Agenda. I. Itaú Unibanco Holding - Overview. Chilean Economy, Banking Sector and Regulatory Framework. Banco Itaú Chile Overview. Financial Highlights

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1 Banco Itaú Chile As of December 31, 2013

2 Agenda I. Itaú Unibanco Holding - Overview II. III. IV. Chilean Economy, Banking Sector and Regulatory Framework Banco Itaú Chile Overview Financial Highlights 2

3 Itaú Unibanco Holding at a Glance Leading position in Brazil through key competitive strengths US$ 67.3 billion market cap (1) 95,696 employees in Brazil and abroad 4,991 branches and CSBs in Brazil and abroad 27,900 ATMs in Brazil and abroad Brazilian multinational bank Major provider of finance for the expansion of Brazilian companies Among the best talent pool in the Brazilian financial system Global Footprint of Brazil s Top Private Sector Bank as of December 31, 2013 Financial Highlights and Ratios As of and for the year ended December 2013 Highlights Total Assets (1) Total Loans Stockholders Equity (2) Recurring Net Income 2013 (3) Recurring Net Income 4Q13 Long Term Foreign Currency (Itaú Unibanco Holding) BRL 1,105.7 Bn BRL Bn BRL 81.0 Bn BRL 15.8 Bn BRL 4.7 Bn Moody s: Baa2 Fitch: BBB+ Financial Ratios Recurring ROE 2013 (4) 20.9% Recurring ROE 4Q13 (5) 23.9% (6) Efficiency Ratio % (6) Efficiency Ratio 4Q % BIS Ratio 16.6% (1) Includes endorsements and sureties. (2) Represents Net Income adjusted for certain non recurring events described in the 4Q/13 MD&A Executive Summary. (3) Represents Net Income adjusted for certain non recurring events described in the 4Q/13 MD&A Executive Summary. (4) Calculated using Recurring Net Income / Average Equity. For annualized calculation method, please refer to the 4Q/13 MD&A Executive Summary. (5) Calculated using Recurring Net Income / Average Equity. For annualized calculation method, please refer to the 4Q/13 MD&A Executive Summary. (6) Calculated using Total Expenses / (marginal financial margin plus banking service fee + tax expenses for ISS, PIS, Cofins and other taxes Notes: (1) As of December 31st Source: Bloomberg 3

4 Footprint in Latin America December

5 Itaú Unibanco Holding and the Largest Banks by Market Cap 5

6 Agenda I. Itaú Unibanco Holding - Overview II. III. IV. Chilean Economy, Banking Sector and Regulatory Framework Banco Itaú Chile Overview Financial Highlights 6

7 Chile - Economic Highlights A small but open economy. Free trade agreements with more than 80% of both global GDP and countries. Trade volumes represent 82% of GDP, copper accounts for nearly 54% of exports and 25% of total exports is destined for China. GDP per capita is the highest in the region (USD 21,000 IMF 2014 estimate). Chile has the best country risk in LATAM: S&P AA-; Moodys Aa3; Fitch A+. Independent central bank (since 1989). Structure is politically balanced & autonomous of political cycles. Inflation targeting monetary policy (3.0% target since 2003). Inflation has averaged 3.1% since Counter-cyclical fiscal framework. When copper prices and growth are high, the government saves (vice versa). Currently, the government is a net creditor. Business-friendly: best-ranked LATAM country in the World Bank s Doing Business survey. Foreign-direct-investment flows averaged around 7.5% of GDP over the last 10 years. Source: Central Bank of Chile, IMF, IUB 7

8 Chilean Economy Key Indicators Investment Rate (% of GDP) Domestic Demand (YoY) 30% 28% 26% 24% 22% 20% 18% 16% 14% 12% 10% 20% 15% 10% 5% 0% -5% -10% -15% Jun-03 Mar-04 Dec-04 Sep-05 Jun-06 Mar-07 Dec-07 Sep-08 Jun-09 Mar-10 Dec-10 Sep-11 Jun-12 Mar-13 Dec-13 Jun-03 Jan-04 Aug-04 Mar-05 Oct-05 May-06 Dec-06 Jul-07 Feb-08 Sep-08 Apr-09 Nov-09 Jun-10 Jan-11 Aug-11 Mar-12 Oct-12 May-13 Dec-13 Unemployment Rate (%) Inflation Rate (YoY) 10% 9% 8% 7% 6% 5% 4% 12% 10% 8% 6% 4% 2% 0% -2% -4% Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Source: Central Bank of Chile, IUB, EconsultRS 8

9 Chilean Economy Key Indicators GDP Per Capita (1980 = 100) Central Government Gross and Net Debt (% of GDP) Argentina Brazil Chile Colombia Mexico Peru 50% 40% 30% 20% 10% Gross Debt Net Debt 150 0% -10% % -30% Source: Central Bank of Chile, IUB, EconsultRS 9

10 The Chilean Financial System The financial system is sound, competitive, well diversified and highly integrated into the global financial system Banks are well capitalized, liquid, and consistently profitable Significant core deposits limit funding risks One of the highest levels of loan penetration in Latin America Stress tests confirm that banks in Chile can withstand severe macroeconomic shocks in terms of solvency and liquidity Chile s financial regulatory and supervisory system is robust Financial Stability Committee in place Source: Central Bank of Chile, IMF, Bloomberg 10

11 Banks Strong Regulatory Framework The banking industry in Chile is recognized as one of the most solid and wellregulated worldwide Constant tracking of liquidity and solvency ratios Credit risk is managed with high standards and strong supervision Annual audits by the banking regulator are based on Management s performance and solvency ratings 11

12 The Chilean Banking Sector Total Loans/GDP Loan Portfolio Breakdown 79% 74% 74% 84% 79% 83% 13% 12% (Ch$ Trn) % 12% 12% 20% 21% 20% 68% 67% 67% 12% 23% 25% 21% 62% 67% 64% GDP Total Loans Total Loans / GDP Retail Mortgage Commercial 18.3% 18.3% Main Players Market Share by Loans (Dec 2013) 12.9% 12.6% 11.5% 6.6% 4.7% 4.7% 2.9% 2.8% De Chile Santander Del Estado BCI Corpbanca BBVA Scotiabank Itaú Chile Security Bice Source: SBIF. Corpbanca figures include acquisition of Santander in Colombia 12

13 Agenda I. Itaú Unibanco Holding - Overview II. III. IV. Chilean Economy, Banking Sector and Regulatory Framework Banco Itaú Chile Overview Financial Highlights 13

14 Historic Milestones Banco de Boston started activities in Chile, focusing on Multinational Companies and Treasury Business Personal & Retail Banking launched and the brand changed to BankBoston, following the merger with Baybank. Loan Portfolio US$500 MM, Market Share 1.1%, Net Profit US$5.2 MM BankBoston Corp. merged with Fleet Financial Group, giving birth to Fleet Boston Financial 2001 BankBoston Chile acquired the retail customer portfolio of ABN Amro Bank Chile 2004 Bank of America acquired Fleet Boston Financial 2007 Banco Itaú Chile started activities after acquiring BankBoston, with 50 Branches Total Assets of US$3.5 Bn, Market Share 2.6%, Net Profits US$31 MM (as of Dec 31, 2006) Life Insurance Company was founded under the Itaú Unibanco Holding, supporting the Bank in the Retail Business Brazil: Merger of Banco Itaú and Unibanco; the network of Banco Itaú Chile reached 70 branches Acquisition of HSBC Chile s retail portfolio Total Assets US$8.5 Bn. Market Share 3.9%. Net Profit US$103 MM, 90 Branches Itaú Unibanco Holding acquired MCC (wealth management company for high income clients), AuM US$2 Bn 2013 On January 29, 2014, we have celebrated an agreement with CorpBanca and its controlling shareholders, resulting in the creation of Itaú CorpBanca which will operate under the Itaú brand. 14

15 Corporate Structure Itaú Unibanco Holding S.A. Itaú Chile Holdings, Inc. (100%) 15

16 Banco Itaú Chile Overview 7 th largest bank in Chile out of a total of 25 banks. Total Assets: US$13.0 Bn. Market Share Loans: 4.7% (5% exp. Corp Colombia) Deposits: 4.5% Assets: 4.3% Banco Itaú Chile Rating Local International Fitch: AA Stable Feller: AA- Positive Moody's: A3/p-2 Stable Business Lines: Retail, Commercial Banking, CIB, and Treasury. Wide range of products offered : factoring, leasing, corporate finance, mortgage lending, mutual funds, insurance brokerage, trading and consumer products Total Assets (US$ Bn) CAGR 18% branches with 2,543 employees Client base of 129K current accounts, with a CAGR of 10% over the last 5 years Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 16

17 Banco Itaú Chile Highlights Banco Itaú Chile is the largest overseas subsidiary of Itaú Unibanco 100% retained earnings - continuous building of capitalization Additional capital injection by Itaú Unibanco of US$50 MM in 2008 and US$150 MM in October 2012 Diversified line of products and services One of the fastest growing banks in the Chilean financial system in 2013 Loan growth largely exceeds industry average over 26% growth during the 12-month, vis-a-vis 13% growth of the banking system in the same period Strong brand recoginition, well positioned in the Premier Segment Diversified income: Retail Banking represents 56% of the total revenues 17

18 Business Overview Retail Banking Includes Retail and Small Businesses (SME) Approximately 124K clients and a network of 96 branches One of the largest specialized footprint in the premier segment in Chile High level of customer satisfaction (No.3 ranking in 2013) Strong Brand recognition in HNI segment Commercial Banking Companies with annual sales from US$200K up to US$100 MM Approximately 5K clients Total loans of US$2.1 Bn with a year-on-year growth of 32% in 2013 Commercial banking has grown 128% their loans in the past 3 years and a 91% revenue Global Corporate Banking (CIB) Treasury Includes conglomerates and corporations with annual sales over US$100MM, multinational companies in Chile, and the public sector Solutions include Commercial, Investment Advisory and Financial Management Services High level of customer satisfaction (No.1 ranking in 2013) Asset Liability Management (ALM), Client and Product Desk & Trading Customer focus with full treasury product base (FX, derivatives, fixed income, etc.) Market Risk under IUH standards and controls International Financial Institutions & Funding Itau BBA was recognized in the categories of best bond in the 2012 joint international market, and best debt restructuring

19 Banco Itaú Chile Branch Network Iquique Antofagasta Calama Branches Copiapó La Serena Valparaíso Curicó Talca Santiago Rancagua Chillán Concepción Temuco Los Angeles km Total Retail Loans (U$ Bn) Valdivia Puerto Montt CAGR 17% Punta Arenas Source: Banco Itaú Chile 19

20 Banco Itaú Chile vs. Banking Sector Assets and Liabilities Structure Banco Itaú Chile (US$13.0 Bn) Banking Sector (US$ Bn) 1% 12% 3% 6% 15% 3%1% 9% Assets 78% 71% Cash Loans Investments Others Fixed Assets Liabilities & Equity 10% 10% 3% 12% 12% 59% DDA Deposits Bank Borrowings Other Debt Equity Bonds 9% 3% 6% 16% 46% 20% Source: SBIF, Banco Itaú Chile Note: Data as of Dec

21 Banco Itaú Chile Assets and Liabilities Structure Loan Portfolio (US$ Bn) & Market Share 2.60% 3.04% CAGR 21% 3.23% 3.2% 3.5% 3.95% % % 10.2 Loan Portfolio - Breakdown Banco Itaú Chile Banking Sector 34% 32% 38% 38% 2.00% % 68% 62% 62% Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Loan Market Share Retail Retail: Mortgage+Retail consumer; Corporate: Commercial Corporate Deposit (US$ Bn) & Market Share CAGR 23% 4.40% 4.50% Deposits - Breakdown Banco Itaú Chile 4.00% 2.50% 2.90% 3.00% 3.30% 3.3% % % 83% % 17% Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Time Deposits Demand Deposits Source: SBIF, Banco Itaú Chile Deposit Market Share 21

22 Banco Itaú Chile Revenues: Growth & Segment Breakdown Financial Margin (US$MM) Financial Margen= Net Interest + Net Fees + FX + loan recovery + other income Revenues 2013 Breakdown Treasury 8% Other 6% Corporates 17% Retail 56% Commercial 13% 22

23 Banco Itaú Chile vs. Banking Sector Profitability ROE ROA 18.6% 10.9% 16.2% 10.4% 15.2% 12.0% 18.0% 18.6% 13.3% 13.3% 17.4% 13.0% 14.7% 14.9% 13.9% 1.5% 1.1% 1.3% 0.9% 1.0% 1.2% 1.2% 1.5% 1.4% 1.4% 1.2% 1.2% 1.1% 1.3% 1.2% 11.0% 0.9% Banco Itau Chile Banking Sector Banco Itau Chile Banking Sector Interest Income / Performing Assets 4.4% 4.3% 4.4% 4.2% 4.0% 3.9% 3.9% 3.6% 3.8% 3.9% 3.5% 3.7% 3.6% 3.2% 3.7% 3.0% Source: SBIF, Banco Itaú Chile Banco Itau Chile Banking Sector 23

24 Banco Itaú Chile vs. Banking Sector Capital Adequacy Ratios 14.9% Risk Weighted Assets to Equity 14.1% 13.9% 14.3% 13.3% 13.3% 13.4% 11.7% 12.3% 11.0% Banco Itau Chile Banking Sector BIS Ratio (%) Chilean Banks (Dec-13) Use of Subordinated Debt (% of Equity)* Estado Security Bice BBVA de Chile Source: SBIF, Banco Itaú Chile Itaú Chile Corpbanc a BCI Sistema Santander Scotiaban k Corpbanca BBVA Estado Security BCI * Max. Limit: 50% of Equity Bice Sistema Santander de Chile Scotiabank Itaú Chile 24

25 Banco Itaú Chile vs. Banking Sector Efficiency Ratios & Net Profit 64.1% Operating Ratio (Operating Expenses / Gross Financial Margin) Operating Expenses / Assets 58.8% 49.2% 49.0% 49.9% 50.4% 46.7% 44.6% 49.5% 45.9% 55.3% 55.2% 47.6% 50.6% 49.7% 48.2% 3.1% 2.5% 2.9% 2.2% 2.5% 2.4% 2.6% 2.3% 2.3% 2.3% 2.3% 2.2% 2.3% 2.3% 2.2% 2.0% Banco Itau Chile Banking Sector Banco Itau Chile Banking Sector Net Profit (US$MM) Source: SBIF, Banco Itaú Chile 2006* (*) 2006 considers full year net profit (1) 2009 and 2010 figures are incorporating the new accounting principles issued by the SBIF 25

26 Banco Itaú Chile vs. Banking Sector Asset Quality - Past Due Loans* / Total Loans Loan Loss Reserves / Past Due Loans* 2.90% 2.66% 2.53% 2.10% 1.97% 157% 170% 178% 175% 142% 1.42% 1.19% 0.92% 0.90% 1.13% 82% 94% 92% 108% 121% Banco Itau Chile Banking Sector Banco Itau Chile Banking Sector Source: SBIF *Note: Past Due Loans are defined as all loans due 90 days or more. 26

27 Agenda I. Itaú Unibanco Holding - Overview II. III. IV. Chilean Economy, Banking Sector and Regulatory Framework Banco Itaú Chile Overview Financial Highlights 27

28 Financial Highlights BANCO ITAU CHILE AND SUBSIDIARES Dec-13 (US$MM) Total Assets Total Loans Allowance for Loan Loss Total Deposit Equity Net Profit ROE 13,26% 13,04% 10,95% 13,90% ROA 1,39% 1,20% 1,09% 1,30% Operating Expenses / Financial Margin 49,47% 55,30% 55,24% 48,20% Loan Loss Reserves / Total Loans 2,01% 1,63% 1,64% 1,61% Past Due Loans / Total Loans 1,19% 0,92% 0,90% 1,13% Loan Loss Reserves / Past Due Loans 94,00% 92,00% 108,00% 121,00% 28