372,796 4,576,282 19.5% 4,567,705 20.4% 1,624,435 8.8%37,380 - - - 37,380 0.2% 37,380 0.2% 48,750 0.3%

27,141 55,172 183,652 910,449 1,176,414 5.0% 1,176,414 5.3% 1,114,342 6.0%49,883 7,983 36,889 144,198 238,953 1.0% 161,192 0.7% 138,899 0.8%

13,781 22,940 10,808 627,197 674,726 2.9% 674,726 3.0% 310,648 1.6%- 22,742 - - 22,742 0.1% 22,742 0.1% 137,720 0.7%

7,891 - - 368,060 375,951 1.6% 375,951 1.7% 167,303 0.9%5,890 198 10,808 259,137 276,033 1.2% 276,033 1.2% 5,625 0.0%

3,550,369 2,201,467 1,821,096 1,593,383 9,166,315 39.0% 9,063,110 40.5% 8,427,495 45.6%1,819,036 633,234 179,699 253,721 2,885,690 12.3% 2,883,286 12.9% 1,756,560 9.5%

713,510 1,377,539 1,283,121 41,508 3,415,678 14.5% 3,402,572 15.2% 4,320,958 23.4%336,958 - - - 336,958 1.4% 330,978 1.5% 468,927 2.5%20,139 9,340 22,863 297,007 349,349 1.5% 331,317 1.5% 339,288 1.8%78,012 32,714 110,411 452,535 673,672 2.9% 673,672 3.0% 373,880 2.0%7,407 13,576 108,692 36,380 166,055 0.7% 166,055 0.7% 11,669 0.1%

391,705 - - - 391,705 1.7% 391,705 1.8% 278,704 1.5%23,240 50,209 94,652 332,248 500,349 2.1% 500,349 2.2% 339,574 1.8%

160,362 84,855 21,658 179,984 446,859 1.9% 383,176 1.7% 537,935 2.9%

4,168,702 5,675,173 3,349,779 10,305,332 23,498,986 100.0% 22,359,591 100.0% 18,475,698 100.0%

17.7% 24.2% 14.3% 43.9%22.0% 21.9% 26.8% 29.3%

03.31.2001 03.31.2000




16

c) Changes in the valuation allowance for securities

Note 5 - Loan and Lease Portfolio

a) Summary

(1) Includes honored endorsements and sureties, receivables from advances, commissions from co-obligations receivable, debtors on purchase of assets andreceivables.

(2) Recorded in other liabilities.(3) Recorded in memorandum accounts.

(*) Additional allowance was recorded to cover risks of future price fluctuation.

With Without

BANESTADO BANESTADO

Balance at December 31, 1999 902,301 902,301Write-offs (13,727) (13,727)

Reversal (11,695) (11,695)

Losses on sales (2,032) (2,032)

Balance at March 31, 2000 888,574 888,574 Minimum allow ance required 142,674 142,674

Additional allow ance (*) 745,900 745,900

Balance at December 31, 2000 972,774 905,247Increase 6,565 3,703

Write-offs (3,218) (3,216)

Reversal (2,083) (2,081)

Loss on sales (1,135) (1,135)

Balance at March 31, 2001 976,121 905,734 Minimum allow ance required 321,121 250,734

Additional allow ance (*) 655,000 655,000

03.31.2000

With Without

BANESTADO BANESTADO Loan operations 21,972,238 20,717,601 15,122,927

Leasing operations 1,109,702 1,080,992 588,574

Other receivables (1) 685,650 141,392 168,491

Advances on exchange contracts (2) 1,739,754 1,734,487 1,512,988

Total 25,507,344 23,674,472 17,392,980

Endorsements and sureties (3) 4,423,856 4,406,682 2,847,560

Total w ith endorsements and sureties 29,931,200 28,081,154 20,240,540

03.31.2001



17

I - Composition by type of operation and risk level

(1) Comprises honoured endorsements and sureties, receivables from advances, commissions,(2) Recorded under other liabilities

b) Loan and Lease portfolio by risk level

II - Composition by maturity and risk level

03.31.2001 03.31.2000

Maturity (days) AA A B C D E F G H Total%

Falling due - - 449,266 518,995 319,462 40,802 132,937 39,613 180,101 1,681,176 6.6%01 to 30 - - 97,724 14,483 16,435 1,784 10,303 1,866 15,265 157,860 0.6%

31 to 60 - - 10,761 12,633 17,320 1,517 7,420 3,205 7,027 59,883 0.2%61 to 90 - - 10,027 11,427 13,225 2,113 6,396 1,481 6,231 50,900 0.2%

91 to 180 - - 74,674 39,301 35,349 5,745 30,137 5,994 24,825 216,025 0.8%181 to 360 - - 91,386 60,652 48,568 5,957 25,479 5,872 33,173 271,087 1.1%More than 360 - - 164,694 380,499 188,565 23,686 53,202 21,195 93,580 925,421 3.6%

Overdue - - 200,736 91,856 125,538 67,345 93,828 62,573 409,219 1,051,095 4.1%01 to 14 - - 2,749 4,388 5,418 975 7,109 1,436 15,018 37,093 0.1%15 to 30 - - 196,334 9,941 27,709 5,968 7,523 1,229 4,674 253,378 1.0%

31 to 60 - - 799 76,257 28,942 4,030 8,950 2,593 11,085 132,656 0.5%61 to 90 - - 87 822 61,695 4,787 7,458 2,484 9,111 86,444 0.3%

91 to 180 - - 767 315 1,774 51,030 61,385 52,879 39,118 207,268 0.8%181 to 360 - - - 133 - 555 1,387 1,952 249,822 253,849 1.0%

More than 360 - - - - - - 16 - 80,391 80,407 0.3%

SUBTOTAL - - 650,002 610,851 445,000 108,147 226,765 102,186 589,320 2,732,271 10.7%

% 0.0% 0.0% 2.5% 2.4% 1.7% 0.4% 0.9% 0.4% 2.3%

Falling due 7,070,423 6,511,880 6,531,889 1,154,395 762,803 148,215 235,823 89,076 88,257 22,592,761 88.6%01 to 30 866,651 943,597 2,600,782 274,695 213,722 3,714 28,197 458 6,487 4,938,303 19.4%31 to 60 1,115,720 824,926 499,474 137,890 75,673 5,384 18,870 208 3,460 2,681,605 10.5%61 to 90 485,850 310,283 328,241 99,591 38,677 14,353 17,661 208 4,134 1,298,998 5.1%91 to 180 1,216,942 630,716 604,326 146,347 86,212 50,150 43,186 422 10,969 2,789,270 10.9%181 to 360 1,065,410 1,011,641 776,499 221,968 128,832 52,949 53,843 570 17,639 3,329,351 13.1%More than 360 2,319,850 2,790,717 1,722,567 273,904 219,687 21,665 74,066 87,210 45,568 7,555,234 29.6%

Overdue up to 14 days 31,241 36,588 60,324 21,127 25,063 389 6,081 118 1,381 182,312 0.7%

SUBTOTAL 7,101,664 6,548,468 6,592,213 1,175,522 787,866 148,604 241,904 89,194 89,638 22,775,073 89.3%% 27.8% 25.7% 25.8% 4.6% 3.1% 0.6% 0.9% 0.3% 0.4%

TOTAL 7,101,664 6,548,468 7,242,215 1,786,373 1,232,866 256,751 468,669 191,380 678,958 25,507,344 100.0%% 27.8% 25.7% 28.4% 7.0% 4.8% 1.0% 1.8% 0.8% 2.7%

CLASSIFICATION OF CLIENTS

NORMAL SITUATION

ABNORMAL SITUATION

Risk Levels AA A B C D E F G HWith

BANESTADO%

Without BANESTADO

%

Loans Operations 6,061,093 5,146,870 6,586,755 1,605,426 1,128,519 242,599 447,341 185,539 568,096 21,972,238 86.1% 20,717,601 87.5% Loans and discounted trade receivables 4,038,522 2,775,523 4,462,497 779,874 703,298 61,944 318,317 72,983 373,680 13,586,638 53.3% 13,114,662 55.4% Financing 1,685,730 1,442,050 701,694 220,338 66,993 16,524 16,083 2,614 13,128 4,165,154 16.3% 4,112,141 17.4% Farm and agrobusiness industries 316,841 369,811 174,068 43,825 12,198 107,232 6,825 77,994 10,585 1,119,379 4.4% 1,042,244 4.4% Real estate financing 20,000 559,486 1,248,496 561,389 346,030 56,899 106,116 31,948 170,703 3,101,067 12.2% 2,448,554 10.3%Securities financing - - - - - - - - - - 0.0% - 0.0%

Leasing Operations 13,756 665,323 201,182 79,552 82,467 5,943 15,571 4,472 41,436 1,109,702 4.4% 1,080,992 4.6%

Other receivables (1) 29,183 485,627 82,317 11,835 7,955 1,840 3,439 1,064 62,390 685,650 2.7% 141,392 0.6%

Advances on Exchange Contracts (2) 997,632 250,648 371,961 89,560 13,925 6,369 2,318 305 7,036 1,739,754 6.8% 1,734,487 7.3%

Total 7,101,664 6,548,468 7,242,215 1,786,373 1,232,866 256,751 468,669 191,380 678,958 25,507,344 100.0% 23,674,472 100.0%

03.31.2001

% Total %

87.5% 15,122,927 86.9%55.4% 8,857,375 50.9%17.4% 2,490,339 14.3%4.4% 884,884 5.1%

10.3% 2,888,760 16.6%0.0% 1,569 0.0%

4.6% 588,574 3.4%

0.6% 168,491 1.0%

7.3% 1,512,988 8.7%

100.0% 17,392,980 100.0%



18

c) Composition by Business Sector

With BANESTADO %

Without BANESTADO % Sectors %

PUBLIC SECTOR 1,012,813 4.0% 516,254 2.2% 658,782 3.8% INDUSTRY 1,012,813 4.0% 516,254 2.2% 658,782 3.8% Chemical and Petrochemical 491,420 1.9% 491,420 2.1% 658,325 3.8% Other 521,393 2.0% 24,834 0.1% 457 0.0%PRIVATE SECTOR 24,494,531 96.0% 23,158,218 97.8% 16,734,198 96.2% INDUSTRY 6,248,384 24.5% 6,183,919 26.1% 4,899,589 28.2% Steel, Metallurgy and Heavy Industry 1,064,487 4.2% 1,058,363 4.5% 861,091 5.0% Chemical and Petrochemical 1,110,782 4.4% 1,107,692 4.7% 778,873 4.5% Food and Beverages 1,066,407 4.2% 1,053,827 4.5% 1,011,415 5.8% Paper and Pulp 573,329 2.2% 568,350 2.4% 487,818 2.8% Light and Heavy Vehicles 371,499 1.5% 371,421 1.6% 274,673 1.6% Electrical and Eletronic 496,087 1.9% 493,944 2.1% 298,617 1.7% Textiles and Clothing 236,500 0.9% 229,760 1.0% 176,178 1.0% Autoparts and Accessories 118,832 0.5% 117,766 0.5% 108,907 0.6% Fertilizers, Insecticides and Crop Protection 245,767 1.0% 239,850 1.0% 198,669 1.1% Pharmaceuticals 49,894 0.2% 49,738 0.2% 90,951 0.5% Other 914,800 3.6% 893,208 3.8% 612,397 3.5% COMMERCE 1,635,385 6.4% 1,579,920 6.7% 870,749 5.0% SERVICES 5,120,335 20.1% 4,937,883 20.9% 3,087,641 17.8% Financial 632,475 2.5% 629,871 2.7% 771,907 4.4% Telecommunications 1,774,070 7.0% 1,773,664 7.5% 632,028 3.6% Public Services Concessionaires 637,252 2.5% 636,853 2.7% 395,584 2.3% Holding and Service Companies 990,707 3.9% 952,917 4.0% 378,691 2.2% Civil Construction 285,746 1.1% 214,133 0.9% 400,949 2.3% Contractors and Real Estate Agents 265,035 1.0% 237,237 1.0% 174,931 1.0% Transportation 137,899 0.5% 124,308 0.5% 89,989 0.5% Others 397,151 1.6% 368,900 1.6% 243,562 1.4% PRIMARY SECTOR 865,958 3.4% 859,530 3.6% 656,847 3.8% Farming and Livestock 436,343 1.7% 431,243 1.8% 348,505 2.0% Mining 429,615 1.7% 428,287 1.8% 308,342 1.8% OTHER - INDIVIDUALS 10,225,137 40.1% 9,228,815 39.0% 6,923,345 39.8% Credit Cards 2,006,812 7.9% 1,974,819 8.3% 1,441,690 8.3% Real estate f inancings 2,815,321 11.0% 2,234,421 9.4% 2,487,811 14.3% Consumer Loans/Vehicles/Overdraft 5,403,004 21.2% 5,019,575 21.2% 2,993,844 17.2% OTHER - CORPORATE ENTITIES 399,332 1.6% 368,151 1.6% 296,027 1.7%

TOTAL 25,507,344 100.0% 23,674,472 100.0% 17,392,980 100.0%

03.31.2001 03.31.2000



19

d) Concentration of credit (*)

(*) Amounts include endorsements and sureties.

e) Allowance for loan losses

The allowance for loan losses complies with the rulesdetermined by BACEN Resolution No. 2.682 of December 21,1999, among which are:

• Provisions are recorded from the date of the loandisbursements, based on periodic analysis of the qualityof the client/loan and not just in the event of default;

I- Changes in the allowance for loan losses

• Based exclusively on delinquency, write-offs can be made360 days after the due date of the credit or 720 days foroperations that mature after a period of 36 months. Otherfactors related to analysis of the quality of the client/loanmay generate write-offs before these periods, however,never before 180 days of the due date.

At March 31, 2001, the balance of the allowance was equivalent to 8.0% of the loan portfolio in ITAÚ CONSOLIDATED withBANESTADO and 7.4% in ITAÚ CONSOLIDATED without BANESTADO (7.4% at March 31, 2000).

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

(2) For operations not covered by the previous item due to the classification of the client or the operation.(3) Refers to the provision in excess of the minimum requirement, recorded based on the conservative criteria adopted by management, in accordance with good

banking practice, in order to cover any unexpected losses resulting from oscillations in the credit risks quantified based on historic data considering marketvolatility and economic casis situations.

Risk w ith % of Total Risk w ithout % of Total Risk % of Total

BANESTADO BANESTADO

Largest debtor 658,831 2.2% 658,831 2.3% 695,469 3.4%

20 largest debtors 6,803,122 22.7% 6,488,693 23.1% 4,128,400 20.4%

50 largest debtors 9,993,303 33.4% 9,599,681 34.2% 6,398,700 31.6%

100 largest debtors 12,532,042 41.9% 12,088,821 43.0% 8,279,648 40.9%

03.31.2001 03.31.2000

With Without

BANESTADO BANESTADO

Balance at December 31, 1999 1,253,371 1,253,371

Increase in the period 150,588 150,588

Write-offs (116,571) (116,571)

Balance at March 31, 2000 1,287,388 1,287,388

Specif ic allow ance (1) 321,599 321,599

Generic allow ance (2) 341,162 341,162

Excess allow ance (3) 624,627 624,627




Balance at December 31, 2000 2,033,091 1,680,765

Increase in the period 234,282 209,432

Write-offs (231,046) (126,654)

Balance at March 31, 2001 2,036,327 1,763,543




20

Three-month periods ended march 31, 2001 and 2000(In of thousands of reais)


II- Allowance for Loan Losses by Risk Levels at December 31, 2000

(1) Operations in abnormal situation are considered to be those with installments overdue for more than 14 days, assumed by or theresponsibility of companies undergoing debt rehabilitation or in process of bankruptcy.

(2) At Bacen's request, the provision was allocated to make explicit, in each risk level, the exceeding amounts quantified using thestatistical models so as to evaluate the "stressed" portfolios in the market.

Risk Levels % Minimum Normal Situation

Provision RequiredFalling Due

Operations and Installments

Overdue Installments

Subtotal Falling Due Operations

AA 0.0% - - - 6,407,430 6,407,430 A 0.5% - - - 5,526,513 5,526,513 B 1.0% 138,158 183,732 321,890 6,636,677 6,958,567 C 3.0% 362,586 90,691 453,277 1,282,482 1,735,759 D 10.0% 334,381 109,319 443,700 1,003,212 1,446,912 E 30.0% 47,987 63,355 111,342 163,169 274,511 F 50.0% 211,548 93,628 305,176 119,513 424,689 G 70.0% 36,088 55,712 91,800 100,535 192,335 H 100.0% 172,887 445,050 617,937 89,224 707,161

Total 1,303,635 1,041,487 2,345,122 21,328,755 23,673,877

Portfolio Balance

Abnormal Situation (1)

Total Falling Due Overdue Subtotal

Excess Allow ance (2)

Existing Allowance

- - - - - - - - - - 27,633 27,633 20,509 48,142 1,381 1,837 3,218 66,366 69,584 124,817 194,401 10,878 2,720 13,598 38,474 52,072 91,315 143,387 33,438 10,932 44,370 100,321 144,691 231,355 376,046 14,396 19,007 33,403 48,951 82,354 45,851 128,205 105,774 46,814 152,588 59,757 212,345 59,282 271,627 25,262 38,998 64,260 70,375 134,635 29,487 164,122 172,887 445,050 617,937 89,224 707,161 - 707,161 364,016 565,358 929,374 501,101 1,430,475 602,616 2,033,091

Total Allowance BACEN Resolution 2682/1999

Specific

Total Generic

Risk Levels % Minimum Normal Situation

Provision RequiredFalling Due

Operations and Installments

Overdue Installments


AA 0.0% - - - 6,316,369 6,316,369 A 0.5% - - - 4,839,339 4,839,339 B 1.0% 113,717 181,555 295,272 6,416,823 6,712,095 C 3.0% 316,573 82,330 398,903 1,007,603 1,406,506 D 10.0% 144,797 91,184 235,981 980,160 1,216,141 E 30.0% 37,203 60,521 97,724 137,707 235,431 F 50.0% 158,716 77,461 236,177 81,137 317,314 G 70.0% 25,398 50,436 75,834 99,941 175,775 H 100.0% 91,020 317,490 408,510 62,183 470,693

Total 887,424 860,977 1,748,401 19,941,262 21,689,663

Total

Portfolio Balance


Falling Due Overdue Subtotal

Excess Allow ance (2)

Existing Allowance

- - - - - - - - - - 24,197 24,197 20,509 44,706 1,137 1,816 2,953 64,168 67,121 127,817 191,938 9,497 2,470 11,967 30,228 42,195 91,315 133,510 14,480 9,118 23,598 98,016 121,614 231,355 352,969 11,161 18,156 29,317 41,312 70,629 4,585 116,480 79,358 38,730 118,088 40,569 158,657 59,282 217,939 17,779 35,305 53,084 69,959 123,043 29,487 152,530 91,020 317,490 408,510 62,183 470,693 - 470,693 224,432 423,085 647,517 430,632 1,078,149 602,616 1,680,765

Specific

Generic Total

Total Allowance BACEN Resolution 2682/1999

21

III- Alowance for Loan Losses by Risk Levels

(1) Operations in abnormal situation are considered to be those with installments overdue for more than 14 days, assumed by or theresponsibility of companies undergoing debt rehabilitation or in process of bankruptcy.

(2) At Bacen's request, the provision was allocated to make explicit, in each risk level, the exceeding amounts quantified using thestatistical models so as to evaluate the "stressed" portfolios in the market.

Risk % Minimum Normal Situation

At levels Allowance

RequiredFalling Due

Operations and installments

Overdue installments


03.31.2000

AA 0.0% - - - 7,101,664 7,101,664 4,906,983 A 0.5% - - - 6,548,468 6,548,468 6,021,657 B 1.0% 449,266 200,736 650,002 6,592,213 7,242,215 3,506,932 C 3.0% 518,995 91,856 610,851 1,175,522 1,786,373 1,530,268 D 10.0% 319,462 125,538 445,000 787,866 1,232,866 723,475 E 30.0% 40,802 67,345 108,147 148,604 256,751 90,347 F 50.0% 132,937 93,828 226,765 241,904 468,669 298,218 G 70.0% 39,613 62,573 102,186 89,194 191,380 39,920 H 100.0% 180,101 409,219 589,320 89,638 678,958 275,180

Total 1,681,176 1,051,095 2,732,271 22,775,073 25,507,344 17,392,980

At 03.31.2001

Portfolio balance


Total

Exceeding 03.31.2001 03.31.2000

Specific At 03.31.2000 At 03.31.2000

Falling Due Overdue Subtotal Generic TotalExces Allowance

(2) Existing

Allowance Existing

Allowance

- - - - - 12,732 12,732 184,090 - 12,732.00 - - - - 32,742 32,742 24,620 57,362 59,614 121,090 145,710 207,341 4,492 2,007 6,499 65,922 72,421 129,315 201,736 104,857 340,322 469,637 316,884 15,570 2,756 18,326 35,266 53,592 98,087 151,679 152,874 57,611 155,698 104,558 31,946 12,554 44,500 78,787 123,287 201,866 325,153 216,970 76,434 278,300 145,956 12,241 20,204 32,445 44,581 77,026 43,658 120,684 45,164 7,385 51,043 34,326 66,469 46,914 113,383 120,952 234,335 67,412 301,747 208,723 20,730 88,142 169,644 27,729 43,801 71,530 62,436 133,966 52,310 186,276 39,916 6,428 58,738 33,499 180,101 409,219 589,320 89,638 678,958 - 678,958 275,180 - - 275,180 338,548 537,455 876,003 530,324 1,406,327 630,000 2,036,327 1,287,388 630,000 1,260,000 1,287,388

Total Allowance Minimum Required

At 03.31.2001

Notes to the Consolidated Financial Statements Three-month periods ended on March 31, 2001 and 2000(In thousands of reais)

Exceeding 03.31.2001 03.31.2000

Specific At 03.31.2000 At 03.31.2000

Falling Due Overdue Subtotal Generic TotalExces Allowance

(2) Existing

Allowance Existing

Allowance

- - - - - 12,732 12,732 184,090 - 12,732 - - - - 28,927 28,927 24,620 53,547 59,614 121,090 145,710 207,341 3,780 1,993 5,773 64,346 70,119 129,315 199,434 104,857 340,322 469,637 316,884 9,130 2,653 11,783 33,831 45,614 98,087 143,701 152,874 57,611 155,698 104,558 21,597 11,735 33,332 74,835 108,167 201,866 310,033 216,970 76,434 278,300 145,956 9,482 19,395 28,877 38,394 67,271 43,658 110,929 45,164 7,385 51,043 34,326 43,390 41,331 84,721 98,270 182,991 67,412 250,403 208,723 20,730 88,142 169,644 20,542 41,019 61,561 62,249 123,810 52,310 176,120 39,916 6,428 58,738 33,499 119,176 324,707 443,883 62,761 506,644 - 506,644 275,180 - - 275,180 227,097 442,833 669,930 463,613 1,133,543 630,000 1,763,543 1,287,388 630,000 1,260,000 1,287,388

Total Allowance Minimum Required

At 03.31.2001

Risk % Minimum Normal Situation

At levels Allowance

RequiredFalling Due

Operations and installments

Overdue installments


03.31.2000

AA 0.0% - - - 7,001,466 7,001,466 4,906,983 A 0.5% - - - 5,785,300 5,785,300 6,021,657 B 1.0% 378,005 199,285 577,290 6,434,562 7,011,852 3,506,932 C 3.0% 304,341 88,417 392,758 1,127,685 1,520,443 1,530,268 D 10.0% 215,965 117,355 333,320 748,353 1,081,673 723,475 E 30.0% 31,608 64,649 96,257 127,981 224,238 90,347 F 50.0% 86,779 82,663 169,442 196,541 365,983 298,218 G 70.0% 29,346 58,599 87,945 88,928 176,873 39,920 H 100.0% 119,176 324,707 443,883 62,761 506,644 275,180

Total 1,165,220 935,675 2,100,895 21,573,577 23,674,472 17,392,980

At 03.31.2001

Portfolio balance


Total



22

f) Recovery and Renegotiations of Credits

I - Recovery of written-off loans against the allowance for loan losses

II -II- At March 31, 2001, the balance of renegotiated credits totaled R$ 375,564 (R$ 308,479 at March 31, 2000),with an allowance for loan losses in the amount of R$ 195,097 (R$ 77,143 at March 31, 2000), which represents51.9% (25.0% - at March 31, 2000) of renegotiated credit portfolio.

g) Expense of allowance for loan losses, net of recovery of written-off loans against allowance for loan losses

These recoveries are classified in Income from loan operations.

With Without

BANESTADO BANESTADO

January 1 to March 70.331 56.437

Renegotiations 20.138 20.138

Receipt 50.193 36.299

January 1 to March 92.141 92.141

Renegotiations 31.685 31.685

Receipt 60.456 60.456

With Without 01.01. to 03.31.2000BANESTADO BANESTADO

Net allow ance for the period 234,282 209,432 150,588

(-) Recoveries (70,331) (56,437) (92,141)

Expense net of recoveries 163,951 152,995 58,447

01.01. to 03.31. 2001



23

Note 6 - Investments - Composition

(1) At March 31, 2000, includes investments in Duraflora S.A., which was sold on June 29, 2000, in União Car-bide do Brasil S.A., sold on December 28,2000, and in SERASA, which has been proportionally consolidated as from June 30, 2000.

(2) Participation increased from 12.5% to 15.0%.

03.31.2001 03.31.2000

Investments in subsidiaries and affiliated - Domestic 99,515 173,903AGF BRASIL SEGUROS S.A. 98,600 77,196

Other (1) 915 96,707

Investments in subsidiaries and affiliated - Foreign 274,144 142,443BPI - SGPS S.A. (BPI) (2) 270,147 142,443

Other 3,997 -

Other investments 329,908 282,436Tax incentive investments 236,106 217,978

Equity securities 18,017 17,977

Shares and quotas 46,681 26,419

Other 29,104 20,062

24

Note 7 – Deposits and funding - composition by maturity

a) Deposits

b) Money market funds


M a t u r i t y in d a y s 0 - 3 0 3 1 - 1 8 0 1 8 1 - 3 6 5 O v e r 3 6 5T o t a l w i t h

B A N ES T A D O %T o t a l w i t h o u t

B A N ES T A D O % T o t a l %

D e m a n d d e p o s its 5 ,8 7 5 ,0 4 4 - - - 5 ,8 7 5 ,0 4 4 2 1 .6 % 5 ,2 1 9 ,0 4 9 2 0 .7 % 4 ,1 6 3 ,9 5 0 1 8 .8 % S a v in g s a c c o u n ts 1 5 ,7 3 1 ,7 7 5 1 9 ,5 4 0 - - 1 5 ,7 5 1 ,3 1 5 5 8 .0 % 1 4 ,3 3 8 ,3 4 7 5 6 .9 % 1 4 ,6 7 4 ,3 4 5 6 6 .3 % In te r b a n k 2 0 5 ,2 0 4 1 2 9 ,1 4 7 1 9 ,1 1 4 8 9 2 3 5 4 ,3 5 7 1 .3 % 1 ,5 0 8 ,5 6 7 6 .0 % 1 6 ,6 9 6 0 .1 % T im e d e p o s its 2 ,6 7 7 ,7 6 6 1 ,9 9 2 ,0 0 0 3 8 5 ,9 5 0 1 2 2 ,4 2 0 5 ,1 7 8 ,1 3 6 1 9 .1 % 4 ,1 3 3 ,7 4 7 1 6 .4 % 3 ,2 7 6 ,0 3 0 1 4 .8 %T O T A L 2 4 ,4 8 9 ,7 8 9 2 ,1 4 0 ,6 8 7 4 0 5 ,0 6 4 1 2 3 ,3 1 2 2 7 ,1 5 8 ,8 5 2 1 0 0 .0 % 2 5 ,1 9 9 ,7 1 0 1 0 0 .0 % 2 2 ,1 3 1 ,0 2 1 1 0 0 .0 %% b y m a tu r ity d a te 0 3 .3 1 .2 0 0 1 9 0 .2 % 7 .9 % 1 .5 % 0 .5 % 0 3 .3 1 .2 0 0 0 9 1 .4 % 7 .2 % 1 .3 % 0 .1 %

0 3 .3 1 .2 0 0 00 3 .3 1 .2 0 0 1

M a t u r i t y in D a y s 0 - 3 0 3 1 - 1 8 0 1 8 1 - 3 6 5 O v e r 3 6 5T o t a l w i t h

B A N ES T A D O% o f t o t a l p o r t f o l io

T o t a l w i t h o u t B A N ES T A D O

% o f t o t a l p o r t f o l io T o t a l

% o f t o t a l p o r t f o l io

F in a n c ia l in s t itu t io n s 1 ,0 8 8 ,4 5 0 4 1 5 ,6 6 5 2 6 5 ,6 0 5 6 6 4 ,1 4 8 2 ,4 3 3 ,8 6 8 2 3 .7 % 2 ,2 2 9 ,4 5 6 2 2 .1 % 1 ,8 1 0 ,8 2 4 4 2 .2 % N o n f in a n c ia l c o m p a n ie s 1 ,8 8 4 ,5 9 6 4 ,8 1 5 ,9 4 1 4 7 7 ,8 7 5 6 3 1 ,4 2 0 7 ,8 0 9 ,8 3 2 7 6 .0 % 7 ,7 8 1 ,3 8 6 7 7 .5 % 2 ,4 7 7 ,1 1 5 5 7 .8 % In d iv id u a ls - - 1 ,9 6 0 3 3 ,2 1 7 3 5 ,1 7 7 0 .3 % 3 5 ,1 7 7 0 .4 % 1 ,3 6 8 0 .0 %

T O T A L 2 ,9 7 3 ,0 4 6 5 ,2 3 1 ,6 0 6 7 4 5 ,4 4 0 1 ,3 2 8 ,7 8 5 1 0 ,2 7 8 ,8 7 7 1 0 0 .0 % 1 0 ,0 4 6 ,0 1 9 1 0 0 .0 % 4 ,2 8 9 ,3 0 7 1 0 0 .0 %

% b y m a tu r ity d a te 0 3 .3 1 .2 0 0 1 2 8 .9 % 5 0 .9 % 7 .3 % 1 2 .9 % 0 3 .3 1 .2 0 0 0 6 0 .9 % 3 .4 % 2 0 .9 % 1 4 .8 %

0 3 .3 1 .2 0 0 00 3 .3 1 .2 0 0 1




25

Note 8 - Foreign Exchange Portfolio

c) Foreign Borrowings in Securities

03.31.2001 03.31.2000

With Without BANESTADO BANESTADO

ASSETS - OTHER RECEIVABLES 4,204,241 4,337,201 3,117,351

Exchange purchase pending settlement 3,163,476 3,239,969 2,300,321

Foreign currency bills exchange and term documents 25,628 25,627 20,484

Exchange sales right 1,136,519 1,192,684 1,140,461

(-) Local currency advances received (155,809) (154,330) (371,706)

Income receivable on advances granted 34,427 33,251 27,791

LIABILITIES - OTHER LIABILITIES 2,382,366 2,520,473 1,989,092

Exchange sales pending settlement 1,134,326 1,191,035 1,138,468

Exchange purchase obligations 2,981,307 3,059,794 2,349,244

(-) Advances on exchange contracts (1,739,754) (1,734,487) (1,512,988)

Other 6,487 4,131 14,368

MEMORANDUM ACCOUNTS 134,781 133,938 60,749

Import credits outstanding 109,370 108,527 23,803

Confirmed export credits 25,411 25,411 36,946

Maturity in days0-30 31-180 181-365 Over 365 Total % Total %

Non-Trade Related 6,412 33,372 175,713 350,257 779,444 39.2% 761,833 38.1%

Issued in Brazil 6,412 33,372 175,713 158,592 587,779 29.6% 721,961 36.1%Commercial Paper 1,143 24,360 175,713 122,478 323,694 16.3% 271,333 13.6%Fixed Rate Notes 5,269 9,012 - 249,804 264,085 13.3% 450,628 22.5%

Issued abroad - - - 191,665 191,665 9.6% 39,872 2.0%Commercial Paper - - - - - 0.0% 39,872 2.0%Fixed Rate Notes - - - 191,665 191,665 9.6% - 0.0%

Trade Related 25,439 479,406 432,320 270,200 1,207,365 60.8% 1,237,265 61.9%

Issued abroad 25,439 479,406 432,320 270,200 1,207,365 60.8% 1,237,265 61.9%Euronotes - 318,955 432,320 270,200 1,021,475 51.4% 1,122,197 56.1%Bankers Acceptance 25,439 160,451 - - 185,890 9.4% 114,531 5.7%Fixed Rate Notes - - - - - 0.0% 537 0.0%

TOTAL 31,851 512,778 608,033 834,147 1,986,809 100.0% 1,999,098 100.0%

% by maturity date 03.31.2001 1.6% 25.8% 30.6% 42.0% 03.31.2000 23.0% 21.9% 33.7% 21.4%

03.31.2001 03.31.2000



26

Note 9 - Income tax and social contribution

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

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

(*) In accordance with Note 3 h.

01.01 to 03.31.2001

01.01 to 03.31.2000

Net incom e before tax and social contribution 817,916 551,071

Taxes payable (Incom e tax and social contribution) at rates of 25% and 9% (*) respectively (278,092) (187,364)

Increases /Decreases in incom e tax and social contribution payable as the result of:

Perm anent (Inclusions) Exclusions 152,894 43,816

Equity in income of subsidiaries and af f iliates 3,263 3,918

Non-deductible expenses and provisions 95,189 (6,950)

Interest on capital 54,442 46,848

Tem porary (Inclusions) Exclusions (30,517) (8,348)

Allow ance for loan losses (16,020) 19,084

Labor provisions, tax contingencies and other expenses (14,497) (27,432)

Other adjustm ents: (7,403) (11,415)

Income tax of foreign branches and subsidiaries (7,403) (11,415)

Incom e tax and social contribution from operations of the year (163,118) (163,311)

Withholding tax on distribution of interest on capital (24,505) (20,793)

Total incom e tax and social contribution (187,623) (184,104)

01.01 to 03.31.2001

01.01 to 03.31.2000

Incom e tax and social contribution related to tem porary adjustm ents 86,459 3,864

Tax credits:

Increase (reversal) over temporary inclusions/exclusions 17,874 3,508

Increase (reversal) over tax loss carryforw ard 53,229 10,537

Increase (reversal) over initial balance of tax loss carryforw ard/w rite-of fs and other (15,356) (10,181)



27

c) The balances of tax credits and deferred tax liabilities (income tax and social contribution) were comprised asfollows:

The average expected realization period is four years.

Without BANESTADOWith

BANESTADO12.31.2000 Changes 03.31.2001 03.31.2001

Tax creditsTemporary dif ferences:

510,034 8,812 518,846 727,195 261,871 (27,933) 233,938 246,359 26,086 22,810 48,896 48,896 109,975 4,851 114,826 187,432 115,452 (1,338) 114,114 165,137 53,391 13 53,404 62,945 33,952 5,514 39,466 50,954 245,048 74,787 319,835 797,466 145,671 (2,296) 143,375 472,268

Total 1,501,480 85,220 1,586,700 2,758,652

Deferred tax liabilities

135,341 16,604 151,945 151,944 4,476 (198) 4,278 20,369 29,877 (8,984) 20,893 24,551 3,905 (77) 3,828 14,638

Total 173,599 7,345 180,944 211,502

Excess of depreciation on leasing operations Revaluation reserves

Provision for civil contingencies Real estate allow ances Tax losses

Other provisions

Provision for loan losses Valuation allow ance for securities/interbank deposits

Other

Temporary dif ferences

Provision for labor contingencies

Provisions for interest on capital Provision for tax contingencies

Taxation of foreign branches and subsidiaries



28

d) In order to better understand the tax credit balances, they have been presented below based on origin anddisbursements incurred:

(*) From a financial point of view, rather than recording the provisions of R$ 3,856,528 and tax credits of R$ 1,130,145, solely the differences should beconsidered as liabilities, since the tax credits only materialize upon payment of the liability.

Without With Without WithBANESTADO BANESTADO BANESTADO BANESTADO

Tax credits 1,586,700 2,758,652

319,835 797,466

476,166 831,041

Nance for losses 343,677 552,026

Valuation allow ance for securities/interbank deposits 18,953 31,374

Real estate allow ances 39,466 50,954

Others 74,070 196,687

Related to provisions not disbursed (*) 2,768,771 3,856,528 790,699 1,130,145

Related to the operation 1,153,408 2,188,938 354,217 680,607

Interest on capital 143,812 143,812 48,896 48,896

Tax contingencies 233,808 444,250 68,498 128,048

Labor contingencies 386,356 568,266 114,114 165,137

Civil contingencies 184,417 219,872 53,404 62,945

Others 205,015 812,738 69,305 275,581

1,615,363 1,667,590 436,482 449,538

Allow ance for loan losses 630,000 630,000 175,169 175,169

Securities valuation allow ance/interbank deposits 655,000 655,000 214,985 214,985

Tax contingencies 330,363 382,590 46,328 59,384

Related to tax losses

Related to provisions disbursed

Related to excess provisions in relation to minimum obligations not disbursed (*)

TAX CREDITPROVISION



29

Note 10 - Other

a) Other receivables

b) Other liabilities

(1) Due to the option which is foreseen in the 8th article of Provisional Measure 2.113-29 as of March 27, 2001, relating to financial, insurance and similarcompanies.(2) Comprised basically of deposits in guarantee for financial operations undertaken where there was an input of funds for the same amount.(3) In ITAÚ CONSOLIDATED, R$ 464,606 refers to the contract for the purchase and sale of public securities, signed with the State of Paraná, with a pledgefor the shares in Companhia Paranaense de Energia - COPEL.

(*) As of 03.31.2001, includes the amount of R$ 434,926, which has not been included yet in income, related to the parcel previously received from AmericaOnline Brasil Ltda. (AOLB); this amount will be recognized over five years, since September 2000, as the costs related to the established goal in the strategic andmarketing partnership contract are.This quarter only R$3,398 was recorded in expenses.

With BANESTADO

Without BANESTADO

03.31.2000

Tax credits 2,758,652 1,586,700 1,528,042 Social contribution to be of fset (1) 1,370,023 777,016 805,334 Deposits in guarantee - Tax appeals 941,254 833,682 385,811 Deposits in guarantee - Overseas (2) 599,087 599,087 32,188 Deposits in guarantee - Labor appeals 317,094 186,862 213,504 Deposits in guarantee - Other 152,790 74,302 84,012 Tax and contributions to compensate 699,239 526,387 457,730

Securities and credits receivable 498,329 (3) 25,054 11,775

Other domestic debtors 379,950 351,035 187,242 Other foreign debtors 15,544 15,544 212,165 Debtors as a result of sale of assets 120,533 68,106 122,303 Recoverable payments 42,789 41,948 45,697 Income tax recoverable 40,269 37,435 46,224 Salaries advances 32,899 25,142 21,468 Option for tax incentives 34,665 26,949 37,245 Receivables from related companies 29,588 60,981 36,290 Other 179,353 20,990 122,373 Total 8,212,058 5,257,220 4,349,403

03.31.2001

With BANESTADO

Without BANESTADO

03.31.2000

Credit card companies 1,382,102 1,365,554 1,069,260 Provision for contingent liabilities 1,419,754 1,105,165 1,024,589

Provision for labor claims contingencies 636,541 461,824 454,892

Provision for BANESTADO restructuring 326,627 - - Salaries and employee benefits 254,423 213,972 196,554

Other foreign creditors 226,637 226,129 270,166

235,000 - - Provision for payments 148,685 123,280 43,934 Liabilities for of f icial agreement 92,446 80,125 70,281 Insurance companies 83,007 58,746 58,210 Values to be paid - Aff iliate companies 46,443 46,433 39,837 Liabilities resulting from purchase of assets and rights 21,209 20,860 10,119 Creditors for resources to be released 33,429 27,895 19,440 Other (*) 998,025 962,047 462,859

Total 5,904,328 4,692,030 3,720,141

03.31.2001

Provision to cover actuarial deficit for FUNBEP - (Multisponsored Pension Fund)



30

c) Banking Service Fees

d) Other operating income

e) Other operating expenses

With BANESTADO

Without BANESTADO

01.01 to 03.31.2000

Mutual funds management fees 210,379 205,475 206,826 Collection fees 53,708 50,083 51,764 Current and saving accounts service fees 172,673 154,501 140,281 Collection fees agreement w ith Public Co. (*) 50,678 46,662 40,746 Interbank charges 42,287 42,287 35,437 Credit operations 74,475 72,780 44,844

Credit cards 245,908 240,452 190,157

Guarantee fees and financial managem ent 90,949 87,999 63,934 Annuities 58,437 56,863 52,613 Others 96,522 95,590 73,610

Other services 132,358 129,316 91,580 Total 982,466 941,556 801,635

01.01 to 03.31.2001

With BANESTADO

Without BANESTADO

01.01 to 03.31.2000

Income from insurance operations 27,933 25,642 30,847 Reversal of operational provisions 16,129 7,771 5,761 Recovery of charges and expenses 14,992 10,473 11,663

47 45 8,118 108,545 89,460 32,100

Total 167,646 133,391 88,489

01.01 to 03.31.2001

Equity share of subsidiaries and aff iliates, not derived from net incomeOther

With BANESTADO

Without BANESTADO

01.01 to 03.31.2000

Credit card operation expenses 49,368 49,325 40,451 Other tax expenses 34,573 21,527 28,769 Other f inancial expenses 8,501 7,304 7,645 Insurance operation expenses 9,394 9,055 17,321 Related to real estate f inancing 5,012 4,454 5,086

3,782 3,782 4,066 Other operational provisions 6,553 119 566 Commission 1,841 1,841 630 Other 66,492 56,178 1,793 Total 185,516 153,585 106,327

Equity share of subsidiaries and aff iliates, not derived from net income

01.01 to 03.31.2001



31

Note 11 - Stockholders' Equity - Itaú

a) Shares

As decided at the Extraordinary Stockholders' Meeting onFebruary 12, 2001 and March 29, 2001 (this latter in processof review and approval by the Brazilian Central Bank),1,251,143,434 and 1,102,035,249 common book entry sharesheld in treasury were cancelled without reducing capital. Asa result, capital (pending the mentioned registration by theBrazilian Central Bank) is represented by 115,596,984,021nominal book entry shares, of which 64,237,562,351 arecommon shares and 51,359,421,670 are preferred shares.

Pursuant to authorization of the Board of Directors, ITAÚrepurchased its own shares to be held in treasury, for

The purchase of 1,634,902,691 shares during the period, at a disbursement of R$ 288,297, was car-ried out due to ITAÚ'sexcess capital and after technical studies which demonstrated that this would result in benefits to the shareholders asfollows:

f) Outras Despesas Administrativas Personnel and Other Administrative Expenses

subsequent cancellation or future resale. The shares wererepurchased at the minimum weighted average and maximumprices, in reais, per thousand shares, of R$ 35.23, R$ 176.19and R$ 203.08 respectively, for common shares and R$ 39.03,R$ 87.74 and R$ 194.13 for preferred shares. The averagemarket value of these shares at March 31, 2001 is R$ 172.00and R$ 166.91 re-spectively, per thousand shares.

Treasury share movements are shown below:

Quantity

Common Preferred Total

Treasury shares at December 31, 2000 1,114,342,903 1,715,967,970 2,830,310,873

Purchases during the period 1,238,835,780 396,066,911 1,634,902,691

(-) Cancellation in the period (2,353,178,683) - (2,353,178,683)

Treasury shares at March 31, 2001 - 2,112,034,881 2,112,034,881

With BANESTADO

Without BANESTADO

01.01 to 03.31.2000

Personnel 612,390 507,625 516,626 Other administrative expenses 789,282 744,260 636,007 Facilities 102,595 90,762 77,247 Materials 26,565 25,341 22,365 Data processing and telecommunications 134,691 134,401 110,015 Transport 44,033 41,133 45,056 Third party services 106,196 95,777 75,804 Security 29,878 26,889 22,444 Advertising, promotions and publications 67,189 65,268 49,963 Contributions and donations 11,065 11,012 8,246 Depreciation and amortization 122,194 118,253 97,393 Financial system services costs 60,631 59,669 57,850 Other 84,245 75,755 69,624 Total 1,401,672 1,251,885 1,152,633

01.01 to 03.31.2001



32

The increase in the return on shareholders' equity and the profit per thousand shares is due to the fact that the loss offinancial income from the cost disbursed, corresponding to the market interest rate of 15.4% before taxes or 10.1% aftertaxes, are lower than the return on equity before the purchase of 37.3%.

b) Dividends

Stockholders are entitled to a minimum mandatory dividendof 25% of net income which is adjusted ac-cording to rulesset forth in the Brazilian Corporate Law. Both types of sharesparticipate equally, after common shares have beenguaranteed payments equal to the minimum preferentialpayments to pre-ferred shares.

Position prior to Purchase of Position afterthe purchase shares purchase

Net prof it 628,110 (2,897) 625,213

Stockholders’ equity 7,103,923 (288,297) 6,815,626

Return on equity 40.3% - 42.1%

Number of outstanding shares (thousand) 115,119,852 (1,634,903) 113,484,949

Net prof it per thousand shares 5.46 - 5.51



33

Note 12 - Related Parties

Transactions between related parties were carried out at amountsand terms in accordance with normal market practices as well asunder reciprocal conditions. Transactions with consolidated

Note 13 - Financial Instruments

a) Derivatives

In relation to transactions involving derivatives, ITAÚ has beenmeeting the principal needs of its cor-porate customers to managemarket risks, arising mainly from fluctuations in interest andexchange rates. In order to monitor these risks on a timely basis,ITAÚ has invested in the development of inter-nal control systems.

ITAÚ's policy is to minimize market risks resulting from derivativeoperations. As such, the bank avoids taking positions whichare subject to fluctuations due to market factors and onlyoperates instruments that permit risk control which is theresponsibility of an independent area within ITAÚ.

Most derivative contracts negotiated with customers are swapand future operations, which are all reg-istered with the

companies were eliminated from the consolidated financialstatements. Other transactions with non-consolidated companiesare not significant in the overall context of ITAÚ's operations.

BM&F or CETIP and involve pre-fixed rates, interbank depositrates, exchange varia-tions or price indices. BM&F futurecontracts involving interbank rates and U.S. dollars are mainlyused to hedge financing operations offered to customerswith maturities or in currencies which are mis-matched withthe resources used to fund these operations.

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

The amounts related to positions in future, swap and optionsoperations are as follows:



34

MEMORANDUM ACCOUNT BALANCE SHEET ACCOUNT

NOTIONAL VALUE RECEIVABLE/RECEIVED

(PAYABLE/PAID)

03.31.2001 03.31.2000 03.31.2001 03.31.2000

Future contracts 26,890,330 6,953,822 (115,714) 12,567

Purchase commitments 12,778,562 3,421,765 (116,659) (2,737)

Foreign currency 1,039,259 456,075 (49,543) (1,133)

Interbank market 10,124,853 2,716,909 (90,152) (18)

Indices 1,443,083 243,474 21,772 (1,562)

Others 171,367 5,307 1,264 (24)

Commitments to sell 14,111,768 3,532,057 945 15,304

Foreign currency 1,272,332 1,658,012 3,341 7,070

Interbank market 10,514,952 581,549 31,610 79

Indices 2,289,608 1,040,893 (34,651) 5,640

Shares 26,918 246,432 569 2,480

Others 7,958 5,171 76 35

Sw ap contracts (141,759) 124,684

Assets position 10,316,856 8,014,411 173,127 192,599

Foreign currency 1,167,010 597,718 80,085 623

Interbank market 4,968,997 3,435,029 2,025 98,745

Pref ixed 2,586,343 3,550,918 40,311 68,466

Indices 548,480 32,454 886 -

Others 1,046,026 398,292 49,820 24,765

Liability position 10,458,615 7,889,727 (314,886) (67,915)

Foreign currency 3,575,663 2,279,858 (259,836) (4,272)

Interbank 3,116,372 3,682,302 (8,833) (27,271)

Pref ixed 1,778,985 1,513,485 (36,376) (27,532)

Indices 768,221 193,680 (5,301) (8,135)

Others 1,219,374 220,402 (4,540) (705)

Options contracts 4,227,568 815,546 (112,648) (6,176)

Purchase commitments- call position 1,034,945 373,285 (44,215) (7,304)

Foreign currency 31,375 88,344 (322) (729)

Pref ixed 212,017 173,848 - -

Indices 138,570 - (246) -

Shares 618,067 82,087 (42,560) (6,575)

Others 34,916 29,006 (1,087) -

Commitments to sell - call position 907,162 77,843 (121,839) (3,980)

Foreign currency 741,685 15,726 111,173 (1,461)

Indices 17,091 14,575 (1,004) (1,051)

Shares 104,877 9,800 (8,737) (1,468)

Others 43,509 37,742 925 -

Purchase commitments - put position 1,443,685 184,678 10,657 4,729

Foreign currency 35,125 62,625 510 58

Interbank market 1,236,073 - - -

Indices 43,246 63,310 948 1,302

Shares 118,326 58,743 9,010 3,369

Others 10,915 - 189 -

Commitments to sell - put position 841,776 179,740 42,749 379

Foreign currency - 3,652 - 11

Pref ixed 212,017 173,848 - -

Shares 624,618 2,240 42,625 368

Others 5,141 - 124 -



35

Contracts of futures, options and swaps mature as follows:

b) Market Value

The financial statements were prepared in conformity withaccounting principles, based on the assumption of normalcontinuity in the operations of ITAÚ and its subsidiaries.

The recorded values of each financial instrument whether

included or not in the balance sheet, when compared withthe values that might be obtained in an active market, or inthe absence of such markets, using the net present value ofadjusted discounted:

To obtain the market values for these financial instruments,the following criteria were adopted:

- Interbank deposits, certificates of bank deposit andmortgage securities, the latter two included in Se-curitieswere determined on the basis of their nominal values,monetarily corrected to maturity dates and discounted

at present value at interest future market rates and swapmarket rates for pre-fixed securities and fixed interestsecurities rates for post-fixed securities published in theGazeta Mercantil on April 2, 2001.

- Public securities included in Securities were determinedbased on market rates valued through com-parison with

(1) Includes unrealized gains relating to minority interests amounting to R$ 152,995 (R$ 148,934 at March 31, 2000).

31 - 180 181 - 365 More than 365 03.31.2001 03.31.2000

9,553,881 6,983,490 7,238,068 26,890,330 6,953,822

4,409,358 1,611,305 2,447,805 10,143,729 7,821,812

1,777,138 994,711 1,012,913 4,227,568 815,546

ITAÚ CONSOLIDATED

03.31.2001 03.31.2000 03.31.2001 03.31.2000 03.31.2001 03.31.2000

Short-term interbank investments 2,880,573 1,756,560 2,882,199 1,778,179 1,626 21,619

Securities and derivatives 19,592,724 15,950,382 20,500,363 16,899,964 907,639 949,582

Loan operations 20,024,449 13,895,649 19,998,023 13,913,562 (26,426) 17,913

Investment in BPI - SGPS, S.A. (BPI) 270,147 142,443 609,579 455,043 339,432 312,600

Other investments 318,322 277,708 317,391 279,940 (931) 2,232

Time and interbank deposits and funds from acceptances and issuance of securities

8,647,384 6,432,400 8,526,056 6,291,073 121,328 141,327

Treasury shares 179,048 110,713 352,520 275,864 173,472 165,151

Total unrealized gain/(loss) 1,516,140 1,610,424

Recorded value Market value Unrealized income/(loss)(1)

•



36

The foreign exchange effects on foreign investments have been allocated to the line items of the Statement of Income, inaccordance with the nature of the corresponding asset and liability accounts.

In order to make the March 31, 2001 financial statements comparable to other periods, the March 31, 2000 accounts havebeen reclassified as shown below:

lists held by National Association of Open MarketInstitutions (ANDIMA).

- Investment fund quotas included in Securities weredetermined based on net value per quota on the balancesheet 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 most recentquotations for the companies shares published in thedaily bulletin of each Stock Exchange.

- Loans with maturity dates over 90 days, when available,were calculated based on their net present value of futurecash flows discounted at market interest rates on thebalance sheet date, also consid-ering the effects ofhedges (swap contracts).

- Other investments and equity shares in foreign subsidiaryand affiliated companies are determined on the basis ofstock market quotations, book value per share andauction quotation.

- Time and interbank deposits, and funds from acceptancesand issuance of securitie when available, were calculatedbased on their present value deter-mined by means offuture cash flows discounted using interest futures marketrates, 367-day swap market for pre-fixed securities, andfixed income securities market rates for post-fixedsecurities pub-lished in the Gazeta Mercantil on April 2,2001; the effects of the hedges (swap contracts) arealso taking into account.

- Derivatives related to swaps contracted to hedge otherassets and liabilities are determined based on referencevalues for each parameter set forth in the contracts (bothparties), monetarily corrected through maturity anddiscounted to present value using interest future marketrates, according to the characteristics of each 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 dailybulletin of each Stock Exchange.

Note 14 - Reclassification for Comparability Purposes

03.31.2000

Previously ReclassifiedDisclosed Reclassification Balances

Income from financial operations Loans 901,801 (133,823) 767,978

Leases 144,630 (54) 144,576

Securities portfolio 862,624 (210,995) 651,629

Foreign exchange portfolio 7,351 (5,729) 1,622

Expenses on financial operations Deposits, money market and interbank funds (588,277) 218,196 (370,081)

Borrow ings and assignments and on-lendings (81,721) 55,099 (26,622)

Provision for loan losses (152,752) 2,164 (150,588)

Gross profit from financial operations 1,026,216 (75,142) 951,074 Other financial income (expenses) (486,285) 76,229 (410,056) Other administrative expenses (639,026) 3,019 (636,007)

Equity in income of subsidiaries and aff iliates (53,074) 64,599 11,525

Other operating income 99,786 (11,297) 88,489

Other operating expenses (126,235) 19,908 (106,327)

Operating income 539,931 1,087 541,018 Non-operating income 9,884 169 10,053 Income tax and social contribution Due on operations for the period (162,055) (1,256) (163,311)

Net income 365,275 - 365,275



37

Note 15 - Extraordinary Results

For a better analysis of the financial statements of the period,non-recuming expense, net of related taxes (income taxesan social contribution) have been segregated to extraordinaryresults accounts, representing the following: R$ 2.354,related to amortization of goodwiee by Banestado S.A.,acquired in this quarter; R$ 3.300, related to recording of

Note 16 - Additional Information

a) ITAÚ manages the following types of investment funds: privatization, fixed income - domestic and for-eign, shares,mutual funds shares open portfolio, investment clubs and its clients and own portfolios dis-tributed as follows:

The information below eliminates double counting of managed funds in investment funds:

Amount of managed funds and

03.31.2001 03.31.2000 portfolios at 03.31.2001

With Without With Without BANESTADO BANESTADO BANESTADO BANESTADO

Mutual funds 38,722,518 38,204,382 28,691,239 417 389

Fixed income 36,864,085 36,375,056 26,249,216 323 300

Shares and other funds 1,858,433 1,829,326 2,442,023 94 89

Managed portfolios 13,822,890 13,504,531 11,971,161 2,045 2,045

Customers 7,069,122 7,069,122 6,207,917 1,999 1,999

Itaú Group 6,753,768 6,435,409 5,763,244 46 46

TOTAL 52,545,408 51,708,913 40,662,400 2,462 2,434

Amount of managed funds and

03.31.2000 portfolios at 03.31.2001

With Without With Without BANESTADO BANESTADO BANESTADO BANESTADO

Mutual funds 38,722,518 38,204,382 28,691,239 417 389

Fixed income 36,864,085 36,375,056 26,249,216 323 300

Shares and other funds 1,858,433 1,829,326 2,442,023 94 89

Managed portfolios 5,643,702 5,643,702 5,444,182 2,045 2,045

Customers 2,064,388 2,064,388 2,123,077 1,999 1,999

Itaú Group 3,579,314 3,579,314 3,321,105 46 46

TOTAL 44,366,220 43,848,084 34,135,421 2,462 2,434

03.31.2001

provision for the transference of Itau Seguros S.A. dataprocessing center to CTO (Technical Operational Center)installations and R$ 19.800 related to expenses from themove of operational areas from Boa Vista to CEIC - ItaúBusiness Center Conceição.



38

b) The balances in Reais vinculated to foreign currency are:

c) ITAÚ and its subsidiaries sponsor complementary pensionplans managed by Fundação Itaubanco and by FUNBEP -Multisponsored Pension Fund (closed private pension fund),for the purpose of granting lifetime income (in the case ofFUNBEP and the plan arising from the Fundação Bemge deSeguridade Social - FASBEMGE, also in the form of pensionsas a result of death) to complement the retirement pensionpaid by social security. During the period, the contributionsamounted to R$ 7,239 (R$ 14,854 from January 1, to March31, 2000). The actuarial liabilities are calculated inaccordance with the actuar-ial models established in the

plans' Technical Notes, which call for compound capitalizationand defined benefits and are fully covered by the technicalprovisions for expired and unexpired risks. The contribu-tion rate increases in accordance with the participant's salary.

d) d) ITAÚ has established an Employee Stock Options Planto provide an incentive for executives to focus on the futuresuccess of ITAÚ over the medium and long terms timehorizons.

At March 31, 2001, the movement of options were as follows:

The exercise price of each series is determined taking intoconsideration the average share prices on São Paulo StockExchange during a minimum period of one year and amaximum of three months prior to the date of issuing theoptions, with an adjustment of up to 20% above or below,at granting date of the option and adjusted using the IGP-M up to the month prior to exercising the option.

e) The amount of R$ 347.140, (R$ 381.379 from January 1to March 31, 2000) was collected and provi-sioned in ITAÚCONSOLIDATED related to taxes and contributions of income,revenues and salaries. Additionally, taxes on financialintermediation were collected from clients in the amount ofR$ 755,606 (R$ 762,582 from January 1 to March 31, 2000).

31.03.2001 31.03.2000

Foreign investment 4,044,773 2,625,548

Net value of assets and liabilities in foreign currency, including derivatives (1,672,859) 13,846

Net foreign exchange position 2,371,914 2,639,394

Lots of thousand sharesVesting Exercise Exercise price Granted Exercised Cancelled Not

period until period until adjusted 3.31.2001 exercisedNº Data (R$1)1th 05.15.1995 12.31.1997 12.31.2001 41.75 282,000 271,000 11,000 -

2th 04.29.1996 12.31.1998 12.31.2001 44.99 597,000 571,952 10,000 15,048

3th 02.17.1997 12.31.2001 12.31.2004 58.42 533,000 10,000 7,000 516,000

4th 02.09.1998 12.31.2002 12.31.2005 67.78 535,000 3,000 4,000 528,000

12.31.2002 12.31.2005 67.65 43,500 - - 43,500

5th 02.22.1999 12.31.2003 12.31.2006 79.91 464,100 - - 464,100

12.31.2003 12.31.2006 79.78 34,000 - - 34,000

6th 02.14.2000 12.31.2004 12.31.2007 121.98 533,200 - - 533,200

7th 02.19.2001 12.31.2005 12.31.2008 158.09 510,000 - - 510,000

12.31.2005 12.31.2008 157.33 22,000 - - 22,000

Total 3,553,800 855,952 32,000 2,665,848

Issue



39

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

(1) Includes Banerjcard Administradora de Cartões de Crédito Ltda., Itaú Personnalité Administradora de Cartões de Crédito e Serviços Ltda., Itaucard Administradorade Cartões de Crédito e Imobiliária Ltda., Bemge Administradora de Cartões de Crédito Ltda., Banestado Admnistradora de Cartões de Crédito Ltda. (only at March31, 2001) and proportionally, Credicard Comercial e Importadora Ltda., Credicard S.A. Administradora de Cartões de Crédito, Redecard S.A. and Orbitall Serviçose Processamento de Informações Comerciais Ltda. (only at March 31, 2001).

(2) Includes Banerj Seguros S.A., Itaú Capitalização S.A., Itaú Previdência e Seguros S.A., Itaú Seguros S.A., Bemge Seguradora S.A., Investprev Seguros e Previdência S.A.(consolidated up to March 31, 2000) and, only at March 31, 2001, Capitaliza - Empresa de Capitalização S.A., Cia. de Seguros Gralha Azul and Paraná Cia. deSeguros - companies regulated by the Insurance Company Regulatory Agency (SUSEP).

03.31.2001 03.31.2000 03.31.2001 03.31.2000Asse ts

Current and long-term asse ts Cash and cash equivalents 7,432 5,685 13,587 9,059 Securities 381,471 282,285 3,039,366 2,316,992 Insurance receivable - - 421,471 354,982 Card holder purchases 1,715,857 1,373,710 - -

Other receivables 562,234 244,113 180,653 155,559 Deposits for tax incentives 26,790 37,117 - - Other assets 11,602 9,777 212,562 175,551

Perm anent asse tsInvestments 1,774,216 8,269 2,022,347 1,782,999

Property and equipment 41,985 35,425 214,880 228,723 Deferred charges 16,611 15,841 7,542 6,496

Total 4,538,198 2,012,222 6,112,408 5,030,361

Liabilities and s tockholders ' equity

Current and long-term liabilities Technical provisions - restricted - - 444,531 332,158

Insurance operations payable - - 73,430 68,233 Borrow ings 209,586 124,782 - - Taxes and social security contributions 133,968 33,623 204,701 117,938 Payable amounts - stores 1,057,856 737,764 - - Banking f inancing - card holders 608,338 536,297 - - Credit Card - annuity revenues 98,607 82,398 - - Other 287,048 157,856 127,664 106,703

Technical provis ions - not restr icte d - - 2,344,225 1,904,201

M inority interest in consolidated s ubsidiarie s - - 405 1,199

Stockholders ' equityCapital and reserves 2,021,218 267,346 2,817,516 2,438,934 Income for the period 121,577 72,156 99,936 60,995

Total 4,538,198 2,012,222 6,112,408 5,030,361

Credit card com paniesIns urance, capitalization and

pension funds com panies

(1) (2)

Note 17 - Additional Information on Affiliates and Subsidiaries

In order to permit a better analysis of the financial situation of the group, we present below a summary of accountinginformation, which has been consolidated according to the activities of the respective companies, as well as branches andfinancial institutions and main financial institutions in the country.


40


b) Foreign branches and subsidiaries

(1) Includes Grand Cayman and New York branches.

(2) Banco Itaú Europa, S.A. and BIE - Bank & Trust, Ltd.

(3) Banco Itaú Europa Luxembourg S.A. and Banco Itaú Europa - Fund Management Company, S.A.

(4) Investment controlling for BANESTADO was acquired on October 17, 2000.

(5) Afinco - Americas Madeira, SGPS Limitada, Banctec Informática S.A., BFB Overseas Inc., BFB Overseas Cayman, Ltd., Externalizacion Global S.A., Inversoradel Buen Ayre S.A., Itaú Europa, SGPS, S.A., Itaú Sociedad Gerente de Fondos Comunes de Inversion S.A. (only at March 31, 2000), Itaúsa Portugal - SGPS,S.A., ITH Zux Cayman Company Ltd., Itaú Leasing de Chile Ltda., Zux Cayman Company Ltd., Zux SGPS, S.A., BIEL Holding AG, IPI - Itaúsa PortugalInvestimentos, SGPS Ltda. (IPI) and Itaú Europa Advisory Holding Company S.A. (only at March 31, 2001).

(6) The foreign consolidated information are presented net of elimination.

Banco de l Paraná S.A.

(4)

03.31.2001 03.31.2000 03.31.2001 03.31.2000 03.31.2001 03.31.2000 03.31.2001 03.31.2000 03.31.2001 03.31.2000 03.31.2001 03.31.2000 03.31.2001

As s e ts

Curre nt and long-te rm as s e tsCash and cash equivalents 30,041 19,435 79,177 179,515 16,581 13,734 11,017 12,949 12,446 488 66 2,057 3,684 Short-term interbank investments 798,943 57,073 60,597 87,622 1,001,931 650,018 195,813 - 234,008 - 6,775 55 -

Money market 63,797 57,073 - 87,622 30,854 - - - - - - - - Interbank depos its 735,146 - 60,597 - 971,077 650,018 195,813 - 234,008 - 6,775 55 -

Securities 3,940,020 3,543,271 303,713 256,041 992,656 496,624 10,520 160,855 871,902 580,957 38,985 50,228 - Braz il 3,420,113 1,900,115 - 118,321 13,105 70,355 2,048 5,332 526,004 407,903 16,580 39,389 -

Federal government 742,972 806,953 - - 3,123 - - - 297,633 214,398 - - - Financ ial ins titutions 2,677,141 1,093,162 - 118,321 9,982 70,355 2,048 5,332 228,371 193,505 16,580 39,389 -

Other 519,907 1,643,156 303,713 137,720 979,551 426,269 8,472 155,523 345,898 173,054 22,405 10,839 - Interbank and interbranch accounts - - 185,147 1,741 - - - - - - 1,098 886 23,164 Loans and leasing 3,549,777 2,019,146 689,689 597,892 1,119,820 857,655 18,773 50,460 229,100 188,842 76,379 21,867 74,142

Foreign exchange loans 1,275,668 1,090,854 59,834 82,087 686,873 532,084 455 216 220,725 181,955 73,966 - - Other 2,274,109 928,292 629,855 515,805 432,947 325,571 18,318 50,244 8,375 6,887 2,413 21,867 74,142

Prepaid expenses 13,563 25,853 3,702 2,351 1,021 315 110 118 1,979 356 - - - Other assets 464,127 106,460 97,601 73,582 49,030 11,729 412 3,802 190,542 54,312 27,550 - 7,107

Pe rm ane nt as s e tsInvestments - 3,997 175 19,783 21,011 4,430 2,227 - - - 684 Property and equipment 957 805 142,284 116,841 4,830 3,834 763 648 142 78 109 111 748 Deferred charges 662 151 8,075 13,726 323 353 2,232 322 39 31 10 15 936

Total 8,798,090 5,772,194 1,573,982 1,329,486 3,205,975 2,055,273 244,070 231,381 1,540,158 825,064 150,972 75,219 110,465

Liabilitie s and s tock holde rs ' e quity

Curre nt and long-te rm liabilit ie sDepos its 783,336 407,931 1,101,600 860,076 2,158,308 1,582,798 181,553 186,146 531,110 152,415 54,024 20,556 98,022

Demand depos its 6,864 14,881 123,960 106,990 40,302 1,703 117,272 93,035 11 38,421 - 1,942 26,250 Sav ings depos its - - 361,454 301,210 - - - - - - - - 45,567 Interbank depos its 32,297 - 84,420 - 148,973 - 13,058 - 153,308 - 51,699 - - Time depos its 744,175 393,050 531,766 451,876 1,969,033 1,581,095 51,223 93,111 377,791 113,994 2,325 18,614 26,205

Money market 633,257 647,322 - - 266,784 4,833 - - 239,776 259,511 - 2,835 - Funds f rom acceptances and issuance of securities 1,228,173 1,279,424 - - 191,665 39,872 - - - - - - - Interbank and interbranch accounts - - - - - - - - - - - - 654 Borrow ings 3,925,310 1,898,218 55,309 83,216 - 3,692 - - 78,996 43,871 - - - Other liabilities 140,017 183,053 98,933 128,604 219,578 119,080 7,394 7,062 41,656 31 24,393 14 3,056

De fe rre d incom e 584 39,211 - - 642 542 - - - 5,589 - - -

M inor ity inte re s t in cons olidate d s ubs idiar ie s - - - - - - 1 1 - - - - -

Stock holde rs ' e quityCapital and reserves 2,084,036 1,307,746 320,402 271,795 359,352 299,442 51,523 36,191 634,134 352,755 69,730 50,742 10,224 Income for the period 3,377 9,289 (2,262) (14,205) 9,646 5,014 3,599 1,981 14,486 10,892 2,825 1,072 (1,491)

Total 8,798,090 5,772,194 1,573,982 1,329,486 3,205,975 2,055,273 244,070 231,381 1,540,158 825,064 150,972 75,219 110,465

Banco Itaú Bue n Ayre S.A.

Banco Itaú Europa S.A. Cons olidate d (2)

Banco Itaú Europa Luxe m bourg S.A. Cons olidate d (3)

Itau Bank , Ltd. IFE - Banco Be m ge

(Uruguay) S.A.Fore ign branche s (1)

03.31.2001 03.31.2000 03.31.2001 03.31.2000

20,143 2,975 153,408 229,766 13,671 - 2,105,529 794,768

- - 94,651 144,695 13,671 - 2,010,878 650,073

112,270 87,650 6,090,337 4,934,735 39,295 28,602 4,127,257 2,570,017

- 2,641 1,043,728 1,023,992 39,295 25,961 3,083,529 1,546,025 72,975 59,048 1,963,080 2,364,718

- - 209,409 2,627 - 1,554 5,726,040 3,709,947 - 540 2,317,521 1,887,736 - 1,014 3,408,519 1,822,211

31 47 20,406 28,677 323,223 401,116 1,159,553 642,767

1,094,229 735,764 277,769 144,006 546 523 150,380 122,840

1,917 151 14,333 14,864

1,566,030 1,229,780 15,907,164 10,624,997

20,484 22,815 4,609,744 3,085,454 - - 296,877 217,200 - - 407,021 301,210 - - 353,223 -

20,484 22,815 3,552,623 2,567,044 - - 1,139,816 914,501 - 537 1,399,031 1,277,138 - - 654 -

64,102 124,117 4,092,153 2,128,011 75,847 103,125 544,577 477,899

1,739 1,630 2,964 46,783

24 - 73,452 69,663

1,382,649 958,198 4,009,649 2,596,743 21,185 19,358 35,124 28,805

1,566,030 1,229,780 15,907,164 10,624,997

Othe r non-financial (5)

Fore ign cons olidate d (6)



41

c) Main financial institutions in the country

(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., Figueira Administração e Participações Ltda. (only at March 31, 2001) and also, at March 31, 2000, Itaú Sociedad Gerente de Fondos Comunes de Inversion S.A.

(2) Includes Banco Bemge S.A., Bemge Administradora de Cartões de Crédito Ltda., Itaucard Financeira S.A. Crédito, Financiamento e Investimento, Financeira BemgeS.A. – Crédito, Financiamento e Investimento, Guaxinim Administração e Participações Ltda. (only at March 31, 2001) IFE - Banco Bemge (Uruguay) S.A. and also, atMarch 31, 2000, Bemge Part Ltda. and its subsidiries.

(3) Includes Banco Banestado S.A., Asban S.A. Participações, Banco Del Paraná S.A., Banestado Administradora de Cartões de Crédito Ltda., Banestado Leasing S.A. -Arrendamento Mercantil, Banestado Corretora de Valores Mobiliários S.A., Banestado S.A. - Participações, Administração e Serviços and Capitaliza - Empresa deCapitalização S.A.

BANESTADO(3)

3.31.2001 3.31.2000 3.31.2001 3.31.2000 3.31.2001Assets

Current and long-term assetsCash and cash equivalents 132,558 234,451 9,824 50,196 93,814 Short-term interbank investments 1,287,319 2,069,656 1,524,532 796,761 1,157,724 Securities 871,403 481,186 794,514 4,453,125 920,762 Interbank accounts 627,027 431,934 105,387 149,792 919,080 Interbranch accounts 10,207 1,758 10 23 3,222 Loand and leasing operations 1,108,212 825,829 120,325 2,316,290 1,062,441 Other receivables 310,461 294,519 743,844 1,959,305 1,862,436 Other assets 7,155 7,275 24,323 184,183 65,239

Permanent assetsInvestments 13,813 8,899 13,555 309,331 26,999 Property and equipment 159,519 145,661 16,880 859,335 137,647 Deferred charges 97,655 131,309 1,906 93,731 10,127

Total 4,625,329 4,632,477 3,355,100 11,172,072 6,259,491

Liabilities and stockholders' equity

Current and long-term liabilitiesDeposits 3,151,031 2,765,124 739,890 3,376,347 3,115,470 Deposits received under security repurchase agreement 69,484 510,148 418,970 127,603 232,858 Funds from acceptances and issuance of securities - - - 484,324 214,381 Interbank accounts 151,954 136,957 10,483 38,318 206,360 Interbranch accounts 11,130 5,106 309 1,107 14,974 Borrowings 56,651 95,573 - 223,119 17,538

On-lending borrowings from public institutions 625 808 - 2,748 348,165 Technical provisions for insurance operations - restricted - - - 331,980 - Other liabilities 357,015 406,020 395,246 2,398,200 1,626,053

- - - 1,904,201 -

Deferred income 340 728 63 89,020 3,516

Minority interest in consolidated subsidiaries 176,838 141,059 11,746 495,120 2,596

Stockholders' equityCapital and reserves 604,185 553,998 1,755,105 1,651,388 474,933 Net income for the period 46,076 16,956 23,288 48,597 2,647

Total 4,625,329 4,632,477 3,355,100 11,172,072 6,259,491

BANERJ(1)

BEMGE(2)

Technical provisions for insurance operations - non-restricted

� �

Report of Independent Accountants onthe Limited Review

1. We have carried out a limited review of the accountinginformation included in the Quarterly Information ofBanco Itaú S.A. and subsidiary companies for the threemonth period ended March 31, 2001, including theconsolidated balance sheet and the correspondingconsolidated statement of operations prepared inconformity with accounting principles determined byBrazilian corporate law. This information is theresponsibility of the management of the Bank.

2 Our review was performed in accordance with specificstandards established by the Brazilian Institute ofAccountants - IBRACON in conjunction with the FederalAccounting Council - CFC and mainly comprised: (a)enquiries of and discussions with managementresponsible for the accounting, financial and operatingareas of Bank Itaú S.A. and subsidiary companies withregard to the main criteria adopted for the preparationof the quarterly information and (b) a review of thesignificant information and of the subsequent eventswhich have, or could have, significant effects on thefinancial position and operations of Banco Itaú andsubsidiary companies.

3 Based on our limited review we are not aware of anysignificant adjustments which should be made to theaccounting information included in the QuarterlyInformation of Banco Itaú S.A. and Subsidiary companiesfor the three month period ended March 31, 2001 for itto be stated in conformity with accounting principlesdetermined by the Brazilian corporate law applicable tothe preparation of quarterly information and incompliance with the regulations of the Brazilian SecuritiesCommission - CVM.

4 The limited review of the accounting information forthe three month period ended March 31, 2000, presentedfor comparison purposes, was conducted by otherindependent accountants, who issued their report datedMay 8, 2000 with no exceptions noted.

April 30, 2001

To the Board of Directors and StockholdersBanco Itaú S.A.

PricewaterhouseCoopers

Auditores Independentes

CRC 2SP000160/O-5

Ricardo Baldin

Partner

Contador CRC 1SP110374/O-0

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