Itau Unibanco Holding S.A. - Announcement to the Market: Disclosure of results for the fourth quarter and from January to December of 2017, according to International Financial Reporting Standards...

Comparison between BRGAAP¹ and IFRS

R$ million

Balance Sheet

BRGAAP

Adjustments and
Reclassifications ²

IFRS

BRGAAP

Adjustments and
Reclassifications ²

IFRS

Dec/31/2017

Dec/31/2016

Total Assets

1,503,503

(68,534)

1,434,969

1,427,084

(73,843)

1,353,241

Cash and Cash Equivalents, Reserve Requirements, Interbank Deposits,
Securities Under Repurchase Agreements, Financial Assets and Derivatives ³

834,616

(9,718)

824,900

767,222

(16,395)

750,827

Loan Operations

493,595

(228)

493,367

491,225

(859)

490,366

(-) Allowance for Loan Losses⁴

(35,360)

7,465

(27,895)

(35,986)

9,014

(26,972)

Other Financial Assets ⁵

111,780

(52,212)

59,568

106,458

(52,541)

53,917

Tax Assets⁶

59,648

(17,720)

41,927

61,210

(16,936)

44,274

Investments in associates and jointly controlled entities, Goodwill, Fixed and
Intangible Assets, Assets Held for Sale and Other Assets

39,224

3,879

43,102

36,954

3,875

40,829

Current Liabilities and Long Term Liabilities

1,364,565

(77,603)

1,286,964

1,299,869

(81,442)

1,218,427

Deposits

402,938

-

402,938

329,414

-

329,414

Deposits Received Under Securities Repurchase Agreements³

323,910

(11,276)

312,634

366,038

(16,874)

349,164

Financial Liabilities Held for Trading, Derivatives, Interbank and Institutional funding

255,100

207

255,309

257,167

(228)

256,939

Other Financial Liabilities ⁵

129,770

(52,157)

77,613

123,604

(51,772)

71,832

Reserves for Insurance, Private Pension and Capitalization

183,747

786

184,533

156,656

567

157,223

Provisions and Other Liabilities

48,660

(2,561)

46,098

49,320

(1,301)

48,019

Tax Liabilities ⁶

20,440

(12,602)

7,839

17,670

(11,834)

5,836

Total Stockholders' Equity

138,938

9,069

148,005

127,215

7,599

134,814

Non-controlling interests

12,014

1,152

13,165

11,625

607

12,232

126,924

7,917

134,840

115,590

6,992

122,582

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

²Resulted from reclassifications between assets and liabilities and other effects from IFRS adoption;

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

⁴Implementation of the criteria for calculating the Allowance for Loan Losses as defined in IFRS;

⁵Difference in accounting, mainly for Foreign Exchange Portfolio, which started to be considered as net effect of Assets and Liabilities;

⁶Difference in accounting, mainly for deferred taxes, which are now treated as a net effect of Assets and Liabilities in each of the consolidated companies;

⁷Conciliation of Controlling Stockholders' Equity is presented in the following table.

Conciliation

Adjustments

Equity

Result

Dec/31/2017

4^thQ/17

3^rdQ/17

4^thQ/16

jan-dec/17

jan-dec/16

BRGAAP - Values Attributable to Controlling Stockholders

126,924

5,821

6,077

5,543

23,965

21,639

(a) Allowance for Loan Losses

5,257

(291)

(89)

240

(457)

1,325

(b) Adjustment to market value of shares and quotas

186

-

-

-

-

-

(c) Acquisition of interest in Porto Seguro Itaú Unibanco Participações S.A.

450

(4)

(4)

(4)

(15)

(15)

(d) Effective interest rate

(84)

(7)

(2)

(5)

(8)

20

(e) Financial Leasing Operation

586

(40)

(33)

2

(131)

125

(f) Other adjustments

1,520

5

98

218

549

171

IFRS - Values Attributable to Controlling Stockholders

134,840

5,485

6,048

5,994

23,903

23,263

IFRS - Values Attributable to Minority Stockholders

13,165

195

(130)

(52)

365

319

IFRS - Values Attributable to Controlling Stockholders and Minority Stockholders

148,005

5,680

5,918

5,942

24,268

23,582

Differences between IFRS and BRGAAP Financial Statements

(a) On IFRS (IAS 39), loan losses allowances must be made when there is objective evidence that loan operations have suffered a reduction in its value (Incurred Loss). On BRGAAP, the expected loss model is used ⁸.

(b) On IFRS (IAS 39 and 32), stocks and quotas classified as permanent investments were measured at fair value and its gains and losses were recorded directly on Equity, with no impact on the income statement of the period.

(c) On IFRS, the effect of accounting at fair value the acquisition of the participation in Porto Seguro Itaú Unibanco Participações S.A. was recognized.

(d) On the IFRS (IAS 39), the assets and financial liabilities measured at amortized cost are recognized according to the methodology of effective interest rate, which appropriates the revenues and costs directly attributed to the acquisition, issue or disposal for the period of operation. On BRGAAP, the recognition of expenses and revenues from fees occurs at the time of contracting these operations.

(e) Under IFRS (IAS 17) the financial leasing operations are recorded as Fixed Assets on the other hand of Other Financial Liabilities. On BRGAAP, as of September 30, 2015, the consideration of these transactions are now recorded in income in accordance with CMN Resolution No. 3,617/08.

  (f) Other Adjustments mainly comprise the difference in the eligibility of operations of the Cash Flow Hedge for purposes of IFRS and the reversal of the Goodwill  
  Amortizations pursuant the BRGAAP.

⁸For more details see our Complete Financial Statements for January to December, 2017

R$ million

Recurring Result 

4^thQ/17

3^rdQ/17

jan-dec/17

jan-dec/16

BRGAAP

IFRS

Variation

BRGAAP

IFRS

Variation

BRGAAP

IFRS

Variation

BRGAAP

IFRS

Variation

Result - Attributable to Controlling Stockholders

5,821

5,485

(336)

6,077

6,048

(29)

23,965

23,903

(62)

21,639

23,263

1,624

Exclusion of the Non-Recurring Events

459

424

(35)

177

52

(125)

914

496

(418)

583

251

(332)

Provision Expenses for Citibank Integration

277

277

-

-

-

-

277

277

-

-

-

-

Goodwill Amortization

135

-

(135)

125

-

(125)

508

-

(508)

441

-

(441)

Disposal of IRB shares

-

-

-

(155)

(155)

-

(155)

(155)

-

-

-

-

Liability Adequacy Test

(145)

(45)

100

-

-

-

(165)

(74)

91

(109)

-

109

Civil Lawsuits - Economic Plans

-

-

-

61

61

-

101

101

-

224

224

-

Tax Contingencies and Legal Liabilities

184

184

-

9

9

-

226

226

-

6

6

-

Impairment

7

7

-

137

137

-

152

152

-

181

181

-

Program for the Settlement or Installment Payment of Taxes

-

-

-

-

-

-

-

-

-

(14)

(14)

-

Pension Fund

-

-

-

-

-

-

-

-

-

(130)

(130)

-

Others

-

-

-

-

-

-

(31)

(31)

-

(18)

(18)

-

Recurring Result - Attributable to Controlling Stockholders

6,280

5,909

(371)

6,254

6,100

(154)

24,879

24,399

(481)

22,222

23,514

1,291