Banco Itaú Holding Financeira S.A.
COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO
July 28th, 2004
2
Main Purpose
Founding a “New Company” (Financial
Institution), responsible for structuring and
selling products, financial services and the
like, exclusively to CBD customers
3
“New Company” Structure
“New Company”
Improving and expanding services and products offered to CBD Customers
Initial Capital Base: R$ 150 million
50% 50%
4
Market Impact
Strengthening of the Brazilian consumer credit market
Association of two major domestic groups recognized for their:
Leadership positions in their respective engagement markets
Management excellence
High value brands
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Highlights – Direct consumer credit Itaú
Credit Cards
Credit and Personal Loans
Active customers (million)
Automated Teller Machines
Points of Sale (*)
R$ 2,959 million
R$ 5,465 million
-
-
-
5,951 thousand
7,990 thousand
9.1 million
20,133
3,146
/March 31, 2004
(*) Branches + customer-site branches
Outstanding Quantities
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Estimated Expansion “New Company”
Consumer Credit Contracts
Own Credit Cards (Private Label)
Credit Cards3
Personal Loan Contracts
580 thousand
3.3 million
480 thousand
-
(1) As of March 31, 2004
(2) Compound Annual Growth Rate
(3) Widely accepted credit card brands
Quantities CAGR2
Year 10
Quantities
Current1
3,519 thousand
9.3 million
2,646 thousand
1,600 thousand
22.2%
12.2%
20.9%
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Operation Features
Operating synergy gains
Expansion and improvement of current products and services offered to CBD customers
Private Label credit cards
Widely accepted credit card brands
Direct consumer credit
Personal loans
Installation of financial service units in the 555 existing stores and at those which may come to be established by CBD
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Location of CBD Stores
July2004
209
71
160
55
#Stores
555
60
Piauí
3Ceará
20 2
Paraíba
6
Pernambuco
2Comprebem 8
Bahia
3
Rio de Janeiro
11
17 18
60São Paulo
136 39
142
55
Paraná
2 11
Mato Grosso do Sul
1
Minas Gerais
3
Distrito Federal
12 3
1
Goiás
40 million transactions per month
Gross revenues in 2003: R$ 15 billion (*)
(*) Source: ABRAS (Brazilian Supermarket Industry) – including Sendas S.A. Data of 2003
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“New Company” Management
Board of Directors and Operations Support committee, comprised equally by the shareholders
Chairman of the Board of Directors and the “New Company” appointed by Itaú
Executive Board made up of market professionals, with broad experience in the area
Operating Management under the responsibility of Itaú
Own structure and personnel
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Strategy of the Operation
Expansion of Focus on direct consumer credit
Long term partnership: 20 years, and renewal option
Exclusivity in exploitation of financial products and
services to CBD customers
Strong partnership = greater commercial relationship
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Investment of R$ 455 million, which include goodwill in the amount of R$ 380 million, determined on the basis of forecast future profitability of the New Company
Strengthening of position in the retail financial market
Development of new relationships with the CBD store customers as well as prospecting of new current account customers
Results without any major impact during the first three years of operations.
Main implications on Itaú
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Focus in Retail (world trend)
Better and broader terms for their customers (customer service units inside stores)
Greater in store customer traffic
Increase in revenues arising from the financial products and services
Consolidation of resources of roughly R$ 380 million:
R$ 75 million paid into the “New Company”
Remaining installment balance in the amount of R$ 152.5 million, will be contingent upon achievement of New Company goals over a five-year maximum period
Operating synergies
Main implications on CBD
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The “New Company” is expected to achieve the same
levels of Itaú´s ROE from 2008 on.
Expected return on operations for Itaú: CDI* + 10.5%
per year
Itaú → use of capital excess
Economic Evaluation of the Investment
(*) Interbank Deposit Rate
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Start Up of the Operation
The fulfillment of this operation is dependent upon the approval of the Brazilian Central Bank and the other appropriate authorities
Start up of operations is expected sometime in the second half of 2004.
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On the basis of this operation Itaú and CBD,
proud to be Brazilian companies, reaffirm
their commitment to the Brazilian market in
the assurance that they will extend and
satisfy their customers and create value for
their shareholders.
COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO
Banco Itaú Holding Financeira S.A.
COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO
Banco Itaú Holding Financeira S.A.
July 28th, 2004