Daniela Ueda - Financial Investor Relations, Brazil Roberto Egydio Setubal - CEO Silvio de Carvalho – CFO Jean Marc Etlin - Executive Vice President of Itaú BBA Marco Antunes - Accounting Director

Jason Mullin - Goldman Sachs Daniel Abut - Citi Jorge Kuri - Morgan Stanley Saul Martinez – JPMorgan Marcelo Telles - Credit Suisse Craig Maurer – CLSA Jonathan Prigoff - Equinox Partners Victor Galliano – HSBC Enrique Narvaho – Santander Bank

This is Itaú Unibanco Holding Conference Call. (Operator Instructions). At this time, I would like turn the conference over to Ms. Daniela Ueda of Financial Investor Relations, Brazil. Please go ahead.

Good morning and welcome to Itaú Unibanco Holding Conference Call about 2009 earnings. This conference call is being broadcast live on www.itau-unibanco.com/ir. A slide presentation is also available on this site. Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Actual performance could differ materially from those anticipated in any forward-looking comments as a result of macro economic conditions, market risks and other factors. With us today in this conference call in Sao Paolo are Roberto Egydio Setubal, CEO, Silvio de Carvalho, Chief Financial Officer, Jean Marc Etlin, Itaú BBA’s Executive Vice President and Marco Antunes, Accounting Director. First Mr. Roberto Setubal will comment on the 2009 earnings. Afterwards, management will be available for a question and answer session. It is now my pleasure to turn the call over to Mr. Roberto Setubal.

Good morning and good afternoon for all you. I would like to start this presentation talking about some of the highlights we had this quarter. Starting with the earnings, we had strong earnings $2.8 billion of recurrent net income, which shows a ROE of 22.6%. Our final net income was $3.2 billion and I’ll talk more about that explaining the differences. But most of the extraordinary items were related payment of the federal tax law, which gave incentives to payments and we took advantage of that. I’d like to mention, and we see also this along with the presentation, that we had not used any of the anti-cycle provisions that we have on our balance sheet. So, this was a very strong recurrent earnings because we are not really using any of the provisions we have done previously, and I will talk more about that. One of the important things on the quarter was the NPL ratio, which has improved, both 60 and 90 days and this is a trend, as we announced in the third quarter that will remain for the year. And also I will talk more about that. I’d like to go to page three. And I will not read the numbers, you can see most of the numbers basically talk some of the cycles we have there. First I’d like to call your attention on the ROE of the quarter, 22.6%, very strong and very stable along the year, which shows our capacity to deliver an ROE along the levels in different scenarios. We have also done improvement in our efficiency ratio, if you look our number in 2008 was 45% and now it's down to 42.4%, so good improvement. And also taking advantage of various synergies of our merger between Itaú and Unibanco, and also…

Ladies and Gentlemen we will now being the question-and-answer session. (Operator Instructions). Your first question comes from Jason Mullin - Goldman Sachs.

I have two questions about the guidance that you've presented for 2010. First, could you talk to us about Itaú Unibanco's outlook for the growth for the Brazilian banking sector overall? Do you anticipate that Itaú Unibanco will be able to maintain its market share post merger? And secondly on fee income growth, you talked about a level of 10% to 15%. Now that you've seen normalization in the regulatory environment and the adjustment that we've seen on individual pricing for fees, can you talk about what kind of fees would be driving this growth?

Well we’re expecting, as I mentioned, 5.5% growth in economy. And the numbers shown here in the guidance are numbers that basically have – some lines -- some gaining market share like small companies for instance, and some others stabilization of market share. We are following these numbers properly. We’re not expecting any loss of market share in 2010. Regarding the fees growth, we are basically expecting growth coming from volumes. We are not really implementing these numbers in the major change in the pricing of our services.

Just as a follow up on the fees, is the fee income from the investment banking operation driving a significant portion of that? They were quite strong already. We saw some reasonable revenue already there.

Jean Marc is here so he can talk something about investment bank perspectives for 2010.

Just looking specifically at the investment banking side of the equation, we expect overall, a fairly supportive market in 2010 versus 2009. As you know, half of 2009 was basically a write off and we had a very strong period in the fourth quarter in terms of investment banking business. So, in terms of perspective, I think we sort of have a positive bias, I would say. And as such I think, the contribution of investment banking fees to the overall fees of the group should continue to remain strong.

And Jason, I would also like to call your attention that this number, 10 to 15 is also highly backed up by credit card fees, which credit card, we are expecting to keep to keep the same level of growth that we have had last years, about 18% to 20%, these are the numbers that the markets are expecting for credit card growth.

Your next question comes from Daniel Abut - Citi.

Good morning Roberto. I think you mentioned in your presentation that you expect, as most people, interest rates to start rising in the year. Could you elaborate a bit and give us some color how you see that impacting your margins and double line income. In 2009 we ended up having a pretty solid double line income in large part because your treasury operations contribute very nicely. How do you see things playing in 2010, now that you widely, most people tell you, interest rates are starting to rise?

Well, we are expecting the interest rates to increase as the market appoints, but we do not expect any meaningful, at all, impact of this directly because of the increase in interest rates. -- : Daniel Abut – Citi: Treasury contributed very nicely 2009, but it was (inaudible) interest rate environment.

Right you are right treasury was a great contribution in 2009. We do not expect and we do not count on this for 2010 and 11. I think the levels of gains on markets were very high, we're not expecting to – we're expecting some decrease in that line.

Your next question comes from Jorge Kuri - Morgan Stanley.

I have two questions, the first one is on expenses for the fourth quarter if we add up your personal expenses and administrative expenses, they grew roughly 12% quarter-over-quarter. Can you give us some color on if there were some one timers there obviously the seasonality in the fourth quarter implies stronger growth but it seems that the grow was a bit higher than but seasonality is – anything (inaudible) that we shouldn’t expect to see going forward? The second question is, you're talking about volume growth of around 15% to 20% year-over-year. So I'm assuming that on average growth is going to be closer to 15% for the year with some pressure on margins as you mentioned and much lower trading environment. Are we talking about financial income growth, closer to 10% for the year, what's your expectation for that?

I'm not sure your numbers on expenses, because the numbers that I'm showing on the page 12 shows 7% increase on cost, so you mentioned something like 12%. If you have the slide, we are adding all expenses all together including personal, administrative, other operating expenses, tax expenses and this adds up to $6.7 billion on the fourth quarter. So I am not really sure what numbers are you mentioning.

Well I was just looking at personal expenses plus other admin expenses, personal expenses grew 9.4% and admin expenses grew 14% quarter-over-quarter and those two jumps were the ones I’m trying to understand.

Well personal expenses we can explain very easily. We had a 7% increase in salaries for the whole banking sector on Brazil in September. So the last quarter has really the impact of those expenses there. In addition to that we have extra hours payments in the last quarter giving the, which increases always in the last quarter giving the more intensity active of the economy in this last quarter. So this probably explains most of the variation on personal expenses. On administrative expenses, we have marketing expenses, which usually have seasonal spending higher, the spending is higher in the last quarter. So this explains part of it. In addition we have like I mentioned more intensity. So in areas like energy, water, everything it’s higher and also some services that we have services, we close the year and we have to finalize some contract. Not with (inaudible) we have more number of transaction during the first quarter, it means that the cost higher is related with that.

I'm just trying to understand, when you put together your guidance for long gross loss, a margin contraction loss, much lower treasury operations. What's you expectation for financial income growth, obviously before provisions? If you just do a quick math you'll probably end up with somewhere around 10 to 12% growth in financial income, does that make sense.

We are not giving any guidance on growth on total revenues as you are mentioning but we will have some growth, we are not guiding, this time I don’t have a clear number here to give you, but we will have growth.

Your next question comes from Saul Martinez – JPMorgan. Saul Martinez – JPMorgan: I want to understand the dynamics on your net interest margin of changes in rates little bit more fully, maybe Silvio can help this here. But as I look at your annualized margin this year, excluding treasures, it actually increased over the course of the year. It's 10.3% in fourth quarter of 2008, 6% fourth quarter of 2009 even as rates have come down. And if I look at the components that is -- because the annualized rate on spread sensitive transactions increased meaningfully even and more than offset the impact of lower rates on rate sensitive transaction. All of which would seem to imply that as rates go up, that net net is more of a negative for you in terms of net interest margin, which is a little bit contrary to what was said earlier that higher rates will actually stem the declining in net interest margins. So can you just help us understand how you think about the impact of higher rates on your margin because it looks like lower rates actually benefited you net net in 2009?

So what we saw that’s our financial margin, net interest margin, which was increasing 90%. The reason basically is because we have some increasing of spread during the year, even consider that the interest rates have reduced but we increased the spreads because of the increase in delinquency. It was basically the reason because we had this impact and we have a very good result related with the treasury, you saw that. When you see the movement in the future interest rates, we made sure that we are not expecting that net interest margin, we (saw) any movement during 2010. Just because we have the (inaudible) of the portfolio, that the duration is about 20 months. This will not impact the material circumstances.

So Silvio, the duration on your loans is roughly 20 months? Is that what I heard from you?

Yes.

So basically, it’s just the higher lending spreads gradually impacted, over the course of the year, the spreads on your spread sensitive transactions?

Yes. Only this is not happening immediately. We will have some – it will take some time to appear in the P&L.

And the second question is also a follow up on the treasury results. I think in the past conference call, I asked how to think about a more reasonable run rate for treasuries. And I think it was mentioned that the floor on treasury income, on a quarterly basis, maybe in the neighborhood of $400 million to $500 million for the quarter. Can you just help us understand what’s in that treasury result and how to think about what’s more of core recurring revenue stream and what’s a little bit more volatile on a quarterly basis?

Well, we put on that line all the transactions that we do with market counterparts, market – well, it’s very hard to talk about a number there. I can tell you that this year the number was much stronger than the usual number that we would expect for that kind of line. The numbers can vary a lot and we believe that this was a very strong number for the year of 2009. If you compare 2009 to 2008, you can see that 2008 was $2.1 billion and 2009 $5.6 billion. So it was a major increase. And seeing these numbers of 2009 above the expected number that we can put, we can expect for 2010 much above.

Your next question comes from Marcelo Telles - Credit Suisse.

I have two questions, the first one regarding the growth in your individuals portfolio. Can you elaborate a little bit more on which segments are going to drive the growth, more specifically if you could mention also the vehicle financing segment. And the second question is about the Hipercard. What are your plans for Hipercard going forward? I mean do you see them operating independently in a fully integrated module or do you think at some point, it would make sense eventually to have Hipercard integrated? At least the acquired business should be really (inaudible)?

On the side of the growth on loans, we have just divided into consumers and companies. Companies we have already mentioned that small companies we will outgrow the big companies. We expect growth for big companies but much higher growth for small companies as we put on the screen 18. On the side of consumers we deliver credit card to be one driver, important driver and credit cards will be another driver. Those will be the two ones that will be pushing the number for consumers. We have also mortgages, which would be important number, we grow a lot although the number comes from a very low base and we have a smaller impact in 2010. Hipercard, we like the business, we deliver Hipercard has a lot of potential. We are discussing how to issue more Hipercard for Itaú clients. We have a lot of discussion on that. But we do not have any position on the acquiring site.

Your next question comes from Craig Maurer – CLSA.

I had a quick question and follow up on the prior question, regarding credit card, I was curious what your opinion is on how that business evolves and how the market evolves once the exclusivity agreements roll-off and competition begins with Santander and possibly others?

Well, I have to tell you, I'll ask you to ask this question to Redecard and you know, I am here on the capacity of it -- I will not to comment on Redecard, I can, we are very happy with the investment that we have there. We believe that’s a big company. It’s lots of potential in Brazil to grow. But I will not talk specifically about Redecard operations in this call. I am sorry.

Your next question comes from Jonathan Prigoff - Equinox Partners.

Hi, I had a question about insurance income in the quarter. I notice that the net result of insurance operations was higher, I know some of that’s probably due to the loss ratio in Q4 being lower. But I was wondering if you could talk a little bit more about it and also how the Porto Seguro transaction will affect that one item going forward?

Well, Porto Seguro transactions as you know will affect our numbers because we will be consolidating a steady percent of Porto Seguro in our balance sheet. We will not consolidate 100%. We will consolidate under Brazilian laws 30% which is our participation in that investment. As we have on page 17, the numbers and how they impacted our quarter line-by-line. So you can, these are numbers for the quarter, as you know we started consolidated Porto Seguro this last quarter. So there is not, there is no previous influence on the numbers. so it is the line by line how it impacted our P&L. (inaudible) this is a great company, we are very positive on this bill. The integration is going well, we have already selected the people that we moved to Porto Seguro. So things are moving, we are very positive on that.

So going forward in the summary income statement, the net result of operation, insurance pension plan capitalization, that line item, that’s going on, you didn’t provide guidance on that. So is that going to grow roughly in line with other C income or is it going be moving a little bit definitely.

I don’t have a number here to give you but I think there is no major change if you compare to previous numbers, we are not expecting any movement, any major movement in those lines. Maybe see we can give you more detailed guidance on that more information on that.

I will call you later; I will give you more details about the operation.

Your next question comes from Victor Galliano – HSBC. Victor Galliano – HSBC: Just two questions from me, one on asset quality. In looking at the implication on the improvement and asset quality which we see from your guidance is that corporate credit is going to improve more rapidly than that of the individual credit, is this a market thing, or is this because Itaú Unibanco has been, shall we say more cautious and more conservative in terms of marking down corporate credit during the weaker part of the cycle? So is this something of non-performing loans going back into performing. And secondly on personal expenses and operating expenses generally, and looking at the expansion plan, I just want to confirm, I don't think you do, do you capitalize any of those expansion costs of new branches or will you put those all through the P&L, in other words all those costs in the 3% to 5% guidance that you're giving?

In the first question, we are expecting, as you could see on our guidance for 2010, the same kind of growth on the balance sheet for consumers and companies. Although when you look on the side of companies, you have higher growth on small companies. And when you look on consumers, you have higher growth on credit cards and personal (inaudible). So but basically at the end of day it's much more a market and opportunities that we see than any other thing. I don't have a opinion of, if you have been more conservative than others or not, I think this is very difficult to mention anything on that area. And your other question, no we do not capitalize any kind of expenses. In the year 2010, we are expecting to have expenses, given the merger and the branch unification program, we expect to have additional expenses of R$550 million. This is the net effect of taxes – of the program of unifying the branches. And this is already included in the numbers that we give you on expenses as guidance for 2010. Victor Galliano – HSBC: So, coming back to the first question, I didn’t explain myself very clearly. You’re implying, by the guidance you gave on the accrual basis for line, that asset quality is going to improve more quickly in corporates and in SMEs. Is that because you’ve been more conservative in your book in terms of writing down corporates?

No. Victor Galliano – HSBC: Or it’s just a product of the cycle? The returning cycle and improving growth?

Just a reminder, the big companies, and here you are talking about big companies in Brazil. The have to rely more on the capital market to get funding. They are (inaudible) operations. That’s one of the reasons, because if you look at the (established) fees, you will see that our commissions increased within the quarter. They do have two effects in this line, in big corporate loans. First is, the rate at which the appreciation that they have, that is one of the reasons because of the portfolio decrease. The second, because the demand is more related to the capital markets.

Your next question comes from Enrique (Narvaho) – Santander Bank. Enrique Narvaho – Santander Bank: Well, a great part of my questions were already answered. But I would like to know if Itau already to started selling Porto Seguro products on its branch network and if not when it will start and what is your expectation of commission revenues per year with that?

Well, we have not started as a whole. We are testing some alternatives of how to offer clients the insurance that Porto Seguro is managing. We are creating the channel interaction. We are testing it and indeed, during this year we will be fully serving clients with Porto Seguro product, which is not the case so far. But this will happen along the year. I’m not sure exactly the date, but we have -- and also because we are testing. In the case of revenues we will have commissions of around 30% of premiums of the insurance that we sell on the branch.

Ladies and Gentlemen this concludes today’s question and answer session. Mr Setubal at this time you may proceed with your closing statement sir.

Okay, thank you very much for this first conference call, first year of conference call with Itau Unibanco. I think we had a very good year giving everything that happen during the year. I have to tell you that we are very positive on an integration going very well. We have done a lot of things this year and we will have results of things we have done this year in the coming years. So we are very positive on the position of the bank in-terms of integration, in-terms of competitiveness and thank you all for being here this morning and afternoon for some of you that are in Europe. Thank you, see you, bye.

Thank you. That thus concludes the Unibanco – União de Bancos Brasileiros S.A. and Unibanco Holdings S.A. and Banco Itaú Holding Financeira S.A. audio conference for today. Thank you very much for your participation and have a good day. And thank you for using Chorus Call Brazil.