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Announcement to the Market

Disclosure of results for the third quarter and from January to September of 2019, according to International Financial Reporting Standards - IFRS

SÃO PAULO, Nov. 4, 2019 /PRNewswire/ -- We present below the differences between our financial statements in BRGAAP and in International Financial Reporting Standards – IFRS.

As from January 1st, 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 September 2019 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


Sep/30/2019



Dec/31/2018


Total Assets

1,738,340

(124,393)

1,613,947

1,649,614

(96,817)

1,552,797

Cash, Compulsory Deposits and Financial Assets At Amortized Cost 3 4 6

1,197,699

(19,094)

1,178,605

1,172,276

(12,837)

1,159,439

(-) Provision for Expected Loss at Amortized Cost5

(33,467)

135

(33,332)

(33,326)

(47)

(33,373)

Financial Assets at Fair Value Through Other Comprehensive Income 4

132,470

(73,696)

58,774

105,065

(55,657)

49,408

(-) Expected Loss at Fair Value Through Other Comprehensive Income 5

(3,069)

2,983

(86)

(3,441)

3,356

(85)

Financial Assets at Fair Value Through Profit or Loss 4

341,762

(31,733)

310,029

315,383

(28,737)

286,646

Tax Assets7

51,420

(6,089)

45,331

50,242

(7,412)

42,830

Investments in Associates and Joint Ventures, Goodwill, Fixed Assets, Intangible Assets,
Assets Held for Sale and Other Assets 

51,525

3,101

54,626

43,415

4,517

47,932








Total Liabilities

1,599,808

(129,723)

1,470,085

1,505,490

(103,159)

1,402,331

Financial Assets at Amortized Cost 3 6

1,259,161

(120,365)

1,138,796

1,220,233

(100,499)

1,119,734

Financial Assets at Fair Value Through Profit or Loss 4

47,638

80

47,718

27,675

36

27,711

Provision for Expected Loss (Loan Commitments and Financial Guarantees) 5

1,124

2,936

4,060

1,265

2,527

3,792

Provision for Insurance and Pension Plan 

212,539

1,297

213,837

199,995

1,192

201,187

Provisions

19,068

-

19,068

18,613

-

18,613

Tax Liabilities 7

12,888

(5,628)

7,260

10,915

(5,631)

5,284

Other Liabilities

47,390

(8,043)

39,347

26,794

(784)

26,010

Total Stockholders' Equity

138,531

5,331

143,862

144,124

6,342

150,466

Non-controlling Interests

12,812

1,670

14,482

12,367

1,317

13,684

Total Controlling Stockholders' Equity 8

125,719

3,661

129,380

131,757

5,025

136,782


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

2Resulted from reclassification of assets and liabilities and other effects from the adoption of IFRS;

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

4Refer to reclassification of financial assets between measurement categories at fair value and amortized cost;

5Application of criterion for calculation of Expected Loss as set forth by IFRS;

6Difference in accounting, particularly from Foreign Exchange Portfolio, which are now be presented as net effect between Assets and Liabilities;

7Difference in accounting, particularly deffered taxes, which are now accounted for as net effect between Assets and Liabilities in each one of the consolidated companies;

8Reconciliation 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 *

Sep/30/2019

 3rd Q/19 

 2nd Q/19 

 3rd Q/18 

 jan-sep/19 

 jan-sep/18 

 BRGAAP - Values Attributable to Controlling Stockholders 

125,719

5,576

6,815

6,247

19,101

18,772

(a)Expected Loss - Loan and Lease Operations and Other Financial Assets

203

(240)

(77)

189

(391)

(179)

(b)Adjustment to Fair Value of Financial Assets

(2,113)

(108)

(6)

(129)

11

(261)

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

440

(1)

(1)

(2)

(3)

(6)

(d)Criteria  for Write-Off of Financial Assets 

1,963

(190)

(24)

(17)

(253)

8

(e)Financial Lease Operations

254

(30)

(45)

(40)

(111)

(120)

(f) Other adjustments

2,914

158

(135)

(123)

85

40

IFRS - Values Attributable to Controlling Stockholders 

129,380

5,165

6,527

6,125

18,439

18,254

IFRS - Values Attributable to Minority Stockholders 

14,482

340

163

206

659

528

IFRS - Values Attributable to Controlling Stockholders and Minority Stockholders 

143,862

5,505

6,690

6,331

19,098

18,782

*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 IFRS9.


(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 composed of reversal of Amortizations of Goodwill under  BRGAAP.








9More details in the Complete Financial Statements for January to September, 2019.







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




R$ million

Recurring Result

3rd Q/19

3rd Q/18


BRGAAP

IFRS

Variation

BRGAAP

IFRS

Variation

Result - Attributable to Controlling Stockholders

5,576

5,165

(411)

6,247

6,125

(122)

Exclusion of the Non-Recurring Events

1,580

1,431

(149)

207

1

(206)

Goodwill Amortization

149

-

(149)

206

-

(206)

Impairment

-

-

-

1

1

-

Voluntary Resignation Plan

1,431

1,431

-

-

-

-

Recurring Result - Attributable to Controlling Stockholders

7,156

6,596

(560)

6,454

6,126

(328)

 

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

Alexsandro Broedel
Group Executive Finance Director and Head of Investor Relations

Cision

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