1

Performance Analysis

1st Quarter of 2001

Investor Relations Division

2

ECONOMIC ENVIRONMENT

In the first quarter of 2001, the Brazilian economic scene was influenced by an unstable

external conjuncture. Uncertainties as regards slow-down trends in the U.S. economy and a

solution for the political and economic crisis in Argentina were the core of the disturbance

that came from abroad. The poor performance of the Euro against the Dollar, the stagnation

of the Japanese economy and the continued high and volatile levels of international oil prices

also had repercussions in the internal environment.

The behavioral pattern of the exchange rate from January to March reflected this instability in

the foreign scenario. The U.S. currency appreciated by 10.5%, closing the period at R$2.16.

The accumulated variance of the “IPCA” (Broad Consumer Price Index) was 1.42%, the

equivalent of 35% of the total focal target of 4%. The “IGP-DI” (General Price Index –

Domestic Supply), on its side, showed a variance of 1.64% in the same period.

In view of this environment and despite the 1.5% drop in the U.S. basic interest rate in the 1st

quarter of 2001, the “Copom” (Monetary Policy Committee) raised the “SELIC” (Securities

Settlement and Custody Service) interest rate by 0.5% in March. At the end of the quarter the

target was 15.75% p.a..

In short, although the Brazilian economy is showing more consistent bases than those that

were evident during the Mexican, Asian and Russian crises, Brazil is feeling the effects of an

unfavorable foreign environment, in a context of a significant need to absorb internal savings.

3

Financial StatementsBalance Sheet

(In Accordance with Brazilian Corporation Law – in R$ millions)

Assets Totals VariationsMar./00 Dec./00 Mar./01 Mar./00 Dec./00

Current and Long-Term Assets 122,115 134,100 140,656 15.2 4.9Cash and Banks 1,692 2,906 2,664 57.4 (8.3)

Interbank Investments 11,124 5,064 7,086 (36.3) 39.9

Securities 37,188 51,116 46,256 24.4 (9.5)

Interbank Accounts 10,292 6,628 9,045 (12.1) 36.5

Interbranch Accounts 10 23 136 1,260.0 491.3

Credit Operations 29,649 35,917 38,437 29.6 7.0

Public sector 3,704 3,949 4,266 15.2 8.0

Private sector 26,959 34,645 37,002 37.3 6.8

Doubtful Credit Operations 9,040 0 0 (100.0)

(Provision for doubtful credits) -10,055 -2,677 -2,831 (71.8) 5.8

Leasing Transactions 100 96 98 (2.0) 2.1

Leasing and subleasing transactions 514 0 477 (7.2)

Doubtful leasing transactions 5 0 0 (100.0)

Unearned leasing income -379 -340 -363 (4.2) 6.8

(Allowance for leasing transactions) -39 -17 -16 (59.0) (5.9)

Other Receivables 31,478 31,931 36,516 16.0 14.4

Guarantees honored 17 21 27 58.8 28.6

Foreign exchange portfolio 8,556 7,299 11,378 33.0 55.9

Income receivable 268 417 410 53.0 (1.7) Trading and Brokerage Agreements 334 221 420 25.7 90.0

Specific Credits 3,630 4,093 4,413 21.6 7.8

Special Operations 4 4 4 - -

Sundry 18,710 20,245 20,244 8.2 (0.0)

Doubtful receivables 1,177 0 0 (100.0)

(Provision for doubtful credits) -1,218 -370 -381 (68.7) 3.0

Other Assets 583 420 417 (28.5) (0.7)

(Provisions for devaluations) -152 -209 -193 27.0 (7.7)

Prepaid expenses 12 6 15 25.0 150.0Permanent Assets 3,894 4,263 4,365 12.1 2.4 Investments 1,007 1,145 1,179 17.1 3.0

Premise in Use 1,838 2,186 2,194 19.4 0.4

Leased Property 638 595 654 2.5 9.9

Deferred Assets 412 338 338 (18.0) -Total 126,009 138,363 145,021 15.1 4.8

4

Financial StatementsBalance Sheet

(In Accordance with Brazilian Corporation Law – in R$ millions)Liabilities Totals Variations

Mar./00 Dec./00 Mar./01 Mar./00 Dec./00Current and Long Term Liabilities 118,668 130,368 136,884 15.4 5.0Deposits 66,998 65,688 69,457 3.7 5.7 Demand Deposits 11,526 16,110 14,605 26.7 (9.3) Savings Deposits 20,142 19,958 20,268 0.6 1.6 Interbank Deposits 2,982 3,296 3,454 15.8 4.8 Term Deposits 32,348 26,323 31,129 (3.8) 18.3Open Market Funds 13,904 28,068 26,397 89.9 (6.0)Funds from Acceptances and Issuances 726 816 1,113 53.3 36.4 Acceptances outstanding 0 0 0 Issuance of securities abroad 726 816 1,113 53.3 36.4 Debentures 0 0 0Interbank Accounts 2,699 39 2,840 5.2 7,182.1Interbranch Accounts 454 786 634 39.6 (19.3)Borrowings 4,322 5,210 5,083 17.6 (2.4) Borrowings in Brazil – Other Institutions 0 0 0 Foreign borrowings 4,322 5,210 5,083 17.6 (2.4) Purchase of government securities 0 0 0On-lending Borrowings from Domestic Official Institutions 8,783 9,331 6,262 (28.7) (32.9) National Treasury 671 881 944 40.7 7.2 BNDES (Federal Bank for Economic and Social Development) 1,170 1,525 1,699 45.2 11.4 CEF (Federal Savings Bank) 0 0 0 Finame (Government Agency for Machinery and Equipment Financing) 2,278 2,268 2,342 2.8 3.3 Other Institutions 4,663 4,656 1,277 (72.6) (72.6)Foreign Currency On-Lendings 6 2 2 (66.7) - Foreign on-lendings 6 2 2 (66.7) -Other Liabilities 20,777 20,430 25,097 20.8 22.8 Tax and Similar Collections 1,257 128 806 (35.9) 529.7 Foreign Exchange Portfolio 5,525 4,075 8,713 57.7 113.8 Social and Statutory 103 188 4 (96.1) (97.9) Tax and Social Security 304 361 499 64.1 38.2 Trading and Brokerage Agreements 411 414 842 104.9 103.4 Financial and Development Funds 3,743 4,329 4,505 20.4 4.1 Special Operations 43 2 2 (95.3) - Sundry 9,391 10,933 9,726 3.6 (11.0)Deferred Income 25 31 36 44.0 16.1Shareholders’ Equity 7,244 7,965 7,965 10.0 -First Quarter Results 72 0 137 90.3Total 126,009 138,363 145,021 15.1 4.8

5

Income StatementIncome Statement for the first quarter 2000 – Consolidated R$ millions

1st qr./00 1st qr./01 Var.%Income from Financial Brokerage 4,153 3,995 -3.8

Credit Operations 1,849 2,444 32.2

Leasing transactions 26 26 0.0

Securities income 1,757 926 -47.3

Foreign Exchange Portfolio 327 397 21.4

Compulsory Investments 194 202 4.1Expenses with Financial Brokerage -2,666 -3,583 34.4

Open Market Funds -1,948 -2,050 5.2

Borrowings, Transfers and On-Lending -544 -860 58.1

Provision for NPL -174 -673 286.8Gross Result from Financial Brokerage 1,486 412 -72.3Other Operating Income/Expenses -1,272 -249 -80.4

Service Fees 734 878 19.6

Personnel Expenses -1,299 -1,294 -0.4

Other administrative expenses -671 -904 34.7

Tax expenses -142 -153 7.7

Equity Income from associated and subsidiary companies -123 851

Other operating income 708 715 1.0

Other operating expenses -479 -342 -28.6Operating Income 214 163 -23.8Non-Operating Income 53 24 -54.7Income before Tax and Participation 267 187 -30.0Income Tax and Social Contribution -195 -50 -74.4Net Income 72 137 90.3

Banco do Brasil recorded Net Income of R$137 million in the 1st quarter of 2001, which was

90.3% higher than the same period of last year.

The results in the quarter reflect continued expansion of the Bank’s business, stressing the

increment of credit operations, earnings from which increased by 32.2% as compared to the

same period of last year. Another important fact was the 19.6% growth in revenues from

service fees, driven by expansion of the client base and by growth of business related to

asset management. Operating Income showed a decrease of 23.8%, affected by the need to

reinforce credit risk provisions. An analysis of reallocations is shown below, providing more

details on the composition of the Bank’s results.

6

Income StatementWith Reallocations (*)

R$ millions

1st qr./00 1st qr./01 Var.%A) Income from Financial Brokerage 4,399 4,388 -0.3

Credit Operations (1) 1,679 2,444 45.6

Leasing transactions 26 26 0.0

Securities Portfolio 1,757 926 -47.3

Foreign Exchange Portfolio 327 397 21.4

Compulsory Investments 194 202 4.1

Other operating income (2) 416 393 -5.5B) Expenses with Financial Brokerage -2,593 -2,398 -7.5

Open Market Funds -1,948 -2,050 5.2

Borrowings, Transfers and On-Lending -544 -860 58.1

Hedging Effects on foreign exposure (7) -101 512C) Gross Financial Margin 1,806 1,990 10.2

Provision for NPL (3) e (4) -59 -673 1,040.7D) Net Financial Margin 1,747 1,317 -24.6

Service Fees 734 878 19.6

Turnover Tax Expenses (5) -118 -113 -5.0E) Contribution Margin 2,363 2,082 -11.9F) Administrative Expenses -1,993 -2,238 12.3

Personnel Expenses -1,299 -1,294 -0.4

Other Administrative Expenses -671 -904 34.7

Other Tax Expenses (5) -23 -40 66.7G) Commercial Result 370 -156 -142.2H) Others Result Items -155 319 -305.8

Other Operating Income (2) e (6) 346 322 -7.2

Other Operating Expenses -479 -342 -28.6

Equity Income from Associated and Subsidiary Companies -123 851 -791.9

Hedging expenses against foreign exchange exposure (7) 101 -512 -612.0I) Operating Income 215 163 -23.8

Non-Operating Income 52 24 -54.7

Statutory Profit Sharing 0 0

Income Tax and Social Contribution -195 -50 -74.4J) Net Income 72 137 90,3

7

Analysis of Reallocated Results

The reallocations applied in the Corporate Law Income Statement so as to arrive at the

reallocated Income Statement are specified below. We clarify that these adjustments do not

change the final results, as they have the sole purpose of arranging expense and revenue

items in a more coherent manner, following the dynamics of the performance of a financial

institution. Basically the adjustments have the aim of:

• Including in Income from Financial Brokerage the revenues booked under Other

Operating Income which have brokerage characteristics;

• excluding from Credit Operations Income, from Other Operating Income and from

Provision for NPL, the amounts deriving from the accruals for NPL before legal

proceedings, which recording took place until August 2000;

• identifying in a specific item the hedging transactions carried out to offset the effect of

foreign exchange variance on exposure that exceeds the limit established for assets and

liabilities management.

Income from Financial Brokerage

(1) exclusion of accruals for NPL before legal proceedings in the amount of R$170

million, in the 1st quarter of 2000 (the amounts were also excluded from the Provision

for NPL);

(2) reallocation of Other Operating Income with financial brokerage characteristics (1st

quarter of 2000 - R$416 million; 1st quarter of 2001 - R$393 million) to the Other

Operating Income item in the assessment of gross financial margin;

Provision for NPL

(3) R$170 million were excluded in the 1st quarter of 2000 relative to Provision for NPL

expenses booked so as to eliminate the effect on the results of accruals for NPL

before legal proceedings;

8

(4) R$55 million were added, in the 1st quarter of 2000, relative to the reversal of

Provision for NPL expenses on other accruals for NPL before legal proceedings. The

amount was also added into Other Operating Income;

Tax Expenses

(5) R$118 million were reallocated to make up the contribution margin in the 1st quarter

of 2000, and R$113 million in the 1st quarter of 2001, relative to taxes (“Pasep” [Civil

Servants’ Savings Program], “Cofins” [Contribution Tax for Social Security

Financing], ISSQN [Service Tax]) levied directly upon the Bank’s turnover;

Other Operating Income

(6) offset of the reversal of accruals for other NPL before legal proceedings in Other

Operating Income item, in the amount of R$55 million, in the 1st quarter of 2000 (the

amount was also added into the Provision for NPL);

Expenses with hedging against foreign exchange exposure

(7) identification and segregation of amounts relative to the hedging transactions

necessary to protect the Bank’s results from the fluctuation of foreign currencies, as

from the maximum limits established for assets and liabilities management for

exchange exposure. These amounts are offset in the gross financial margin to protect

the margin from the fluctuations caused by the hedging transactions.

R$ million

1st qr./00 1st qr./01Exchange gain/loss on investments abroad -169 796

Hedging transactions 101 -512

Admitted foreign exchange effect -69 284

9

I. GROSS FINANCIAL MARGIN

Gross Financial Margin showed an evolution of 10.2% over the 1st quarter/2000, reaching

45.4% of Income from Financial Brokerage, compared to 41.1% in the same period last year.

R$ millions

% 1st QR./00 1st QR./01 % Var.Average TR* 0.7 0.3 -46.7TMS 4.4 3.6 -19.0IGP-DI 1.4 1.6 17.5IGP-M** 1.7 1.4 -18.9US$ -2.3 10.5 -* TR – Referential Rate

**IGP-M – General Market Price Index

In the quarter, the indexes related to the Bank’s assets and liabilities from financial

brokerage, except for the dollar and the “IGP-DI”, showed a reduction compared to the

figures presented in the 1st quarter of 2000.

Despite this, there was no significant compression of the gross spread, which recorded 7.8%

in the quarter, against 8.0% in the same period of last year. This performance is explained by

BB’s assets and liabilities management, which seeks to:

a) manage the impacts deriving from market risks, enhancing earnings and minimizing

losses resulting from mismatch of assets and liabilities rates;

b) take advantage of the growth in cost-free funds, particularly demand deposits, with the

aim of reducing funding costs;

1,806 1,990

1st qr./00 1st qr.//01

10

c) increase the profitability of credit assets, by intensifying commercial and retail portfolio

transactions.

Composition of the Gross SpreadR$ millions

1st qr./00 1st qr./01 Abs. Var. % Var.

A)Average Profitable Investments 92,899 104,888 11,990 12.9

B)Income from Financial Brokerage 4,399 4,388 -10 -0.2

C)Investment Rate % (C=B:A) 4.7 4.2 0 -10.6

D)Source of Funds (D=E+F) 92,899 104,888 11,990 12.9

E)Interest-bearing Average Sources 87,222 96,886 9,664 11.1

F) Non-interest Average Sources 5,677 8,002 2,325 41.0

G) Expenses with Financial Brokerage -2,593 -2,398 195 -7.5

H)Funding Rate % (H=G:D) 2.8 2.3 0 -17.9

I)Gross Financial Margin (I=B+G) 1,806 1,990 185 10.2

J)Annualized Gross Spread % (J=C-H) 8.0 7.8 0 -2.5

Credit growth

In the light of these figures and with the refueling of the economy, BB prioritized funds for

credit operations. The strategy proved to be correct, because even in a scenario of falling

interest rates, the volume of revenue in the period was 45.6% higher than that shown in the

1st quarter of 2000:R$ millions

1st qr./00 1st qr./01 % Var.

Credit Operations* 29,749 38,536 29.5

Credit Operations Income 1,679 2,444 45.6

*Net of provisions

11

The good performance for this item was not only due to unilateral 29.5% expansion of the

credit portfolio but also resulted from an improved mix. The Bank sought to allocate funds to

segments that could provide better earnings at lower operating costs, stressing mass

automated and receivables-based credit transactions. The effects of this strategy can be

noticed in the performance of products like “Crédito Direto ao Consumidor - CDC” (Direct

Consumer Credit), “BB Giro Rápido” (a working capital providing program for small

businesses), Receivables, the portfolios of which almost doubled in volume.

The sum of credit operations with individuals and with corporate increased from 32% to 44%

of the total portfolio. This performance ratifies BB’s position as the largest retail bank in Latin

America.

March/2001March/2000

1.7

2.9

0.5

3.4

1.0

5.3

Receivable CDC BB-Giro Rápido

Mar./00 Mar./01

R$ billions

Month-end Balance

Retail14%

Commercial18%

Rural43%

International14%

Others11% Retail

22%

Commercial22%

Rural39%

International13%

Others4%

12

Liquidity Preserved

The Bank aimed at maintaining a balance between

the expansion of the credit portfolio and an adequate

level of liquidity. BB’s assets and liabilities

management policy allowed for this expansion while

maintaining liquid assets at 35.3% of total assets.

The difference between Liquid Assets and Liabilities ended the quarter at R$21.4 billion.

There was a reduction of R$4.4 billion in this position from the 1st quarter of 2000 to the 1st

quarter of 2001. This fact is explained by the expansion of funding through the open market,

due to major clients’ preference for this type of investment. Despite this, liquid assets have

maintained their share of the Bank’s total assets, as mentioned previously, without hindering

the expansion of the credit portfolio to 26.6%, against 23.6% of total assets in the 1st quarter

of 2000.

R$ billions

Mar./00 Mar./01

Balance % Share Balance % Share

Liquidity Assets 42,692 33.9 51,252 35.3

Credit Operations 29,749 23.6 38,536 26.6

Other Assets 53,568 42.5 55,233 38.1

Total Assets 126,009 100.0 145,021 100.00

Liquidity Assets(*)/Total Assets

R$ millions25,806 21,401

Mar./00 Mar./01

Liquidity Assets–Liquidity Liabilities (*)

(*) Liquidity Liabilities = Interbank Accounts+ Open Market Funds

33.9% 35.3%

Mar./00 Mar./01

(*)Liquidity Assets = Cash and Banks +Interbank Investments + Securities –Securities deposited with the Central Bank -Privatization Currencies

13

Earnings from Securities accumulated R$926 million in the quarter, 47.3% less than the

same period of last year. Two factors contributed to the decrease in these revenues in the 1st

quarter of 2001. Security earnings in the previous period included revenue deriving from the

restatement of privatization currencies, which up until June 2000 were recorded in this item.

As from the 2nd half of 2000, they started to be booked in Other Operating income, as

required by Bacen. As a result, the 1st quarter of 2000 is higher than the quarter under

examination by R$384 million, in respect of such revenues.

Another factor that caused the reduction in Earnings from Securities was the increase in

expenses with derivatives allocated to make up annulment of the impact of exchange

exposure on the Bank’s equity. Thus, the adjustments deriving from hedging carried out in

the period amounted to expenses of R$209 million, recorded under Earnings from Securities,

against R$60 million in revenues booked in the 1st quarter of 2000.

R$ millions

1st qr./00 1st qr./01 % Var.

Earnings from Securities 1,757 926 -47.3

• Revenues from Restatement of Privatization Currencies -384 0

• Effect of Hedging on Earnings from Securities -60 209

Adjusted Earnings from Securities 1,313 1,135 -13.6

Excluding the events shown in the table above, Security earnings fell 13.6% in relation to the

1st quarter of 2000, due to a lower variance of the economic indexes applicable to the

securities portfolio.

Retail funding

In the 1st quarter of 2001, the Bank continued to direct its network towards an increment in

total funding, with the purpose of backing the growth of short-term investments and

maintaining an adequate level of liquidity. Demand deposits ended the quarter at R$14.6

billion, an increase of 26.7% in relation to the same period of last year. Total funding,

including investment open market funds, amounted to R$145.5 billion, a growth of 24.5%.

14

The reduction in term deposits and the s

explained by BB’s initiative of offering co

major clients, as commented previously.

Expenses with Funding in the Market am

compared to R$1,948 million in the sam

taking into account the 17.1% growth

deposits, interbank and open market fun

Total Funding

3.014.6

3.5

2

116.9

20.132.3

11.5 13.9

145.5

20.331.1

Tota

ls

Savin

gs

Term

Dep

osits

Dem

and

Depis

its

Inte

rfina

ncial

Open

R$ Billions

ubstantial increase in Open market Funds are partly

mmitted transactions as an investment alternative for

ounted to R$2,050 million in the 1st quarter of 2001,

e period of last year, a slight increase of 5.2%, even

in the volume of burdened funds (savings, term

ding).

6.436.0

49.6

Mar

ket

Inve

stmen

tFu

nds

Mar./00Mar./01

15

II – NET FINANCIAL MARGIN

Net Financial Margin showed a reduction of

24.6% in the 1st quarter of 2001, compared to the

same period of last year. Provisions for market

risks are deducted from the Gross Financial

Margin, which was R$673 million in the period,

well above the R$59 million recorded in the 1st

quarter of 2000. The process of adjustment of the credit portfolio to the requirements of

“CMN” (National Monetary Council) Resolution 2682/99 was commenced in this quarter. The

Bank had already accrued an additional provision in 1999, in anticipation of the need to

adjust the level of provisions to the new requirements. This procedure mitigated the initial

impact in that quarter, as to the requirement of more substantial provisions. On the other

hand, in the 1st quarter of 2000, changes were implemented in the system for monitoring and

appropriating charges for transactions deriving from Securitization and the Special Program

of Enhancement of Assets (Law 9138/95), which required additional reinforcement of credit

risk provisions.

R$ millions

1,7471,317

Mar./00 Mar./01

16

Credit risk

The credit portfolio in the quarter totaled R$50 billion, following the criterion established by

CMN Resolution 2682/99 (credit operations, leasing and other credits subject to risk

assessment). Credits deemed as being of good quality, classified under AA, A and B,

represented 83% of the volume at the end of the quarter. The volume of credit with H risk

remained at 4.1% of the portfolio, as shown at the end of FY 2000. The balance of Provision

for NPL amounted to R$3.2 billion in March 2001. This amount covers 99.5% of the credit

operations in risk levels E, F, G and H.

R$ millions

Banco do Brasil SFN*Risk Credit Volume Required

Provision% %

AA 17,076 - 33.9 17.1

A 17,779 89 35.3 42.9

B 6,901 69 13.7 18.4

C 2,967 89 5.9 5.1

D 2,429 243 4.8 3.8

E 655 197 1.3 1.8

F 299 150 0.6 1.4

G 222 156 0.4 0.7

H 2,067 2,067 4.1 8.7

Total 50,395 3,060 100.0 100.0Source: Bacen – Note to press – 4/23/2001 on the Credit Portfolio of the National Financial System.

17

III – CONTRIBUTION MARGIN

The Contribution Margin is assessed by adding to the

Financial Margin Service fees and Tax Expenses

(Pasep, Cofins and ISSQN) that are levied directly on

the Bank’s turnover. In the 1st quarter of 2001, the

Margin was 11.9% lower than in the same period of last

year. This drop is a result of the decrease in Net

Financial Margin, which was affected by the

reinforcement of Provision for NPL, which were

1,040.7% higher in March/2001.

Segregating the effect of the Provision, one arrives at the Gross Contribution Margin, which

increased by 13.7% in the quarter, a reflection of the higher gains from financial brokerage

and of the pattern of Service fees, which showed an increase of 19.5%.

R$ millions

1st qr./00 1st qr./01 % Var.

Net Contribution Margin from Provision for NPL 2,363 2,082 -11.9

Provision for NPL 59 673 1,040.7

Gross Contribution Margin 2,422 2,755 13.7

Diversifying sources of income

The 19.6% expansion in the volume Service fees – “RPS” illustrates well the Bank’s efforts to

diversify its business and take advantage of opportunities obtained from the consistent

growth of its individual and corporate clients base.

R$ millions

2,3632,082

1st qr./00 1st qr./01

18

R$ millions

1st qr./00 1st qr./01 Abs. Var. % Var.

Service fees 734 878 144 19.6

Fees from Client Relationship 214 238 24 11.2

Credit operations Fees 62 66 4 6.5

Investment Fund Management 121 159 38 31.4

Collections 62 75 13 21.0

Other income 275 340 65 23.6

Expansion of client base

Fees charged on current accounts, recorded under Fees

from Client relationship, reached a volume of R$238

million, an increase of 11.2% over the 1st quarter of 2000.

This growth is related to the expansion of the client base in

both the individual and company segments. The Bank

closed the quarter with 13.0 million clients, which

represented an increase of 16.3% compared to the client base in March 2000.

Of the total of 12.1 million Individual clients, 6.4 million are special overdraft accounts, a

figure that is 15.3% higher than in March 2000. This growth derives from the Company’s

commitment with modernization of its services and the launch of new products with the

differential of the Banco do Brasil trademark. The highlight in the period was the launch of

“Conta Especial Eletrônica” (Electronic Overdraft Account).

The company client base closed the quarter with 893

thousand accountholders, an increase of 16.4% over the

same period of last year.

In the company segment, Banco do Brasil has an aggressive

approach and operates in a range that goes from “micro-

companies” (equivalent to Sub-Chapter 5) to large business

conglomerates.

Individual Clientsmillions

Corporate Clientsthousands

10.412.1

Mar./00 Mar./01

767

893

Mar./00 Mar./01

19

BB’s Corporate portfolio is made up of 580 business groups, which together represent 1,412

companies. There was an increase of 23% in the number of clients.

Leadership in Asset Management

Earnings from Asset Management accounted for 18.1% of total

Service fees in the 1st quarter of 2001, against 16.5% in the same

period last year. The figures for the month of March 2001 confirm

the leadership of BB DTVM (BB Asset Management) in the

investment funds market. BBDTVM ended the period with R$54.6

billion in managed funds, a growth of 32.5% compared to the 1st

quarter of 2001, with a 15.6% market share in the sector, as

reported by the National Association of Investment Banks –

“ANBID”.

Another feature is the improvement of the Coverage

Index of Service fees on Personnel Expenses, which

totaled 67.8% in the 1st quarter of 2001, against 56.5%

in March 2000, a growth of 19.9%. This indicator

mainly reflects the 19.6% increase in Service fees. On

the other side, Personnel Expenses showed a

decrease of 0.4% in the quarter.

67.8%56.5%

mar/00 mar/01

41.2

54.6

Mar./000

Mar./01

Asset ManagementR$ billions

Service Fees / Personnel Expenses

20

IV - COMMERCIAL RESULTS

Commercial results, calculated by taking Contribution

Margin, less Administrative Expenses, was a negative

R$156 million in the first quarter of 2001, still

reflecting the increase in credit risk provisions.

Taking Gross Contribution Margin, excluding the

effect of the provisions, one observes a growth of

20.5% in Commercial results for the 1st quarter of

2001, which would enable comfortable absorption of the 12.3% increase

costs.

R$ millions

1st qr./00 1st qr./01 % Var.

Gross Contribution Margin 2,422 2,755 13.7

Administrative Expenses -1,993 -2,238 12.3

Adjusted Commercial results 429 517 20.5

Administrative Expenses reflect a more substantial increase in Advertis

Expenses, as a result of advertising campaigns conducted, which ha

increased and improved profitability of the client base.

R$ millions

1st qr./00 1st qr./01 % Var.

Administrative Expenses 1,993 2,238 12.3 Personnel Expenses 1,299 1,294 -0.4

Other Administrative Expenses 671 904 34.7

Communications 81 100 23.5

Data Processing 61 79 29.5

Advertising & Publicity 17 42 147.1

Other Administrative Expenses 512 683 33.4

Tax Expenses 24 40 66.7

370

1st qr./00

R$ millions

in administrative

ing and Publicity

ve contributed to

-1561st qr./01

21

Among these actions the most important is the nationwide campaign to popularize the use of

the Internet, launched in 2000, which enabled an increase in the number of users of the

“Portal BB”(BB Gateway). The results of this campaign were felt during the 1st quarter,

through the growth of business via the Portal BB. Of the total of ACC/ACE granted, for

example, 308 transactions were contracted under the ACC-Automático category, via the

Internet, showing an effectiveness of 84% in relation to the total of transactions quoted

through this channel. The total contracted on the worldwide web was more than US$2.6

million.

Investing in the future

In order to maintain leadership in the markets in which it operates, BB continues to invest in

the development of the Portal bb.com.br. Currently, the Gateway enables effecting more

than 100 types of different transactions, offers banking services and information and sites

that are specialized in investments, agribusiness, sports and culture. With the [e-pronto]advertising campaign launched in 2000, the Bank was able to attain important figures on the

Internet. The initiative increased the number of banking transactions to 13.5 million per month

and increased the number of clients with access to “Auto-Atendimento BB” (Personal

Banking) on the worldwide web to 2.9 million, corresponding to approximately 22% of the

base. In the 1st quarter of 2001, a total of 566,600 transactions were carried out via Portal

BB, with an activity volume of R$3.0 billion in investments.

• 2.9 million clients with access to Portal BB

1.51.9

2.6 2.9

June/00 Sept/00 Dec./00 Mar./01

22

• 13.5 million transactions per month on the Internet

This aggressive approach showed significant results in the quarter:

AGRONEGÓCIOS-eBANCO DO BRASIL

• Volume of new offers: R$1.8 billion

• Volume of new business: R$30.9 million

• 1,907 new users on record

• R$68.0 million in business, since the site was launched

13,512,5 8,3

3,5

0,4

23

Another item that affected the pattern of Administrative Expenses was the continuity of the

process of improvement of the geographical deployment of the services network. In the first

quarter of 2001, a total of 57 new branches were opened and 41 were broken down into 43

new downsized branches, with an average allocation of 25 employees. In the opening and

breakdown process, 67 branches were deployed in the South and Southeast Regions. BB is

present in 2,607 cities throughout

Brazil, with 7,795 points-of-service.

There are 3,008 branches, 1,473

banking service stations, 2,906 ATMs

and 408 other stations, 9.1% more

than in March 2000. The ratio

between Commercial results,

excluding credit risk provisions, and

the number of BB points-of-service,

showed an increase of 10.1% over the 1st quarter of 2000.

59,943.966,365.1

Mar./00 Mar./01

Adjusted Commercial Earnings / Points-of-Service (R$)

24

V – OPERATING INCOME

Operating income showed a drop of

23.8% as compared to the 1st quarter of

2000. This result was affected by the

impact of the reduction in the Net

Financial Margin, as a result of

increased credit risk provisions.

In Operating income, we stress the increase in Earnings from Equity Participation in Affiliates

and Controlled Subsidiaries, from a negative R$123 million in 2000 to a positive R$851

million in the 1st quarter of 2001. The 10.5% exchange variance recorded in 2001, against the

–2.3% in the 1st quarter of 2000, was one of the factors that contributed to the improvement

in these results.

R$ millions

1st qr./00 1st qr./01 % Var.

Other Earnings Components -155 319 -

Other Operating income 347 322 -7.2

Other Operating Expenses -479 -342 -28.6

Earnings from Equity Participation in Affiliates and Controlled

Subsidiaries

-123 851 -

Expenses with Hedging Against Exchange Exposure 100 -512 -

Operating income 214 163 -23.8

215

163

1st qr./00 1st qr./01

R$ millions

25

Operating efficiency

Operating performance is a reflection of BB’s strategy of expanding business by offering

financial solutions to its clients, coupled with an improvement in operating efficiency. The

increase in operating income enabled

absorption of a greater proportion of

administrative expenses than in the 1st

quarter of 2000, improving the efficiency

index from 82.8% to 78.6% in March

2001.

It should be stressed, however, that Operating income take into account the expenses with

restatement of Social Security Liabilities. This concerns an expense item that, in general,

BB’s direct competitors do not carry, which renders meaningless any direct comparison with

such banks. If in the calculation of the efficiency index this expense were disregarded, BB

would have ended the quarter with a 73.7% ratio of Administrative Expenses on Operating

income.R$ thousands

1st qr./00 1st qr./01

Expenses with updating of Pension Plan Liabilities 151,389 188,260

Efficiency Ratio excluding Pension Plan Liabilities 77.9 73.7

Administrative Expenses / Operating income *

*Gross Financial Margin + Service Fees + OtherOperating income + Other Operating Expenses

82.8% 78.6%

Mar./00 Mar./01

26

VI – NET INCOME

BB recorded Net Income of R$137 million in the 1st

quarter of 2001. This result is 90.3% higher than

that obtained in the 1st quarter of 2000, and is

equivalent to an annualized return on Stockholders’

Equity of 6.9%, against 4.0% in 2000.

Taxable results

The quest for taxable earnings has the

main purpose of enabling consumption of

tax credits and enhancing the profitability

of equity capital in order to improve the

Bank’s Capital Adjustment Index. Among

the measures taken for adjustment to the

Basle Index, which ended the quarter at

8.0%, we highlight the transformation of

BB into a Multiple Bank, as approved by the Board of Directors in a meeting held on April 2,

2001.

With this transformation the Company aims at reducing administrative costs with the

elimination of bureaucratic structures and processes related to the management of the

subsidiary, as well as enhancement of fiscal/tax management of the Conglomerate.

R$ millions

72

137

1st qr./00 1st qr./01

10,4

9,6

11,910,2

8,0

Mar./97 Mar./98 Mar./99 Mar/2000 Mar./2001

Basle Index %

27

Major IndicatorsR$ millions

Equity Items 1st qr./00 1st qr./01 Var.%

Assets 126,009 145,021 15.1

Earning Assets 91,000 106,755 17.3

Operating Assets 29,749 38,536 29.5

Credit Operations Net of Provision for NPL 29,749 38,536 29.5 Credit Operations 39,843 41,383 3.9

Provision for NPL on Credit Operations -10,094 -2,847 -71.8

Other Operating Credits 10,373 8,378 -19.2

Liquidity Assets 42,692 51,252 20.1

Cash and Banks 1,692 2,664 57.4

Interbank Investments 11,124 7,086 -36.3

Securities 29,876 41,502 38.9

Others Earning Assets 18,559 16,968 -8.6

Other Assets 35,009 38,266 9.3

Liabilities 126,009 145,021 15.1

Interest-Bearing Liabilities 86,955 98,213 12.9

Operating Liabilities 70,069 68,363 -2.4

Savings Deposits 20,142 20,268 0.6

Term Deposits 32,348 31,129 -3.8

Acceptance and Debentures 726 1,113 53.3

Borrowings and On-Lending 13,110 11,347 -13.4

Financial and Development Funds 3,743 4,505 20.4

Liquidity Liabilities 16,886 29,851 76.8

Open Market Funds 13,904 26,397 89.9

Interbank Deposits 2,982 3,454 15.8

Other Liabilities 31,738 38,706 22.0

Demand Deposits 11,526 14,605 26.7

Others 20,212 24,101 19.2

Stockholders’ Equity 7,244 7,965 10.0

Indicators (%) 1st qr./00 1st qr./01 Var.%

Basle Accord 10.2 8.0 -21.6

ROE 4.0 6.9 72.5

ROA 0.06 0.09 64.2

Efficiency 82.8 78.6 -5.1

Leverage (times) 17.39 18.21 4.7

Contribution Margin/Total Income (Gross Fin. Margin + Service Fees)* % 93.0 72.6 -22.0

Service Fees / Administrative Expenses* 36.8 39.2 6.5

Contribution Margin / Average Clients Base* (R$) 233.9 172.0 -26.4

Administrative Expenses/ Average Clients Base * (R$) 197.3 184.9 -6.3%

Spread annualized 8.0 7,8 -2.5

* P&L items in the Reallocated Income Statements for the Fiscal Year

28

Other Information1st qr.00 1st qr./01

Ratings*

Atlantic Rating – Brazil AAA AAA

Fitch– Individual D/E D/E

Shareholding Structure

National Treasury 71.8 71.8

Previ 13.7 13.7

BNDESPar 5.6 5.9

Foreign Capital 0.6 0.6

Other Individuals 2.5 5.3

Other Companies 4.4 1.5

Others Pension Funds 1.4 1.2

Distribution Network – Brazil

Branches 2,846 3,008

Others Points-of-Service 4,299 4,787

Total 7,145 7,795

Distribution Network - Abroad

Branches 22 21

Other (Offices + Sub-branches + Subsidiaries) 12 14

Total 34 35

Human Resources

Employees 73,730 77,299

Interns 12,064 12,324

Total 85,794 89,623

Technology

Office Banking (Companies) 86,641 211,856

Self-Service Terminals 25,690 30,149

Number of Accounts – in thousands

Individuals 10,434 12,030

Companies 767 893

Total 11,201 12,923

Number of Cards (in millions)

Credit Cards 2.3 3.5

Debit Cards 10.6 13.2

*Atlantic Rating’s last valuation, in December/1999 and 2000; and Fitch, in December/1999 and June/2000.