miolo the company agosto07 - Banco do Brasil€¦ · Banco do Brasil National Trasure - 68.7 PREVI...

MissionTo be the solution in services and financial intermediation, to meet the expectations of customers and shareholders, to strengthen the commitment between employees and the Bank, and to contribute towards Brazil development.

Leadership Positions•TotalAssets:R$333.0billion •AccountHolders:24.9million• Loan Portfolio: R$ 145.2 billion • Distribution Network in Brazil 15,161 points of service• Total Funding: R$ 239.3 billion • ATM network in Latin America: 39,952 machines• Asset Management: R$ 208.9 billion • Internet: 8.4 million registered customers• Export Exchange: 26.8% market share

ProfileBanco do Brasil is the largest bank in Brazil with 24.9 million clients and 15.2 thousand points of service in 3.2 thousand brazilian cities and 22 countries. Being the first bank to operate in the Country, Banco do Brasil has collected stories of pioneer actions and leadership and consolidated its position in the Brazilian Banking Industry during its 198 years of existence.

Investments in technology, 79.3 thousand skilled employees, its market segmentation strategy, the constant search for efficiency, the commitment with the best corporate governance practices and the company’s tradition have been fundamental in reaffirming BB as a flexible, modern and competitive institution, with the capacity to serve all segments of the Banking Industry.

Banco do Brasil has the largest wholly-owned bank branch network in the Country and the largest branch network outside Brazil among brazilians’ banks. This banking franchise increases bank’s business generation potential and helps to determine the success of its various strategies.

In 2006, Banco do Brasil entered the Bovespa’s Novo Mercado, being the company with the largest market value in the segment, R$ 69.1 billion on June, 2007. The entrance to the “Novo Mercado” represents the commitment of the major shareholder and of the entire board of Banco do Brasil to continue managing the Company in a transparent, efficient and profitable manner, as it performs a significant role in the economic and social development of the Country.

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Figures at a GlanceR$ million 2002 2003 2004 2005 2006 1H06 1H07

Net Income 2,028 2,381 3,024 4,154 6,044 3,888 2,477Net Interest Income 13,575 15,318 15,464 16,709 17,984 9,042 10,227Allowance for Loan Losses (2,876) (3,073) (3,531) (4,527) (5,744) (4,056) (2,917)Fee Income 4,454 5,491 6,607 7,648 8,887 4,349 4,814Administrative Expenses (9,645) (11,326) (12,595) (13,144) (13,744) (6,688) (7,486)Total Assets 204,595 230,144 239,014 252,977 296,356 273,836 332,968Loan Portfolio 62,900 77,636 88,554 101,789 133,157 113,103 145,233Securities Portfolio 70,943 69,590 73,485 66,470 73,108 70,677 72,071Deposits 97,253 110,014 115,532 137,658 158,841 139,939 164,545Assets Under Management 66,153 102,658 124,021 153,508 182,682 171,154 208,851Shareholder’s Equity 9,197 12,172 14,106 16,850 20,758 19,178 22,305Ratios (%) ROE - Annualized 22.6 22.3 23.0 26.8 32.1 47.8 24.3NIM – Annualized a 9.3 9.0 8.4 8.6 8.0 8.2 7.8Effi ciency b 57.9 55.8 54.2 48.1 47.5 45.5 49.1Delinquency c 3.3 3.0 3.3 4.0 2.9 3.6 2.8Allowance / Delinquency 166.5 178.8 186.0 165.7 223.5 203.9 229.7Coverage d 80.3 82.5 96.9 103.9 112.9 112.2 110.1BIS Ratio 12.2 13.7 15.2 17.1 17.3 17.3 15.9Shares Dividends / Interest on Own Capital (R$ million) 579 746 954 1,498 2,418 1,555 991Book Value per Share (R$) e 4.19 5.54 5.80 6.93 8.38 7.8 9.0Earnings per Share (R$) e 0.92 1.08 1.24 1.71 2.44 1.6 1.0Payout (%) 28.6 31.3 31.5 36.1 40.0 40.0 40.0Dividend Yield (%) 10.8 4.2 3.7 4.4 4.6 3.8 1.4Price / Earning e 2.70 6.15 7.58 7.40 8.59 6.3 14.9Price / Book Value e 0.59 1.20 1.63 1.82 2.50 2.0 3.1Other Indicators (In thousands) Account Holders 15,391 18,751 21,089 22,907 24,374 23,710 24,912 Individuals 14,399 17,534 19,720 21,475 22,815 22,225 23,294 Corporate 992 1,217 1,369 1,432 1,559 1,486 1,618Service Network 12.3 13.2 14.4 14.8 15.1 15.0 15.2Automated Teller Machine (ATM) 33.6 37.0 39.0 40.2 39.7 41.7 40.0Credit Cards 4,728 5,335 6,918 9,282 14,096 9,812 15,697Number of Employees 75.9 78.0 79.7 83.7 82.7 82.9 79.3a) Net Interest Income to Earnings Assets.b) Administrative Expenses over Operating Income.c) 60 days past due loans over Loan Portfolio.d) Fee Income over Personnel Expenses.e) Adjusted series considering the stock split (1:3) occured in the second quarter of 2007.

Ratings Global Ratings

Fitch Ratings Classifi cationIndividual C/DShort-Term – Local Currency F3Long-Term – Local Currency BBB-Short-Term – Foreign Currency F3Long-Term – Foreign Currency BBB-Support 4

Standard & Poor’s Classifi cationLong-Term – Local Currency BB+Long-Term – Foreign Currency BB+Short-Term – Foreign Currency B

Moody’s Classifi cationFinancial Strength CShort-Term – Local Currency P-�Short-Term – Foreign Currency NPLong-Term Debt – Foreign Currency Baa3Long-Term Deposits – Local Currency A�Long-Term Deposits – Foreign Currency Ba3

National Ratings

Fitch Ratings Classifi cationShort-Term F�+(bra)Long-Term AA+(bra)

Moody’s Classifi cationShort-Term BR-� Long-Term Aaa.Br

�Banco do Brasil – The Company

Table of Contents0�. Economic Environment............................................................. 3

02. Industry Outlook ....................................................................... 6

03. Banco do Brasil at a glance ...................................................... 8

04. Banco do Brasil’s Shares ....................................................... �0

05. Corporate Governance ........................................................... �2

• Organizational Structure ...................................................... �2

• Risk Management ................................................................ �4

06. Financial Performance............................................................ �5

• Credit ................................................................................... �8

• Securities ............................................................................. 2�

• Funding ................................................................................ 22

07. Retail ...................................................................................... 23

08. Wholesale ............................................................................... 26

09. Public Sector .......................................................................... 27

�0. Agribusiness ........................................................................... 28

��. Foreign Trade ......................................................................... 29

�2. Asset Management ................................................................. 30

�3. Capital Markets....................................................................... 3�

�4. Insurance, Pension Plans and Capitalization ......................... 32

�5. Distribution Network ............................................................... 34

�6. Technology Structure .............................................................. 36

�7. Human Resources .................................................................. 38

�8. Social Responsability ............................................................ 39

�9. Banco do Brasil Figures ......................................................... 40

Distribution Network Abroad ......................................................... 43

Subsidiaries .................................................................................. 45

Contact List................................................................................... 46

Awards ......................................................................................... 46

3Banco do Brasil – The Company

�. Economic Environment Throughout the fi rst half of 2007, the international environment remained favorable as regards resources fl ows to emerging markets, in spite of oil prices volatility and small scale turbulences in markets related to uncertainties resulting from the performance of the U.S. economy and the future of monetary policies in that country.

In Brazil, the strengthening of economic foundations, namely in the indicators of external solvency, has been important for the decrease of sovereign risk, the increase of external resources fl ows and the recent improvement of ratings for the Brazilian economy.

Such an environment was favored the infl ow of U.S. dollars in Brazilian market. As a consequence, the exchange rate (R$/US$) presented the smaller landings of the last six years.

The infl ation index (IPCA) continues above the target of 4,5% per year and the interest rate decreased in 125 basis points during the fi rst half.

The decrease in the interest rate, the extension of loans/fi nancing terms and the continuous improvement in wages and and employment have been the main factors that maintained the expansion of consumption and credit. That environment and the perspective of higher economic growth over the next years has encouraged investments, generating a perspective of strong growth in domestic demand without pressure on prices that could curtail the fulfi llment of infl ation goals.

2002 2003 2004 2005 2006

47,243

�3,�96

25,238

33,842

44,932

* Amount in the period.Source: Secex (Ministry of Development, Industry and Foreign Trade)

46,476

20,662

�H06 �H07

60,43947,966

73,20362,836

96,678

73,600

��8,532

9�,332

4�,5�252,554

73,2�66�,057

�37,807

�9,545

Surplus Exports Imports

Trade Balance* (R$ billion)

4 Banco do Brasil – The Company

2002 2003 2004 2005 2006

3.5333

2.8892

2.6544

2.3407

2.�380

Exchange Rate* (R$/US$)

*Price for dollar sale at the last working day of each year/semester.Source: Economática

2002 2003 2004 2005 2006

�,478 �,700

�,942 2,�48

2,323

2.7

4.3

�.�

5.7

2.9

GDP (R$ billion)

*Preview Until March 2007.** Total amount in 4 Quarters*** Change over the same period of the previous yearSource: IBGE (Brazilian Institute of Geography and Statistics)

GDP Real Annual Change (%)*** GDP Nominal**

2.�643

�.9262

June/06 June/07

2,223

3.7

June/06 June/07*

2.8

2,380


2002 2003 2004 2005 2006

�2.5

9.3

7.6

5.7

3.�

IPCA Price Index - Annual Change (%)*

* Total amount in the periodSource: IBGE (Brazilian Institute of Geography and Statistics)

2002 2003 2004 2005 2006

�,439

463383

305

�93

Brazilian Sovereign Risk*

* End of periodSource: Bloomberg

2002 2003 2004 2005 2006

25.00

�6.50 �7.75 �8.00

�3.25

�9.�

23.3

�6.2

�9.�

�5.3

Interest Rate (Selic)

Source: Economática

Average Interest Rate (Selic) % Interest Rate (end of period) - %

�H06

�.5

�5.25

�H06

246

June/06

�H07

�H07

June/07

2.�

�2.6

�2.0

�6.5

�6�


2. Industry OutlookThe Brazilian banking industry ended the fi rst half of 2007 with 155 banks. Lower infl ation levels and decreasing interest rates led to a higher competitiveness in the Brazilian banking industry. In this scenario, overall loan portfolio reached R$ 799.2 billion, what means 32.3% of GDP. The impact of recent regulations, namely relating to loan portability and free banking option for public employees, is expected to be felt during this year.

2002 2003 2004 2005 2006

2224 24.5

28.�30.8

Loan x GDP (%)*

* End of periodSource: Brazilian Central Bank

2002 2003 2004 2005 2006

�66 �64 �63 �60 �58

Banks in Brazil*

*Multiples and Commercial BanksSource: Brazilian Central Bank

June/07

June/07

�55

32.3


Main Individuals Loan Operations Free Resources 2002 2003 2004 2005 2006 June/07

Direct Consumer Credit 24,553 30,494 49,356 70,739 88,7�0 �0�,906 Payroll Loan - - �7,�5� 3�,704 48,�49 57,973Vehicles 26,933 29,987 38,065 50,685 63,475 70,94�Credit Card 4,839 6,475 8,207 ��,260 �3,4�8 �5,873Overdraft Account 8,545 8,9�9 9,800 �0,974 ��,760 �3,935Others ��,296 �2,223 33,�33 47,073 60,605 70,348 * Payroll information not available from 2002 to 2003. Source: Brazilian Central Bank

(R$ million)*

Loan Segments - Free Resources (%)

2002 2003 2004 2005 2006

63.2 60.5 56.4 52.8 52.�

36.8 39.5 43.6 47.2 47.9

Individuals Businesses

June/07

Source: Brazilian Central Bank

5�.�

48.9


3. Banco do Brasil at a glanceBanco do Brasil is the largest fi nancial institution in the Brazil, with 24.9 million customers, served by 15,161 points of sale, and 39,952 ATM (the largest service network among Brazilian banks), not to mention mobile and internet banking that are responsible for 32.2% of banking operations. Banco do Brasil maintains its leadership in several segments of banking industry, such as total assets, funding, loan portfolio and asset management.

2002 2003 2004 2005 2006

204.6

230.� 239.0253.0

296.4

�6.3�7.3

�6.5�5.� �5.0

Total Assets (R$ billion)

* Until March 2007.Source: Brazilian Central Bank

CAGR: 11.4%

%market share BB

2002 2003 2004 2005 2006

�45.6 �50.��60.�

�68.2

208.�

23.4

2�.720.9

�8.� �8.6

Funding (R$ billion)


CAGR: 11.6%*

%market share BB

June/07

June/07

333.0

�4.6*

239.3

20.4


2002 2003 2004 2005 2006

24.327.� 29.0

35.8 36.8

30.733.7 33.�

35.632.8

Demand Deposits (R$ billion)


CAGR: 9.6%

%market share BB

2002 2003 2004 2005 2006

62.977.6

88.6�0�.8

�33.2

�6.9

�9.0 �8.7�7.9

�9.3

Loan Portfolio (R$ billion)

*Loan and Leasing Operations. Until March 2007.Source: Brazilian Central Bank

CAGR: 20.4%

%market share BB

3,�64 3,24�

3,722 3,894 3,969

�8.6�9.3

2�.622.� 22.�

Branches CAGR: 5.2%

June/07

June/07

2002 2003 2004 2005 2006


%market share BB

June/07

3�.9*

40.�

20.2*

�45.2

3,977

22.8*

�0 Banco do Brasil – The Company

4. Banco do Brasil’s SharesOn April 25th 2007, Banco do Brasil’s General Shareholders Meeting approved a 200% split of BB’s shares (BBAS3), which means two new shares for each existing share. This measure, which raised the quantity of shares without equity changes, helped to improve liquidity and access of small investors to Banco do Brasil’s shares.

In 2006, BB adhered the so-called “Novo Mercado” of Bovespa – a special listing group that encompass the companies that have adopted strict corporate governace practices. To join this segment, BB commited itself to reach 25% of free-fl oat until 2009. As a consequence, BB held a secondary market offering in 2006, which raised BB’s free-fl oat from 6.9% to 14.8%.

Shareholders (%) 2005 June/06 2006 June/07

National Treasury 72.� 70.9 68.7 68.7Previ �3.9 ��.4 ��.4 ��.4BNDESPar 5.7 2.9 5.0 5.0Treasury Stocks �.4 0.0 0.0 0.0Free Float 6.8 14.8 14.8 14.8Individuals 2.6 4.5 4.2 4.0Companies 0.9 3.6 3.4 3.8Foreign Investors 3.4 6.8 7.2 7.0Total Shareholders 100.0 100.0 100.0 100.0

Performance Ratios 2002 2003 2004 2005 2006 1H06 1H07

Earnings per Share (R$)* 0.92 �.08 �.24 �.7� 2.44 �.57 �.0Book Value per Share (R$)* 4.�9 5.54 5.80 6.93 8.38 7.75 9.0�Price/Book Value* 0.59 �.20 �.63 �.82 2.50 2.0 3.�Price/Earnings* 2.70 6.�5 7.58 7.40 8.59 6.3 �4.9Payout (%) 28.6 31.3 31.5 36.1 40.0 40.0 40.0Dividend Yield (%) 10.8 4.2 3.7 4.4 4.6 3.8 1.4Daily Average Volume (R$ million) �.6 4.2 4.9 8.6 25.2 �9.6 44.2Market Capitalization (R$ billion) 6.7 �7.6 26.0 33.7 52.8 4�.2 69.�

* Adjusted series considering the stock split (1:3) occured in the second quarter of 2007.

��Banco do Brasil – The Company

Ibovespa increased 22.3% during the fi rst half of 2007, while Banco do Brasil’s shares increased 33.0% in the same period. If considered the fi ve year period (between June 2002 to June 2007), Ibovespa expanded 338.3% and BB got 1,178.1%.

Ibovespa Banco do Brasil

Subscription WarrantsIn �996, on the occasion of BB’s capital increase, three series of subscription warrants were issued: A, B, and C, maturing in 200�, 2006, and 20��, respectively.

Since the subscription warrants series C (BBAS�3) were not splitted, the proportion for future exercise changed

to 3.�3�799 shares to each subscription warrant.

Warrant Serie “C”

Exercising Date 03.3� to 06.30.20��Quantity of Warrants 27,028,746Quantity of Shares* 84,648,600Capital Dilution* 3.4%*Considered that a capital increase will not take place until the exercising date and the entire outstanding warrants will be exercised.

jun/02 dec/02 jun/03 dec/03 jun/04 dec/04 jun/05 dec/05 jun/06 dec/06 jun/07

388%

1,178%


5. Corporate GovernanceIn the Bovespa’s “Novo Mercado” since 2006, Banco do Brasil is committed to disclosure, accountability, equity and social-environmental responsibility, supported by the implementation of tools for monitoring that align executive behavior with company and shareholder interests. Banco do Brasi decisions at all levels are taken jointly. In order to get all executives involved in the defi nition of strategies and accountable for the approval of proposals for BB’s different lines of business, the management uses committees, subcommittees and commissions at a strategic level, which guarantee agility, quality and security for the decision making process.

During the period under consideration, it should be highlighted that the bank established a 40% payout rate (the percentage of profi t distributed to shareholders), the payment of dividends / interest on equity quarterly and the split of BB’s shares.

5.�. Organizational StructureBB’s management bodies are the Board of Directors, advised by the Audit Committee, and the Executive Board, made up of the Board of Offi cers (CEO and nine vice-presidents) and by 26 statutory managing directors. The Bank has also a permanent Audit Committee.

The Board of Directors has seven members, elected on April 2007, for 2007/2008 mandate. Out of the seven members, three were indicated by the minority shareholders and the others by the major shareholder. In the composition of the Board of Directors, a minimum of two directors should be independent, as defi ned in the Regulation of the Bovespa’s “Novo Mercado”.

The Shareholders Meeting taking place in April also elected the fi ve members of the Audit Committee, including two indicated by the minority shareholders and the others by the controlling shareholder, for the 2007/2009 mandate.

Board of Directors Board of Auditors

Bernard Appy Otávio Ladeira de MedeirosChairman - Federal Government PresidentAntonio Francisco de Lima Neto Vice-Chairman - Federal Government Agostinho do Nascimento NettoJosé Carlos Rocha Miranda Member Member - Federal Government Tarcísio José Massote de Godoy Eduardo Grande BittencourtMember - Federal Government Member Carlos Augusto Vidotto Member – Minority Shareholders Eustáquio Wagner Guimarães GomesFrancisco Augusto da Costa e Silva Member Member – Minority Shareholders João Carlos Ferraz Marcos Machado GuimarãesMember – Minority Shareholders Member

�3Banco do Brasil – The Company

Gen

eral

Sha

reho

lder

s M

eetin

g

Boa

rd o

f Aud

itors

Aud

it C

omm

itee

Foreign Trade

Commercial

International

High Income

Regional SustainableDevelopment

Inte

rnal

Aud

it

Boa

rd o

f Dire

ctor

s

Boa

rd o

f Offi

cers

CE

O

Executive Secretariat

VP

ofIn

tern

atio

nal

Bus

ines

s an

dW

hole

sale

Employee Relation andSocial-Env. Responsability

Human Resources

VP

of H

uman

Res

ourc

es a

ndS

ocia

l-Env

iro-

nmen

tal

Res

pons

ibili

tyAgribusiness

VP

ofR

ural

Bus

ines

ses

Credit and Debt Cards

Insurance, Pension Plansand Capitalization

New Retail Businesses

VP

of C

redi

tan

d D

ebit

Car

ds a

nd N

ewR

etai

l Bus

ines

s

Micro and Small Businesses

Distribution

Retail Services

VP

of R

etai

lS

ervi

ces

and

Dis

tribu

tion

Investor Relations

Finance

Capital Markets andInvestments

VP

of F

inan

ce,

Cap

ital M

arke

tan

d In

vest

orR

elat

ions

Accountig

Risk Management

Controlling

Credit

Restructuring ofOperational Assets

Security Management

Strategy and Organization

Marketing andCommunication

Legal

Internal Controls

VP

of C

redi

t,C

ontro

lling

and

Ris

kM

anag

emen

t

Pension Fund Management

Government AffairsVP

ofG

over

nmen

tA

ffairs

Operational Support

Information Technology

Software DevelopmentTecnology

Logistic

VP

ofTe

chno

logy

and

Logi

stic

Stru

ctur

e

Dire

ctor

ship

Uni

ts

Aut

onom

ous

Dep

artm

ents

Bei

ng S

truct

ured


5.2. Risk Management Banco do Brasil risk management is integrated. This integration conferred greater acuracy to the measurement of risks and a better allocation of capital. BB maintain a Global Risk Committee (CRG), a forum composed by the Board of Offi cers and executives of the areas that manage risk and defi ne exposure limits, contingency plans and risk measurement models.

Global Risk Committee - GRC

Credit Risk CommitteeAssets and LiabilitiesCommittee

Operational RiskCommittee

Analyses and proposes measures about:- assets and liabilities management and models- liquidity and market risk level exposure- liquidity and market risk management and models- apropriate liquidity levels and contingency plans

Analyses and proposes measures about:- credit risk management- credit risk level exposure- credit risk models and contingency plans

Analyses and proposes measures about:- operational business environment, legal and image risks management- operational risk level exposure- operational risk models and contingency plans


6. Financial PerformanceNet income reached R$ 2,477 billion in the fi rst half of 2007 and a return on equity of 24.3%, also meaning

R$ 1.00 of earnings per share. The shareholders’ equity raised 16.3% to R$ 22.3 billion.

2002 2003 2004 2005

2,028 2,38�3,024

4,�54

22.6 22.3 23.026.8

Net Income X ROE

ROE (%) Net Income (R$ million)

32.�

6,044

2006

2002 2003 2004 2005

�3.575�5,3�8 �5,464

�6,709

9.3 9.08,4 8.6

Net Interest Income X NIM

NIM (%) Net Interest Income (R$ million)

2006

8.0

�7,980

�H06 �H07

47.8

3,888

�H06 �H07

8.37.8

8,7�8�0,060

2,477

24. 3


2002 2003 2004 2005

4,4545,49�

6,607

8,887

Fee Income (R$ milion)

7,648

2006

2002 2003 2004 2005

579746

954

�,498

Dividends/Interest on Own Capital (R$ million)

2006

2,4�8

2002 2003 2004 2005 2006

9,�97

�2,�72�4,�06

�6,850

20,758

Shareholders Equity (R$ million)

�H06 �H07

June/06 June/07

�H06 �H07

4,349 4,8�4

�9,�78

22,305

862 99�


2002 2003 2004 2005

9,645

��,326�2,595

�3,�43

Administrative Expenses (R$ million)

�3,744

2006

Capital Adequacy BIS Ratio (%)

�2.2�3.7

�5.2�7.� �7.3

2002 2003 2004 2005 2006

�H06 �H07

�H06 �H07

�7.3�5.9

7,486 6,688


Loan Portfolio * 2004 2005 June/06 2006 June/07 Chg % (Jun/06)

Loan Portfolio 88.5 101.8 113.1 133.1 145.2 28.4Domestic 79.5 92.6 �03.2 �20.9 �33.0 28.9 Individuals �6.� �8.4 2�.6 23.9 27.9 29.0 Payroll Loan �.5 3.8 6.0 8.3 �0.2 68.4 Vehicles 0.3 0.2 0.4 0.9 �.7 304.5 Businesses 33.4 38.5 4�.7 5�.9 56.3 35.0 Agribusiness 30.0 35.7 39.9 45.� 48.8 22.2Abroad 9.0 9.2 9.9 �2.2 �2.2

*In the �Q05, some operations from the Commercial Portfolio were transferred to the Retail Portfolio.

(R$ billion)

33.6%

8.4% 19.2%

38.8%

Loan portfolio (June/2007)

Individuals

Businesses

Agribusiness

Abroad

6.�. CreditBanco do Brasil’s loan portfolio reached R$ 145.2 billion in June 2007, a growth of 28.4% over the previous year. This performance was mainly driven by the businesses loan portfolio, which reached

R$ 56.3 billion, a change of 35%, and by individuals loan portfolio that achieved R$ 27.9 billion.


Loans rated at risk levels AA to C accounted for 90.8% of BB’s portfolio, compared to 88.4% in June 2006. In the Brazilian banking industry, this level was 91.2% in June 2007.

2005 *BI 2006 *BI% Balance Allowance Comp.% Balance Allowance Comp.%

AA �7,095 - �5.� 24.4 39,37� - 27.� 24.4A 30,796 �54 27.2 37.4 29,432 �47 20.3 39.9B 34,499 345 30.5 �7.4 46,5�3 465 32.0 �7.6C �7,624 529 �5.6 �0.4 �6,546 496 ��.4 9.3D 5,286 529 4.7 3.4 5,��3 5�� 3.5 2.6E �,48� 444 �.3 �.5 �,993 598 �.4 �.3F 785 393 0.7 �.0 803 40� 0.6 0.9G 894 626 0.8 �.0 987 69� 0.7 0.7H 4,643 4,643 4.� 3.5 4,476 4,476 3.� 3.3Total 113,103 7,662 100.0 100.0 145,233 7,786 100.0 100.0AA-C �00,0�3 �,028 88.4 89.5 �3�,86� �,�08 90.8 9�.2D-H �3,090 6,634 ��.6 �0.5 �3,372 6,677 9.2 8.8

*Banking Industry - Preliminary data

R$ millionLoan Portfolio by Level of Risk

�2.6�6.0

27.53�.0

40.4

Retail Loan Portfl olio * (R$ billion)

*In the �Q05, operations from the Commercial Portfolio were transferred to the Retail Portfolio.

2002 2003 2004 2005 2006 June/2007

45.8


2002 2003 2004 2005 2006

�4.0�6.2

�2.2�3.9

2�.7

Commercial Loan Portfolio* (R$ billion)

*In the �Q05, operations from the Commercial Portfolio were transferred to the Retail Portfolio.

2002 2003 2004 2005 2006

7.6 7.4 8.0

9.6

��.0

Foreign Trade Loan Portfolio (R$ billion)

2002 2003 2004 2005 2006

�6.8

27.230.0

35.7

45.�

Agribusiness Loan Portfolio (R$ billion)

June/07

June/07

June/07

24.9

��.0

48.8

2�Banco do Brasil – The Company

6.2. SecuritiesBanco do Brasil securities portfolio reached R$ 72.0 billion, an increase of 2.0% if compared to the same

period of the previous year.

June/ June/Balance 2002 2003 2004 2005 2006 2006 2007

Available for trading 3,585 �6,095 �3,�63 3,077 5,568 7,494 �0,856Available for sale 4�,303 28,307 32,790 37,832 39,78� 40,64� 39,379Held to maturity 25,763 24,82� 26,95� 25,275 24,865 24,409 20,589Derivatives 292 368 58� 287 463 564 �,247Total 70,943 69,590 73,485 66,470 70,677 73,108 72,071

(R$ million)

Under 1 year 1-5 years 5-10 years Over 10 years

2004 29.6 6�.2 8.6 0.62005 26.0 63.7 9.4 0.9June/2006 3�.3 57.9 9.5 �.22006 33.2 58.0 7.� �.7June/2007 37.7 52.8 7.4 2.2

(%)Securities Portfolio by Maturity – Market Value

Securities Portfolio


6.3. FundingBanco do Brasil’s credibility allied with its broadly distributed network allowed BB to maintain its leadership in

funding, ending June 2007 with a balance of R$ 164.5 billion, 17.6% change over the 12 months period.

(R$ million)

Funding Composition (%)

June/ June/ Funding 2002 2003 2004 2005 2006 2006 2007

Total Deposits 97,253 ��0,0�4 ��5,532 �37,658 �39,939 �58,84� �64,545 Demands 24,342 27,�40 28,99� 35,802 3�,363 40,059 36,84� Savings 26,9�8 27,425 3�,069 32,844 33,2�5 36,7�4 40,83� Time 42,��7 48,�73 49,665 63,495 69,377 76,900 8�,427 Interbank 3,876 7,275 5,768 5,383 5,855 4,878 5,4�6 Investment - - 38 �34 �29 289 300Money Market Borrowing 48,327 40,063 44,527 30,508 5�,496 49,283 74,7�9Total 145,580 150,077 160,059 168,166 191,435 208,123 239,264

Demand Deposits

Savings Deposits

Time Deposits

Interbank Deposits

Investment Deposits

Money Market Borrowing

2005 2006 2007

2005 2006 2007

2005 2006 2007

2�.3

�9.5

37.8

3.20.�

�8.�

3�.2

2.2

34.0

�7.�

�5.4

2005

Jun/07

0.�

2005 2006 2007

23.7

2.3

37.0

�7.6

�9.3

2006

0.�


7. RetailThe Retail segment is comprised of individual, small and micro enterprises and small corporate customers. At the end of June, this segment had 23.3 million account holders and 9.4 non-account holders: the largest banking customer base in Brazil. Retail loan operations reached R$ 45.8 billion, an increase of 31.4% compared to the same period of the previous year.

To better serve the retail market, BB segments its customers base in six broad relationship levels, based on income and investment volume: Banco Popular do Brasil (low income), Pessoa Física (individuals), Preferencial (preferential), Exclusivo (exclusive), Estilo (high income) and Private (private banking). For each segment, BB offers specifi c products and services, according to their needs.

Retail Segmentation

I >= R$ 1,000,000A

I >= R$ 100,000GI >= R$ 6,000

GAI >= 1,500,000B

I >= R$ 20,000GI >= 2,000

GAI >= 120,000C

I < R$ 20,000GI < 2,000D

Banco Popular do BrasilLow Income Customers

I = InvestmentsGI = Gross Income (per month)GAI = Gross Agriculture Income (per year)

Banco Popular do BrasilBanco Popular do Brasil (BPB) is a Banco do Brasil wholly-owned subsidiary that serves low income customers by offering loans, debt cards, insurance products and account services. At the end of the fi rst half, BPB’s customer base was composed by �.4 million individuals. Customers are served by 2.6 points of sales distributed over �.3 municipalities in Brazil.

During the period, over 228 thousand loan transactions were carried out, totalling almost R$ 42 million.


IndividualsDirect consumer lending (CDC) is the main product intended for individual customers, representing 44.3% of retail loan portfolio. Payroll-tied loans represented 50.2% of the CDC portfolio. Vehicle fi nancing should also be highlighted: by the end of June, transactions reached R$ 1,722 million, an increase of 304.2% if compared to the same period of the previous year.

The credit card’s base rose 59.1% until the end of June comparing to the same period of the previous year, with an expressive growth in the number of cards and private label retail partnerships.During the semester the bank earned R$ 22.7 billion with cards, an amount 28.9% higher than for the same period in 2006. Of this amount, R$ �2.4 billion refers to credit cards and R$ �0.3 billion to charge cards.

2002 2003 2004 2005 2006

6.77.8

9.7

�2.0

�6.9

CDC - Direct Consumer Credit (R$ billion)

2002 2003 2004 2005 2006

4.7 5.36.9

9.3

�5.7

Credit Cards

9.��.3

�3.6

�6.5

2�.3

Number (million)Revenue (R$ billion)

June/07

June/07

�4.�

22.7

20.3


Small and Micro Enterprises (SME)BB had 1.6 million SME customers in the end of the period. The SME loan portfolio grew 28.8% in 12 months, achieving R$ 21.4 billion. About 71% of SME’s portfolio was for working capital operations and 29% for investments fi nancing. Among working Capital lines, it is highlighted BB Giro Rápido that surpassed R$ 4.7 billion, growth of 10.4%.

During the period, there was an impressive increase in SME cards base, which reached 752 thousand units against 457 thousand in the same period of last year.

2002 2003 2004 2005 2006

�.5

2.7

3.43.9

4.3

BB Giro Rápido (R$ billion)

BB Consórcio - ConsortiumsBB Consórcio is the third largest company, if considered the number of active quotas. By the end of the fi rst

half, the consortium portfolio had 147 thousand active quotas.

Vehicle FinancingThe vehicle fi nancing portfolio reached R$ 1.7 billion at the end of the fi rst half, an increase of 304.5% if compared to the same period of previous year. This line of business was specially driven by the increase of non-account holder service through distrubutors and multi-brand partnerships.

Retail PartnershipsThe partnerships with retailers to offer banking products and services, started in 2006, recorded positive results. In the fi rst half, BB had 25 new partnerships with important retail corporations. This initiative foresees offering credit both to customers and non-account holders through loans or credit card. By June, there were 276 thousand retail partnership cards, an increase of 297.2% in the half.The partnership business generated has led a growth in the Bank’s loan portfolio of R$ �55 million, and the issuing of 65� thousand cards in eight months of activities.

June/07

4.7


8. WholesaleAt the end of the period, Banco do Brasil reached 35.5 thousand wholesale customers, among medium, large and corporate companies, institutional investors and fi nancial institutions. Segmentation for such customers is based on annual gross sales with economic activities.

Business Corporate

Industry From �0 million to 90 million Over 90 millionCommerce From �0 million to �50 million Over �50 millionServices From �0 million to �50 million Over �50 million

The wholesale loan portfolio, which includes agroindustrial loans and those recorded abroad, reached R$ 50.3 billion at the end of June, growth of 43.6% if compared to the same period of the previous year. Working capital loans reached R$ �9 billion and investment loan operations achieved R$ 5.� billion.

Furthermore, the Bank offers a customized cash management that includes payroll services, payment of suppliers and taxes; collections and debits in accounts; and absorption of payment, receivables, foreign trade and exchange services. These solutions allow companies to focus on their core business and to optimize fi nancial services.

BB also offers supplementary pension plans for companies through BB Previdência, Banco do Brasil’s pension fund product. During the period, those plans equity reached R$ 1.2 billion, among 40 plans and 70 sponsoring companies.


9. Public SectorBanco do Brasil is one of the main partners of public administration in implementing policies, programs and projects focusing on regional and national development. BB develops solutions that seek to satisfy specifi c needs in the public sector and all its network, helping not only the daily routine of the public sector manager, but also public sector employees , suppliers and citizens in general.

Banco do Brasil has kept its leadership position in public sector payroll servicing. In the fi rst half, BB was responsible for 8.6 million individual payrolls in the federal, state and municipal spheres. Banco do Brasil is also a leader at taxes billings, the prior payment agent of social security and the main manager of government funds.

The Government Card base grew 47.7% in 12 months and reached 44.7 thousand cards issued. Billings increased 66.7%, totaling R$ 52.4 million.

Licitações-e (e-Biddings), the largest electronic system for purchases and services contracting, has consolidated its position as the most important system used by the public sector in Brazil, generating transparency and savings. In the fi rst half, 20.6 thousand electronic bids were carried out, for transaction of R$ 3.� billion.

Licitações-e 2005 2006 1H06 1H07

Quantity �8,�0� 42,965 �7,078 20,606Amount (R$ billion) 3.� 6.9 2.3 3.�


�0. AgribusinessAs the major credit supplier for the Brazilian agribusiness, Banco do Brasil reaches all the segments of the market, from the small farmer to the large agro-industrial companies. In June 2007, BB’s agribusiness loan portfolio presented a balance of R$ 48.8 billion, a growth of 22.2% in relation to the same period of 2006.

The Bank destined R$ 33.9 billion to the rural sector for the 2006/2007 harvest, ended in June. This sum is 26% higher than the one assigned to the 2006/2005 harvest.

Furthermore, BB has encouraged hedging for the agribusiness, through production insurance and derivative markets, as term contracts and future options, and offers products with social environmental attributes, such as BB Florestal, aimed at increasing forest production, and BB Biodiesel, to support fi nancing biodiesel plant projects.

Family Farming ProgramFamily farming, which includes small and medium-sized producers, represent the majority of farmers in Brazil. For that reason, the Federal Government designed specifi c programs to support family farming, such as the Family Farming National Program (Pronaf) that aim at providing credit facilities to the segment. In the fi rst half, Pronaf operations amounted R$ 4.9 billion, 8.8% more than in the same period of 2006.

Acting as an agent of public policy, Banco do Brasil has its profi tability ensured through the prior allocation of the funds and proper remuneration. In Government programs, the Brazilian Treasury pays to the Bank equalization revenues, that means the difference between the rate charged to the taker of the credit and the costs of the funds, administration and tax costs and capital remuneration, in accordance with article 5 of the company’s Bylaws. In the fi rst half, BB receives R$ 853 billion as revenues from equalization revenues.

2002 2003 2004 2005 2006

6,9��

Agribusiness Loan Portfolio – Segments (R$ million)

8,562

�3,724�0,642

�5,788�3,23�

�9,23015,463

26,080

�8,582

Investment Capital LoanWorking Capital Loan

June/06 June/07

2002 2003 2004 2005 2006

�,743

2,4�3

3,2�7

4,342

4,802

Pronaf

635

8�4850

�,094

996

Number of Contracts (thousand) Loan Portfolio (R$ million)

June/06 June/07

2�,267�6,857

�9,686

28,942

955�,0�0

4,9434,543


��. Foreign TradeBanco do Brasil has kept its leadership in foreign trade operations, supporting and promoting the market. Advances on Exchange Contracts (ACC) and Advances on Export Contracts (ACE) reached together a new record in the fi rst half: volume of US$ 7.4 billion and 14 thousand contracts.

BB contracted US$ 24.5 billion in the Export Exchange market in the fi rst half. This amount represent a growth of 31.4% against the same period of 2006.

As the main player of BNDES-Exim Program, BB’s outlays achieved US$ 545.5 million in the fi rst half 2007.

Besides its foreign trade products, BB offers International business consulting as a tool to support the insertion of companies in the foreign market. At the end of the half, revenues from consulting achieved R$ 4.8 million, a growth 26.3% in relation to the same period of the last year.

2002 2003 2004 2005

�4.�

2�.6

25.9

34.2

Foreign Exchange for Exports

23.�

28.927.2 27.0 26.5

39.4

2006

Market Share - % Volume Contracted (US$ billion)

5.5

7.6

9.0

��.9 ��.9

ACC/ACE

23,4�5

27,77930,370

32,�2629,06�

2002 2003 2004 2005 2006

Number of Contracts Lending Volume (USD billion)

�H06 �H07

�H06 �H07

�4,890�4,028

5.7

7.4

26.9 25.4

�8.7

24.5


�2. Asset ManagementBB Administração de Ativos – Distribuidora de Títulos e Valores Mobiliários (BB DTVM), a BB’s wholly owned subsidiary, recorded R$ 208.9 million third party assets in the end of June, growth of 23.5% in relation to the same period of previous year. This volume represents a market share of 19.1% and also allowed BB DTVM to keep the leadership position as the largest asset manager in Latin America since �995.

At the end of the period, BBDTVM offered 356 funds and 74 portfolios, serving �.5 million investors.

4.7 4.6 4.9 5.2

Managed Portfolios

�3.0

��.2 ��.6�2.4

2002 2003 2004 2005 2006

7.7

�0.7

Market Share (%) Total Assets (R$ billion)

2002 2003 2004 2005 2006

66.2

�02.7�24.0

�53.6

�82.7

Asset Management

�7.4

�9.720.2

�9.��9.7


June/06 June/07

6�.5

98.��9.�

�48.4

Investment Funds

�7.8�9.7 20.3 20.9

�8.7

�75.0


June/06 June/07

�7�.2

208.9

�9.��9.0

2002 2003 2004 2005 2006 June/06 June/07

�62.8

200.0

20.��9.6

8.38.8

�4.3

��.6


�3. Capital MarketsIn the domestic capital market, Banco do Brasil offers complete solutions to issuing companies, integrating their commercial activities to the capital market products and services through its investment bank (BB Banco de Investimentos).

During the semester BB-BI participated in fixed income transactions with a volume of R$ 5.8 billion. With regard to variable income, the Bank coordinated in �2 Initial Public Offerings in a total amount of R$ 9.4 billion in emissions, and in transactions with Certificado de Potencial Adicional de Construção (Cepac), involving R$ �30 million. Securitization involved a total volume of R$ 200 million. The Bank also participated in the retail distribution in �5 Initial Public Offerings totaling R$ 9.9 billion in emissions.

During the period, the Bank had a significant participation in the floating of fixed income securities on the international market, with a presence in eight such bond transactions in overseas capital markets through its offshore brokerage firm BB Securities Ltd. involving a total of roughly US$ 3.4 billion in offshore transactions.

Special mention should be made of the increasing participation in Brazilian real denominated issues in the overseas market for domestic and international financial institutions and also for Brazil, which totaled R$ 4.7 billion. In this respect, the Bank was co-manager of all the offshore bond issues by Brazil during the period, in a total of roughly US$ 2.9 billion in six transactions.


�4. Insurance, Pension Plans and CapitalizationBB offers a diversifi ed product portfolio with solutions for attending the needs of its customers, and also of non-account-holders, through retail partnerships. Insurance, pension plans and capitalization services are provided by affi liated companies and gave Banco do Brasil R$ 631.2 million as equity equivalence and fee income in the period.

InsuranceIn June, BrasilVeículos’ auto insurance portfolio reached R$ 562.5 million issued premiums and 7�8 thousand vehicles insured.

Aliança do Brasil’s life insurance portfolio reached R$ 797.7 million in issued premiums, growth of 7.3% in 12 months, and �.8 million lives insured. Considering rural insurance, Aliança do Brasil is the largest insurer in Brazil, with 37.3% of market share.

Auto Insurance

�,224 �,263�,35� �,4�7

Life Insurance

44�,596

570,545

680,6277�7,094

Lives Insured (thousand) Managed portfolio (R$ thousand)

2002 2003 2004 2005 2006

820,092

�,748

June/06 June/07

445

500

578

625

�36,099�7�,820

238,734

3�8,5��

Cars Insured (thousand) Managed portfolio (R$ thousand)

2002 2003 2004 2005 2006

366,958

676

June/06 June/07

635

7�8

35�,303

405,206

753,699 797,746

�,685�,824


Brasilsaúde’s health insurance portfolio reached R$ 63.3 million in issued premiums and 8�.6 thousand participants. In the fi rst half, Brasilsaúde started a new business strategy through partnership with independent brokers, in São Paulo and Rio de Janeiro.

Pension FundBrasilprev is a supplementary pension plan company of Banco do Brasil, in association with Principal Financial Group and Sebrae. The pension plans include traditional, PGBL and VGBL plans.

Brasilprev recorded revenues of R$ 1.4 billion during the period (14.7% from the higher income segment), a 31.3% increase in 12 months. The sales volume increased 101.6% during the semester and the rate of net funding rose reached 55%, which assured a performance that was better than the competition.

Capitalization (Annuity Plans)During the semester Brasilcap maintained its leadership in provisions, with 23.1% share, and in revenues acquired, with 25.1% in June. BrasilCap turn over reached R$ 923.7 million which represents a 6.8% increase in relation to the same period of previous year.

886

�,�78

�,365

�,576

Pension Fund

Active Participants (thousand) Managed portfolio (R$ million)

�,756

3,785

5,586

7,78�

9,659

�2,473

2002 2003 2004 2005 2006 June/06 June/07

Capitalization - Annuity Plans

�,549

2,264

2,875

2,060

Managed portfolio (R$ million)

2002 2003 2004 2005 2006

2,788

June/06 June/07

�,652

�,903

�0,75�

�3,�94

2,822 2,727


�5. Distribution NetworkAt the end of the half, Banco do Brasil’s own service network in Brazil comprised �5.2 thousand points. This network is segmented in accordance with the markets defi ned by the Bank – Retail, Wholesale and Government – and distributed over 3.2 thousand municipalities, covering the whole Country. The number of

full-service branches increased from 3,948 in June 2006 to 3,977 in June 2007.

Distribution Network

Points of Service 2002 2003 2004 2005 2006 1H2006 1H2007

Others * 9,�69 9,979 �0,728 �0,9�0 ��,�44 ��,008 ��,�84Branches 3,�64 3,24� 3,722 3,894 3,969 3,948 3,977Total �2,333 �3,220 �4,450 �4,804 �5,��3 �4,956 �5,�6�

* Others include the following Points of Service:PAA – Advanced Service Post: these are points of service intended for towns without a bank. They have a small staff and automated teller machines;PAB – Banking Service Post: this type of unit is located inside the premises of companies or government offi ces. This service requires one employee and automated teller machines; PAE – Electronic Service Post: the structure of services is exclusively for self-servicing; SAA – Self-Service Room: exclusively ATM installed in the main areas of the branches;PAP – Payment and collection post: positioned mainly in government offi ces (town halls) for carrying out receipts and payments. Employees and automated teller machines provide the service;QSQ – Kiosk: positioned in commercial establishments providing self-services.

NorthBranches 242Others 9�7Total �,�59

MidwestBranches 39�Others �,327Total �,7�8

SouthBranches 8�0Others 2,�20Total 2,930

SoutheastBranches �,539Others 3,923Total 5,462

NortheastBranches 995Others 2,895Total 3,890

7.6%

11.4%

19.2%

36.1%

25.6%


Due to international presence, BB has the largest service network abroad among Brazilian banks. This network comprehends 16 branches, 10 sub-branches, 10 business units and representative offi ces and fi ve subsidiaries

in 22 countries. Besides that, BB counts on �.5 thousand correspondent banks in �47 countries.

Branches Sub-Branches Business Units and Subsidiaries Representative Offi ces

For more information on BB’s Distribution Network Abroad, check the last pages of this report.

Assunção

Buenos Aires

Cidade do Leste

Frankfurt

Grand Cayman

La Paz

Lisboa

Londres

Madri

Miami

Milão

Nova Iorque

Panamá (***)

Paris

Santiago

Tóquio

Cascais

Gifu

Gunma (*)

Hamamatsu (*)

Ibaraki

Nagano

Nagóia (*)

Parque das Nações

Porto

Santa Cruz de La Sierra

Caracas

Cidade do México

Hong Kong

Lima

Luanda

Roma

Xangai

Washington

Seul(**)

Dubai(**)

Banco do Brasil AG Viena

Banco do Brasil Securities LLC

BB Leasing Company Ltd.

BB Securities Ltd.

BAMB Brasilian American Merchant Bank

(*) Sub-Branch being transformed in Branch

(**) Unit in process of installation

(***) Unit being transformed in Representative Offi ces


�6. Technology StructureBB uses its technology structure to increase the customer’s convenience and security in accessing their account, offering complementary channels: ATM, Internet, telephone, fax, POS, call center and mobile banking, besides a network of banking agents. In the fi rst half, the transactions carried out using these channels represented

89.9% of the total of the transactions carried out by BB customers.

BB has the largest own ATM network in Latin America – 39,952 machines. This network accounted for 1.1 billion transactions during the fi rst half, representing 45.9% of the total of the transactions carried out by complementary channels.

2002 2003 2004 2005 2006

84.�

86.4

88.489.2

90.0

Transaction in Automated Channels (%)

2002 2003 2004 2005 2006

33,64537,0�8

39,0�5 40,�9� 39,664

Automated Teller Machines

June/06 June/07

June/06 June/07

89.089.9

4�,7�239,952


Banco do Brasil continue as the leader on the Internet and mobile banking. At the end of June, the number of customers enabled to carry out transactions through the bb.com.br portal and mobile phone reached 8.4 million. Around 32.2% of self-service transactions were carried out through the Internet during the fi rst half.

2005

ATM

Internet Banking - Individuals

Internet Banking - Businesses

Cashier

POS

Others

2006

2005

ATM



Cashier

POS

Others

2006

3.9

48.3

�2.7

�6.6

7.7

�0.8

�0.�

�8.3

�3.8

45.9

7.84.0

2005

June/2007

Breakdown of Transactions (%)

ATM



Cashier

POS

Others

2005

ATM



Cashier

POS

Others

2006

2002 2003 2004 2005

4.8

6.06.9

7.9

Internet Registered Customers (milion)

2006

8.2

June/06 June/07

8.� 8.4

2005

ATM



Cashier

POS

Others

2006

�0.0

�7.5

�2.747.�

9.03.8

2006


�7. Human ResourcesIn the fi rst half of 2007, Banco do Brasil had 79.3 thousand employees, 63.4% were male and 36.6% were female. At the end of June, this workforce presented the following profi le:

2002 2003 2004 2005 2006

78,6�9

Workforce

9,540

78,040

�0,�8�

79,725

�0,339

83,75�

�0,363

82,672

9,947

Level of Education (%)

35.6

�7.30.8

46.3

Tenure (%)

�9.3

�5.7 36.�

28.9Age Bracket (%)

28.6

7.932.6

30.9

Specialization, Master’s or Doctor’s Degrees

Holders of Bachelor’s Degrees

High School

Elementary School

Up to 5 years

From 6 to �0 years

From �� to 20 years

Above 20 years

Up to 25 years

From 26 to 35 years

From 36 to 45 years

Above 45 years

InternsEmployees

In this period, BB provided qualifi cation programs that reached the average of 71 hours of training per staff member. Beyond that, 500 employees were awarded with scholarship for academic degree, 33 for master’s and doctor’s degrees and �32 for language studies.

June/2007

79,3�0

9,798


�8. Social Responsibility Committed with the development of communities and the Country as a whole, Banco do Brasil integrates the aspects of sustainability – economic, social and environmental – in its strategic positioning and operational decisions in order to guarantee the long-term creation of value.

In the fi rst half of the year, BB launched its Agenda 21 – a participate planning instrument which guides the implementation of administrative and business practices based on social and environmental responsibility principles, being the fi rst Brazilian company to publish such a document. This agenda is structured in three main pillars: business focused in the sustainable development, administrative and business practices regarding social and environmental responsibility principles and private social investment.

Nevertheless, the Bank’s engagement with the principles of social and environment responsibility isn’t a new: it has always been part of its business practices and its relationship with its stakeholders, as shown in the table below:

Sustainable Regional Development

Involved Branches 3,586Benefi ted Families 307,284Approved Business Plans �,529

BB Social and Enviromental Commitmets and History

�995 Green Protocol2003 United Nations Global Pact2004 BB publicly disclosed its pioneer commitment to develop a Business Agenda 2� 2005 Pact to Combat Slave Labor Equator Principles Report on Carbon Emission Infomation2006 BB began to addopt Global Reporting Initiative (GRI) guidelines in its annual report2007 BB launch its Business Agenda 2�

The Sustainable Regional Development (DRS) strategy, which stimulated regional development, supporting value chains of rural and urban activities, is one of the most representative initiatives in order to contribute to the development of communities and the Country as a whole. At the end of the fi rst half, the DRS strategy recorded a growth of 145% of programmed loans in relation to the same period of 2006. In June 2007, 3.6 thousand branches were able to act by DRS strategy, serving 3.3 thousand municipalities and carrying benefi ts to 307 thousand families.

BB holds Fundação Banco do Brasil, a nonprofi t devoted foundation for helping people and attending programs that aims at job and income generation, education and sports. Those programs received, in the fi rst half, R$ 20 million from BB. More than �3.8 thousand people have received classes to learn read and write during the fi rst half.


�9. Banco do Brasil Figures

Balance Sheet Items 2002 2003 2004 2005 2006 1H06 1H07

Assets 204,595 230,144 239,014 252,977 296,356 273,836 332,968Available funds ��,582 �0,789 �5,494 5,828 4,749 5,068 4,724Short-term interbank investments �7,764 33,407 �6,453 28,996 29,088 29,758 5�,6�4Marketable securities 70,943 69,590 73,485 66,470 73,�08 70,677 72,07� Securities available for trading 3,585 �6,095 �3,�63 3,077 7,494 5,568 �0,856 Securities available for sale 4�,303 28,307 32,790 37,832 40,64� 39,78� 39,379 Securities held to maturity 25,763 24,82� 26,95� 25,275 24,409 24,865 20,589 Financial derivatives 292 368 58� 287 564 463 �,247Interbank accounts �8,�78 �8,666 22,�06 24,404 28,�80 26,208 30,759Intrabank accounts 270 34 �47 �2� �36 22 32Loans and leasing 5�,407 65,59� 74,823 85,942 ��3,858 94,893 �25,502 Public sector 5,6�7 4,364 4,�6� 3,730 4,384 3,�93 4,63� Private sector 48,993 65,207 75,773 88,55� ��7,840 99,688 �29,975 (Allowance for loan losses) (3,202) (3,980) (5,��0) (6,339) (8,366) (7,988) (9,�04)Leasing 62 �3 20 20 �� 4 22Other receivables 29,784 27,309 3�,�98 35,�08 40,482 40,862 4�,263 Tax Credit ��,847 9,406 8,396 6,687 8,604 9,223 �3,746Other assets 254 233 228 509 95� 320 27�Permanent assets 4,350 4,5�3 5,059 5,580 5,794 5,646 5,903 Liabilities and Shareholders’ Equity 204,595 230,144 239,014 252,977 296,356 273,836 332,968Deposits 97,253 ��0,0�4 ��5,532 �37,658 �58,84� �39,939 �64,545 Demand deposits 24,342 27,�40 28,99� 35,802 40,059 3�,363 36,84� Savings deposits 26,9�8 27,425 3�,069 32,844 36,7�4 33,2�5 40,83� Interbank deposits 3,876 7,275 5,768 5,383 4,878 5,855 5,�46 Time deposits 42,��7 48,�73 49,665 63,495 76,900 69,377 8�,427 Investment deposits - - 38 �34 289 �29 300Money market borrowing 48,327 40,063 44,527 30,508 49,283 5�,496 74,7�9Funds from acceptances and securities placed �,053 �,637 776 3,�66 2,304 2,603 �,487Interbank accounts 74 �7 6 980 �,�66 2,037 �,697Intrabank accounts �,366 �,834 �,725 �,973 2,397 �,388 �,3�8Borrowing �3,432 9,982 �6,565 4,858 3,737 3,930 3,354 Foreign borrowing �3,432 9,982 �6,565 4,858 3,737 3,930 3,354Domestic onlending – offi cial institutions 5,92� 7,458 �0,6�� 3,370 �4,335 �2,43� �5,240Foreign onlending 2 2 2 - - - 4Financial derivatives 743 533 523 57� 3,5�� ,�56 2,052 Other accounts payable 27,�23 46,306 34,508 42,9�8 39,895 39,548 46,�45FCO (Subordinated Debt) 4,�80 4,99� 6,833 7,840 8,995 8,409 9,574Unearned income �02 �26 �34 �25 �29 �28 �00Shareholders’ equity 9,197 12,172 14,106 16,850 20,758 19,178 22,305


Income Statement 2002 2003 2004 2005 2006 1H06 1H07

Financial Intermediation Income 36,727 33,625 30,572 33,065 36,787 �8,426 �9,833 Loans �3,828 �6,�67 �7,086 �9,200 2�,6�3 �0,434 �2,�7� Leasing �06 83 89 �3� �73 78 95 Securities �3,940 �5,80� ��,308 �2,4�9 �3,484 6,804 6,2�0 Financial Derivatives (�,664) (547) (3�8) (385) (635) (320) 353 Foreign Exchange Portfolio 8,282 439 �,095 �� 539 6�0 205 Compulsory Investments 2,234 �,682 �,3�3 �,689 �,6�2 8�9 800Financial Intermediation Expenses (28,655) (23,6�8) (20,364) (22,255) (25,978) (�3,440) (�2,523) Money Market Funds (�3,6�7) (�7,497) (�2,978) (�5,246) (�6,989) (8,349) (8,804) Borrowing, Assignments and Onlending (�2,030) (2,856) (2,865) (�,602) (�,850) (�,035) (803) Allowance for Loan Losses (3,009) (3,265) (4,52�) (5,407) (7,�40) (4,056) (2,9�7)Gross Income from Financial Intermediation 8,07� �0,006 �0,208 �0,809 �0,808 4,986 7,3�0Other Operating Income (Expenses) (4,88�) (5,433) (5,60�) (3,779) (4,6�2) (�,9�7) (3,489) Service Revenues 4,454 5,49� 6,607 7,648 8.887 4,349 4,8�4 Personnel Expenses (5,548) (6,8�2) (7,096) (7,473) (7,87�) (3,877) (4,372) Other Administrative Expenses (4,097) (4,5�4) (5,466) (5,670) (5,873) (2,8�2) (3,��4) Taxes (820) (�,�28) (�,469) (�,72�) (�,825) (89�) (�,0�4) Equity Int, in the Results of Subs, and Affi l, 2,304 (642) 46 (67) 288 �8 (20) Other Operating Revenues �,679 6,553 5,824 7,623 5,�38 3,�83 2,692 Other Operating Expenses (2,854) (4,382) (4,048) (4,�20) (3,356) (�,887) (2,476)Operating Income 3,�90 4,573 4,607 7,030 6,�96 3,069 3,82� Non-operating Income �7� �49 �30 2�0 �20 5� 43Income Before Taxes 3,36� 4,72� 4,738 7,24� 6,3�6 3,�20 3,864 Income and Social Contribution Taxes (�,�88) (2,067) (�,340) (2,554) 504 �,265 (�,070) Statutory Profi t Sharing (145) (273) (373) (533) (777) (496) (317)Net Income 2,028 2,38� 3,024 4,�54 6,044 3,888 2,477


Ratios (Income Statement with Reallocations) 2002 2003 2004 2005 2006 1H06 1H07

Profi tability Earnings per share** (R$)* 0.92 �.08 �.24 �.7� 2.44 �.6 �.0ROE 22.6 22.3 23.0 26.8 32.� 47.8 24.3ROA �.� �.� �.3 �.7 2.2 3.0 �.6Net Interest Income / Assets (-) Permanent (%) 7.5 7.4 6.9 7.0 6.6 6.8 6.5NIM (%) 9.4 9.1 8.5 8.6 8.0 8.3 7.8 ProductivityEffi ciency (%) 57.9 55.8 54.2 48.1 47.5 45.5 49.1Service Fees / Personnel Expenses (%) 80.3 80.6 9�.3 �03.9 ��2.9 ��2.2 ��0.�Service Fees / Administrative Expenses (%) 45.6 48.6 53.� 58.0 64.3 49.0 64.3Personnel Expenses per Collaborator (R$) 62,927 73,329 69,897 72,6�6 78,496 38,785 49,062Employees + Interns per Branches + PAA + PAB �7 �7 �7 �7 �7 �7 �7 Loan Portfolio QualityAllowance / Loan Portfolio (%) 5.9 5.4 6.1 6.6 6.1 7.4 6.5Allowance / Ratings E + F + G + H (%) 82.9 106.3 99.5 109.2 110.5 107.8 114.3 Capital StructureLeverage (x ) 22.2 �8.9 �6.9 �5.0 �4.3 �4.3 �4.9BIS Ratio (%) 12.2 13.7 15.2 17.1 17.3 17.3 15.9

Capital MarketPrice / Earnings (�2 months)** 2.70 6.�5 7.58 7.40 8.59 6.3 �4.9Price / Book Value** 0.59 �.20 �.63 �.82 2.50 2.0� 3.�0Market Capitalization (R$ million) 6,696 �7,568 25,979 33,733 52,820 4�,249 69,054Book Value per share** (R$)* 4.�9 5.54 5.80 6.93 8.38 7.75 9.0�

* BB shares were traded per lot of a thousand shares until January 2004.** Adjusted series considering the stock split (1:3) occured in the second quarter of 2007.


Angola - LuandaBusiness UnitAddress: Rua Engrácia Fragoso, 6�Edifício Kalunga Atrium -�º andar – CPhone: 244 + 9� + 34035�

Argentina - Buenos AiresBranchAddress: Calle Sarmiento. 487C�04�AAI - Federal Capital - ArgentinaPhone: 54 + �� + 40002759e-mail: [email protected]

Bolivia - La PazBranchAddress: Av. �6 de Julio �642, El PradoCentral - La Paz - BoliviaPhone: 59� + 2 + 2��3509e-mail: [email protected]

Bolivia – Santa Cruz de la SierraSub-BranchAddress: Avenida San Martin, �700Edifício Centro Empresarial Equipetrol Piso 4Santa Cruz de La Sierra - BoliviaPhone: 59� + 3 + 3453�7�e-mail: [email protected]

Cayman Islands - Grand CaymanBranchAddress: Elizabethan Square. Phase III4th floor - Sheden Road George TownGrand Cayman - Cayman IslandsPhone: � + 345 + 9495907e-mail: [email protected]

Chile - SantiagoBranchAddress: Avenida Apoquindo, 3001. Piso 1Las Condes - 6760342 – Santiago -ChilePhone: 56 + 2 + 336300�e-mail: [email protected]

China – ShanghaiRepresentative OfficeAddress: Unit �305. �3th Floor. Shanghai Kerry Centre�5�5 Nanjing Road WestShanghai 200040 - P.R. of ChinaPhone: 86 + 2� + 62890707 / 62894503

China - Hong KongRepresentative OfficeAddress: Unit 360�. 36/Floor Tower 2Lippo Centre. 89 Queensway. AdmiraltyHong Kong – (SAR) ChinaPhone: 852 + 252�64��e-mail: [email protected]

France - ParisBranchAddress: �0 Avenue de La Grande Armeé750�7 – Paris - FrancePhone: 33 + � + 40535500e-mail: [email protected]

Germany - FrankfurtBranchAddress: Eschersheimer Landstrasse 5560322 - AM – Frankfurt - GermanyPhone: 49 + 69 + 299090e-mail: [email protected]

Italy - MilanBranchAddress: Piazza Castello. � . 3º PianoCAP: 20�2� - Centro20�23 - Milan - MI - ItalyPhone: 39 + 02 + 882520�e-mail: [email protected]

Italy - RomeBusiness UnitAddress: Via Barberini, 29 . 4° Piano00�87 - RM - ItalyPhone: 39 + 06 + 4880707e-mail: [email protected]

Japan - GifuSub-BranchAddress: Asahi Plaza Minokamo Station Core Office 101. Minokamo-shi.Ota-cho 259�-� Gifu-Ken -JapanPhone: 8� + 574 + 245568e-mail: [email protected]

Japan - GunmaBranchAddress: Bandou BLDG . �3�9-�. IIda-choOta-shi - Gunma-ken - JapanPhone: 8� + 276 + 4665��e-mail: [email protected]

DISTRIBUTION NETWORK ABROADBranches, Sub-Branches, Business Units and Representative Offices


Japan - HamamatsuBranchAxa Hamamatsu BLDG., 307-�4 Renjaku-cho Hamamatsu-shi.Shizuoka-kenPhone: 8� + 53 + 45265��e-mail: [email protected]

Japan - IbarakiSub-BranchAddress: 303-0022 Shirai BLDG 2909-�. Mitsukaido-shi. Fuchigashira-MachiIbaraki-Ken - JapanPhone: 8� + 297 + 3065��e-mail: [email protected]

Japan - NaganoSub-BranchAddress: Atago Mansion �0� . Ueda-shi. Chuo Higashi �-5Nagano-Ken - JapanPhone: 8� + 268 + 2865�2e-mail: [email protected]

Japan - NagoiaBranchAddress: 460-0002 Aichi-Ken. Nagoya-Shi. Naka-Ku. Marunouchi �-�7-�9. Kirix Marunouchi BLDG. - JapanPhone: 8� + 52 + 20246��e-mail: [email protected]

Japan - TokyoBranchAddress: New Kokusai Building3-4-� MarunouchiChiyoda ku - �00-0005 - Japan - TokyoPhone: 8� + 3 + 32�365��e-mail: [email protected]

Mexico - Mexico CityBusiness UnitAddress: Calle Campos Elíseos, 345. piso 6oColônia Chapultepec Polanco��560 - Ciudad del Mexico - MexicoPhone: 52 + 55 + 528�7245e-mail: [email protected]

Panama - Panama CityBranchAddress: Calle Elvira Mendez. Edifício Interseco Nr. �0. Planta BajaCampo Alegre - Zona 7 - PanamaPhone: 507 + 2636566e-mail: [email protected]

Paraguay - AsuncionBranchAddress: Calle Oliva Y Nuestra Senora de La Asunción – Casila del Correo 667 - CentroAsunción - ParaguayPhone: 595 + 2� + 445802e-mail: [email protected]

Paraguay - Ciudad del EsteBranchAddress: Calle Nanawa. �07.Esquina Monsenhor Rodrigues - CentroCiudad del Este - Alto Paraná - ParaguayPhone: 595 + 6� + 5003�9e-mail: [email protected]

Peru - LimaBusiness UnitAddress: Av. Camino Real 348 - Piso 9 . Torre El Pilar - San Isidro27 – Lima - PeruPhone: 5� + � + 2�24230e-mail: [email protected]

Portugal - CascaisSub-BranchAddress: Passeio Carlos Andrade Teixeira, 7 e 8Edifício Baía Center2765-409 – Cascais - PortugalPhone: 35� + 2� + 4822405 e-mail: [email protected]

Portugal - LisbonBranchAddress: Praça Marquês de Pombal. 16�269-�34 - PortugalPhone: 35� + 2� + 3585000e-mail: [email protected]

Portugal – Parque das NaçõesSub-BranchAddress: Av. D. João II, Lote �.�3.0� – Loja ELisbon - PortugalPhone: 35� + 2� + 3585000e-mail: [email protected]

Portugal – PortoSub-BranchAddress: Av de França, 256Porto - PortugalPhone: 35� + 2� + 3585000


Spain - MadridBranchAddress: Calle José Ortega y Gasset. 29 - 1ª Planta - Edificio Beatriz 28006 - Madrid - SpainPhone: 34 + 9� + 4232500e-mail: [email protected]

United Kingdom - LondonBranchAddress: 34, King Street. - CityEC2V 8ES - London - United KingdomPhone: 44 + 20 + 76067�0�e-mail: [email protected]

USA – MiamiBranchAddress: 2 S. Biscayne BoulevardOne Biscayne Tower - Suite 3870 Downtown – Miami 33�3� - FL - USAPhone: � + 786 + 4374444e-mail: [email protected]

USA - New YorkBranchAddress: 600 Fifth Avenue. Third Floor Rockfeller CenterNew York - �0020 - NY - USAPhone: � + 2�2 + 6267000e-mail: [email protected]

USA - WashingtonBusiness UnitAddress: �80�. K Street - N.W.- Suite 7�020006 - Washington - DC - USAPhone: � + 202 + 8570320e-mail: [email protected]

Venezuela - CaracasBusiness UnitAddress: Av. Francisco de MirandaCentro Lido - Piso 09Oficina 93A - Torre A. El Rosal�067-A - Caracas - VenezuelaPhone: 58 + 2�2 + 9522674e-mail: [email protected]

BAMB - Brasilian American Merchant BankAddress: C/O - International DivisionGerin/DIOPB - SBS Qd.� Bl.C Lote 32 Ed.Sede III - �3° andar70073-90� - DF - Brasilia - BrazilPhone: � + 6� + 33�04504e-mail: [email protected]

BB - A.G. VienaAddress: Franz Josefs-Kai. 47 - 3. OG �0�0 – Viena - AustriaPhone: 43 + � + 5�266630e-mail: [email protected]

BB-Leasing Company Ltd.Address: C/O - International DivisionGerin/DIOPB - SBS Qd.� Bl.C Lote 32 Ed.Sede III - �2° andar70073-90� - DF - Brasilia - BrazilPhone: � + 6� + 33�04504e-mail: [email protected]

SUBSIDIARIES

BB-SecuritiesAddress: 7th Floor. �6 St. Martins Le Grand EC�A 4NA - London - United KingdomPhone: 44 + 207 + 3675800Fax: 44 + 207 + 7960859e-mail: [email protected]

Banco do Brasil Securities LLCAddress: 600 Fifth Avenue – 3rd. FloorRockfeller CenterNew York - �0020 - NY - USAPhone: � + 2�2 + 6267000e-mail: [email protected]


Banco do BrasilSBS – Ed.Sede III – �3º andarInternational Division70073-90� – Brasília (DF) – Brazilwww.bb.com.br

PresidencyPhone: 55 (6�) 33�0.3400Fax.: 55 (6�) 33�0.2563

Finance, Capital Markets and Investor Relations VPPhone: 55 (6�) 33�0.3406Fax.: 55 (6�) 33�0.256�

International and Wholesale Business VPPhone: 55 (6�) 33�0.3406Fax.: 55 (6�) 33�0.256�

International DivisionPhone: 55 (6�) 33�0.4500Fax: 55 (6�) 33�0.2444

International Division - Financial Institutions DepartmentPhone: 55 (��) 3066.908�Fax: 55 (��) 3066.9089

Investor RelationsAddress: SBS – Ed.Sede III – 5th floor70073-90� – Brasília (DF) – BrazilPhone: 55 (6�) 33�0.3980Fax: 55 (6�) 33�0.3735e-mail: [email protected]

CONTACT LIST

Financial Times of Sustainable Finance 2007Award, in the category of Sustainable Banking in Emerging Markets - Latin America

Fundação Getúlio Vargas and Institute of Economics (IBRE)“The largest and best financial groups in the country” award – Brazilian Management & ExcellenceTop score in the survey for the Socio-environmental Responsibility page of Banco do Brasil

Isto é Dinheiro MagazineBrand in second place in terms of growth in 2006, with appreciation of 110%14 funds of BB DTVM classified in the ranking of most profitable funds in the last 12 months

Brazilian Chamber of Commerce in Great Britain“Personality of the Year 2007” Award to the President of BB

Ministry of Planning, Budget and Management“National Award of Public Management” (PQGF) - bronze medal in the category of Public Companies and Private and Public Joint Stock Company, for the areas of Agribusiness and Credit

e-Finance 2007Best set of applications for mobile banking; best application for a branch; best use of business intelligence; best set of applications for cards and payment methods; best banking correspondent operation; best solution in data administration; and best set of solutions for ITIL management.

Latin Finance Magazine“Best Financial Institution Bond for 2006”

ValorInveste MagazineFour funds listed in “Star Ranking”

AWARDS

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