Itaú Unibanco Holding S.A. Announcement to the Market

Rhea-AI Summary

Itaú Unibanco has provided an overview of differences between its financial statements under BRGAAP and IFRS as of year-end 2020. Key data includes total assets of R$2,019,252 million under IFRS, down from R$2,112,586 million under BRGAAP. The bank highlighted a decrease in cash and financial assets, alongside a provision for expected losses leading to adjusted equities. The IFRS adoption results in significant adjustments across various balance sheet items, particularly financial assets and liabilities. More details are available on their investor relations website.

Positive

• Total Stockholders' Equity increased to R$154,525 million under IFRS from R$149,465 million under BRGAAP.
• Controlling Stockholders' Equity improved to R$142,993 million under IFRS compared to R$136,925 million under BRGAAP.

Negative

• Total assets decreased to R$2,019,252 million under IFRS from R$2,112,586 million under BRGAAP.
• Cash and financial assets diminished due to adjustments related to expected losses.

SÃO PAULO, Feb. 1, 2021 /PRNewswire/ -- We present below the differences between our financial statements in BRGAAP and in International Financial Reporting Standards – IFRS.

As from January 1^st, 2018, IFRS 9 came into effect, the accounting standard that replaces IAS 39 in the treatment of Financial Instruments. The new standard is structured to encompass the pillars of classification, measurement of financial assets and impairment and was applied retrospectively by Itaú Unibanco Holding.

The complete consolidated financial statements under IFRS from January to December 2020 are available at our website: www.itau.com.br/investor-relations.

Comparison between BRGAAP¹ and IFRS                                                       

						R$ million
Balance Sheet	BRGAAP	Adjustments and Reclassifications 2	IFRS	BRGAAP	Adjustments and Reclassifications 2	IFRS
		Dec/31/2020			Dec/31/2019
Total Assets	2,112,586	(93,334)	2,019,252	1,738,713	(101,232)	1,637,481
Cash, Compulsory Deposits and Financial Assets At Amortized Cost 3 4 6	1,381,449	(12,375)	1,369,074	1,164,753	3,535	1,168,288
(-) Provision for Expected Loss at Amortized Cost 5	(51,404)	4,353	(47,051)	(38,888)	2,859	(36,029)
Financial Assets at Fair Value Through Other Comprehensive Income 4	209,636	(99,601)	110,035	166,676	(89,930)	76,746
(-) Expected Loss at Fair Value Through Other Comprehensive Income 5	(4,149)	4,056	(93)	(3,162)	3,076	(86)
Financial Assets at Fair Value Through Profit or Loss 4	457,739	7,842	465,581	345,677	(22,748)	322,929
Tax Assets 7	73,792	(7,148)	66,644	56,835	(7,875)	48,960
Investments in Associates and Joint Ventures, Goodwill, Fixed Assets, Intangible Assets, Assets Held for Sale and Other Assets	45,521	9,541	55,062	46,822	9,851	56,673
Total Liabilities	1,964,880	(100,153)	1,864,727	1,595,865	(107,849)	1,488,016
Financial Assets at Amortized Cost 3 6	1,595,816	(100,175)	1,495,641	1,265,471	(105,641)	1,159,830
Financial Assets at Fair Value Through Profit or Loss 4	79,742	(89)	79,653	48,008	21	48,029
Provision for Expected Loss (Loan Commitments and Financial Guarantees) 5	840	3,552	4,392	959	3,181	4,140
Provision for Insurance and Pension Plan	220,004	996	221,000	217,216	1,118	218,334
Provisions	19,819	-	19,819	21,454	-	21,454
Tax Liabilities 7	9,633	(3,922)	5,711	13,870	(5,979)	7,891
Other Liabilities	39,025	(514)	38,511	28,887	(549)	28,338
Total Stockholders' Equity	147,706	6,819	154,525	142,848	6,617	149,465
Non-controlling Interests	11,113	419	11,532	10,861	1,679	12,540
Total Controlling Stockholders' Equity 8	136,593	6,400	142,993	131,987	4,938	136,925

1 BRGAAP represents accounting practices in force in Brazil for financial institutions, according to regulation of the Central Bank of Brazil;
2 Resulted from reclassification of assets and liabilities and other effects from the adoption of IFRS;
3 Resulted from the elimination of transactions between parent company and exclusive funds (particularly PGBL and VGBL funds), which are consolidated under IFRS;
4 Refer to reclassification of financial assets between measurement categories at fair value and amortized cost;
5 Application of criterion for calculation of Expected Loss as set forth by IFRS;
6 Difference in accounting, particularly from Foreign Exchange Portfolio, which are now be presented as net effect between Assets and Liabilities;
7 Difference in accounting, particularly deffered taxes, which are now accounted for as net effect between Assets and Liabilities in each one of the consolidated companies;
8 Reconciliation of Controlling Stockholders' Equity is presented in the following table.

Below is the reconciliation of Results to Stockholders' Equity, with the conceptual description of major adjustments.

		R$ million
Reconciliation	Stockholders Equity *	Result *
	Dec/31/2020	4th Q/20	3rd Q/20	4th Q/19	jan-dec/20	jan-dec/19
BRGAAP - Values Attributable to Controlling Stockholders	136,593	7,592	4,492	7,482	18,909	26,583
(a) Expected Loss - Loan and Lease Operations and Other Financial Assets	2,466	612	25	1,569	750	1,178
(b) Adjustment to Fair Value of Financial Assets	(1,064)	669	(8)	(250)	278	(239)
(c) Acquisition of Interest in Porto Seguro Itaú Unibanco Participações S.A.	435	(1)	(1)	(1)	(4)	(4)
(d) Criteria  for Write-Off of Financial Assets	1,935	13	(49)	(36)	8	(289)
(e) Financial Lease Operations	87	(12)	(25)	(61)	(106)	(172)
(f) Other adjustments	2,541	109	298	(29)	(939)	56
IFRS - Values Attributable to Controlling Stockholders	142,993	8,982	4,732	8,674	18,896	27,113
IFRS - Values Attributable to Minority Stockholders	11,532	(792)	367	41	(3,832)	700
IFRS - Values Attributable to Controlling Stockholders and Minority Stockholders	154,525	8,190	5,099	8,715	15,064	27,813
* Events net of tax effects

Differences between IFRS and BRGAAP Financial Statements
(a) In the adoption of IFRS 9, there was a change in the calculation model of incurred loss (IAS 39) to expected loss, considering forward-looking information. On BRGAAP, the concept of Expected Loss is used, pursuant to BACEN Resolution No. 2,682/99.9
(b) Under IFRS, stocks and quotas classified as permanent investments were measured at fair value and its gains and losses were recorded directly in Result. Additionally, there was a change in the model of classification and measurement of financial assets due to the new categories introduced by IFRS 9.
(c) Under IFRS, the effect of accounting at fair value of the acquisition of interest in Porto Seguro Itaú Unibanco Participações S.A. was recognized.
(d) Criterion for write-off of financial assets on IFRS considers the recovery expectative.
(e) Under IFRS (IAS 17) the financial lease operations are recorded as Fixed Assets,  as a contra-entry of Other Financial Liabilities. Under BRGAAP, as from September 30th,  2015, the consideration of these transactions are now recorded in result, in accordance with CMN Resolution No. 3,617/08.
(f) Other Adjustments is mainly due to the impairment of goodwill and intangible assets of Itaú Corpbanca in the 2nd Q/20 and reversal of the Amortization of Goodwill under BRGAAP.
9 More details in the Complete Financial Statements for January to December, 2020.

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

				R$ million
Recurring Result	4th Q/20			4th Q/19
	BRGAAP	IFRS	Variação	BRGAAP	IFRS	Variação
Result - Attributable to Controlling Stockholders	7,592	8,982	1,390	7,482	8,674	1,192
Exclusion of the Non-Recurring Events	2,204	2,592	389	186	2,240	2,054
Gain on the the partial sale of  XP Inc shares	3,193	3,263	70	-	-	-
Provision for restructuring	(220)	(220)	-	-	-	-
Mark to market of collateralized securities	(379)	(379)	-	-	-	-
Goodwill amortization	(179)	-	179	(155)	6	161
Liability adequacy test	10	150	140	9	66	57
Gain due to the primary issuance of XP Investimentos shares	-	-	-	1,974	1,974	-
Impairment, mainly related to technology	(92)	(92)	-	(37)	(37)	-
Revaluation of the tax credit balance	-	-	-	2,303	2,024	(279)
Civil, fiscal and labor contingencies	-	-	-	(1,307)	(1,307)	-
Constitution of provision for loan losses	-	-	-	(2,453)	(338)	2,115
Other	(128)	(128)	-	(148)	(148)	-
Recurring Result - Attributable to Controlling Stockholders	5,388	6,390	1,001	7,296	6,434	(862)

The tables in this report show the figures in million. Variations and summations, however, were calculated in units.

Renato Lulia Jacob
Group Head of Investor Relations and Market Intelligence

Contact:
Itaú Unibanco – Corporate Communication
(11) 5019-8880 / 8881 – imprensa@itau-unibanco.com.br

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SOURCE Itaú Unibanco Holding S.A.

FAQ

What are the key differences between Itaú Unibanco’s BRGAAP and IFRS financial statements for 2020?

Itaú Unibanco's IFRS total assets were R$2,019,252 million, lower than R$2,112,586 million under BRGAAP.

How did Itaú Unibanco's equity change under IFRS?

Under IFRS, total stockholders' equity rose to R$154,525 million, up from R$149,465 million under BRGAAP.

What adjustments did Itaú Unibanco implement when adopting IFRS 9?

Itaú Unibanco implemented significant adjustments affecting financial assets and expected loss provisions.

What effect did IFRS adoption have on Itaú Unibanco's total assets?

Adopting IFRS resulted in a decrease of total assets from R$2,112,586 million to R$2,019,252 million.

Where can I find Itaú Unibanco's complete financial statements under IFRS?

The full consolidated financial statements can be accessed on Itaú Unibanco's investor relations website.