Exhibit 99.1

MANAGEMENT REPORT – June 30, 2017

To our stockholders:

We present the Management Report of ITAÚ UNIBANCO HOLDING S.A. and its subsidiaries (ITAÚ UNIBANCO HOLDING PRUDENTIAL) for the periods from January 1 to June 30, 2017 and 2016, which were prepared in accordance with BACEN Resolution No. 4,280 of October 31, 2013 and Circular Letter No. 3,701 of March 13, 2014, and fit for the specific purposes of this resolution.

Net income and stockholder’ equity

ITAÚ UNIBANCO HOLDING PRUDENTIAL net income totaled R$ 11,085 million for the year and net earnings per share were R$ 1.70. Consolidated stockholders' equity totaled R$ 120,530 million and the book value per share reached R$ 18.55.

Assets and funds raised

Assets totaled R$ 1,286,367 million and were substantially composed of R$ 501,820 million of Interbank Investments, Securities and Derivative Financial Instruments, and R$ 541,359 million of Loan, Lease and Other Credit Operations and the Foreign Exchange Portfolio. The raised and Managed Funds totaled R$ 2,076,918 million.

Circular letter No. 3,068/01 of BACEN

ITAÚ UNIBANCO HOLDING PRUDENTIAL hereby represents that it has the financial capacity and the intention to hold to maturity securities classified under the line “held-to-maturity securities” in the balance sheet, amounting to R$ 34.5 billion, corresponding to only 15.8% of the total securities and derivative financial instruments held.

Acknowledgements

We thank our stockholders and clients for their support and trust, and our employees for their determination and commitment, which have been essential to reaching these positive results.

São Paulo, August 24, 2017.

Executive Board

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 1.1

ITAÚ UNIBANCO HOLDING S.A.

BOARD OF DIRECTORS	BOARD OF EXECUTIVE OFFICERS
Co-Chairmen	Chief Executive Officer
Pedro Moreira Salles	Candido Botelho Bracher
Roberto Egydio Setubal
Members	Director-Generals
Alfredo Egydio Setubal	Eduardo Mazzilli de Vassimon
Amos Genish	Márcio de Andrade Schettini
Fábio Colletti Barbosa
Geraldo José Carbone
Gustavo Jorge Laboissière Loyola
João Moreira Salles
José Galló	Executive Vice-Presidents
Marco Ambrogio Crespi Bonomi	André Sapoznik
Pedro Luiz Bodin de Moraes	Caio Ibrahim David
Ricardo Villela Marino	Claudia Politanski
AUDIT COMMITTEE	Executive Officers
Chairman	Alexsandro Broedel Lopes
Gustavo Jorge Laboissière Loyola	Fernando Barçante Tostes Malta
	Leila Cristiane Barboza Braga de Melo
	Paulo Sergio Miron
Members
Antonio Francisco de Lima Neto
Diego Fresco Gutierrez
Geraldo Travaglia Filho	Officers
Maria Helena dos Santos Fernandes de Santana	Adriano Cabral Volpini
Rogério Paulo Calderón Peres	Álvaro Felipe Rizzi Rodrigues
	Atilio Luiz Magila Albiero Junior
	Eduardo Hiroyuki Miyaki
FISCAL COUNCIL	Emerson Macedo Bortoloto
Chairman	Gilberto Frussa
José Caruso Cruz Henriques	José Virgilio Vita Neto
	Marcelo Kopel (*)
	Matias Granata
Members	Rodrigo Luis Rosa Couto
Alkimar Ribeiro Moura	Sergio Mychkis Goldstein
Carlos Roberto de Albuquerque Sá	Tatiana Grecco
	(*) Investor Relations Officer.
Accountant
Reginaldo José Camilo
CRC-1SP – 114.497/O-9

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 2.1

ITAÚ UNIBANCO HOLDING S.A.

Prudential Consolidated Balance Sheet (Note 2a)

(In thousands of Reais)

Assets	Note	06/30/2017			06/30/2016
Current assets			865,563,957			822,856,144
Cash and cash equivalents			22,575,276			21,711,321
Interbank investments	4b and 6		282,238,911			264,741,722
Money market			254,973,003			240,249,289
Interbank deposits			27,265,908			24,492,433
Securities and derivative financial instruments	4c, 4d and 7		117,970,469			111,956,549
Own portfolio			89,511,847			52,255,920
Subject to repurchase commitments			4,664,488			23,404,868
Pledged in guarantee			5,650,859			6,143,911
Deposited with the Central Bank			3,857,989			1,344,620
Securities under resale agreements with free movement			4,158,979			5,245,696
Derivative financial instruments			10,126,307			23,561,534
Interbank accounts			92,882,755			72,940,944
Pending settlement			4,087,303			4,062,435
Central Bank deposits			88,607,045			68,698,374
National Housing System (SFH)			6,399			3,856
Correspondents			34,783			45,751
Interbank Onlending			147,225			130,528
Interbranch accounts			49,322			104,458
Loan, lease and other credit operations	8		232,872,521			243,953,309
Operations with credit granting characteristics	4e		248,946,415			263,322,398
(Allowance for loan losses)	4f		(16,073,894	)		(19,369,089	)
Other receivables			114,801,254			105,235,904
Foreign exchange portfolio	9		44,401,903			37,308,957
Income receivable			2,556,212			4,590,830
Transactions with credit card issuers	4e		24,918,815			23,583,911
Negotiation and intermediation of securities			6,686,605			9,929,750
Deferred tax assets	13b I		24,776,036			17,076,212
Escrow deposits	11b and 11d		1,364,500			2,056,974
Sundry	12a		10,097,183			10,689,270
Other assets	4g		2,173,449			2,211,937
Assets held for sale			952,324			701,398
(Valuation allowance)			(371,174	)		(127,096	)
Prepaid expenses	4g and 12b		1,592,299			1,637,635
Long-term receivables			375,382,833			393,158,019
Interbank investments - Interbank deposits	4b and 6		1,548,571			878,696
Money market			101,338			12,486
Interbank deposits			1,447,233			866,210
Securities and derivative financial instruments	4c, 4d and 7		100,062,400			101,894,500
Own portfolio			63,967,047			64,872,173
Subject to repurchase commitments			5,276,261			1,886,126
Pledged in guarantee			7,136,384			5,002,593
Deposited with the Central Bank			-			2,014,588
Securities under resale agreements with free movement			14,848,615			14,482,948
Derivative financial instruments			8,834,093			13,636,072
Interbank accounts - National Housing System (SFH)			4,661			580,262
Loan, lease and other credit operations	8		211,469,562			216,409,611
Operations with credit granting characteristics	4e		230,928,600			234,626,518
(Allowance for loan losses)	4f		(19,459,038	)		(18,216,907	)
Other receivables			61,826,604			72,617,192
Foreign exchange portfolio	9		17,082,571			19,802,064
Deferred tax assets	13b I		26,039,186			35,286,352
Escrow deposits	11b and 11d		11,153,714			9,924,103
Sundry	12a		7,551,133			7,604,673
Other assets - Prepaid expenses	4g and 12b		471,035			777,758
Permanent assets			45,420,029			43,641,532
Investments	4h and 14a I		22,416,269			18,073,401
Investments in affiliates and jointly controlled entities			21,891,157			17,577,035
Other investments			674,629			645,891
(Allowance for losses)			(149,517	)		(149,525	)
Real estate in use	4i and 14b		5,978,346			6,236,771
Real estate in use			3,276,119			3,265,845
Other fixed assets			12,486,447			12,006,717
(Accumulated depreciation)			(9,784,220	)		(9,035,791	)
Goodwill	4j and 14b		794,843			567,916
Intangible assets	4k and 14b		16,230,571			18,763,444
Acquisition of rights to credit payroll			1,004,035			1,045,952
Other intangible assets			29,044,730			28,042,632
(Accumulated amortization)			(13,818,194	)		(10,325,140	)
Total assets			1,286,366,819			1,259,655,695

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 3.1

ITAÚ UNIBANCO HOLDING S.A.

Prudential Consolidated Balance Sheet (Note 2a)

(In thousands of Reais)

Liabilities	Note	06/30/2017			06/30/2016
Current liabilities			769,627,608			710,331,062
Deposits	4b and 10b		252,865,298			250,708,506
Demand deposits			65,453,197			60,664,111
Savings deposits			109,542,150			104,493,158
Interbank deposits			2,453,451			6,138,776
Time deposits			75,414,380			79,412,461
Other deposits			2,120			-
Deposits received under securities repurchase agreements	4b and 10c		252,464,365			198,979,524
Own portfolio			55,075,657			56,910,771
Third-party portfolio			182,994,666			125,981,308
Free portfolio			14,394,042			16,087,445
Funds from acceptances and issuance of securities	4b and 10d		47,679,650			24,769,276
Real estate, mortgage, credit and similar notes			31,649,889			18,472,826
Foreign Borrowing through securities			15,412,640			4,295,808
Structured Operations Certificates			617,121			2,000,642
Interbank accounts			5,276,754			5,206,237
Pending settlement			3,414,056			3,447,091
Correspondents			1,862,698			1,759,146
Interbranch accounts			5,982,067			5,862,660
Third-party funds in transit			5,968,362			5,839,691
Internal transfer of funds			13,705			22,969
Borrowing and onlending	4b and 10e		41,733,080			52,658,696
Borrowing			32,774,125			41,611,831
Onlending			8,958,955			11,046,865
Derivative financial instruments	4d and 7g		8,288,681			18,186,232
Other liabilities			155,337,713			153,959,931
Collection and payment of taxes and contributions			3,971,826			3,934,953
Foreign exchange portfolio	9		45,019,700			39,476,864
Social and statutory	15b II		4,325,277			3,756,789
Tax and social security contributions	4m, 4n and 13c		4,797,139			8,143,816
Negotiation and intermediation of securities			6,524,783			13,309,594
Credit card operations	4e		54,938,650			51,769,113
Subordinated debt	10f		11,848,641			10,723,205
Provisions for contingent liabilities	11b		4,267,764			3,838,897
Sundry	12c		19,643,933			19,006,700
Long-term liabilities			382,320,200			420,735,969
Deposits	4b and 10b		101,715,342			61,004,150
Interbank deposits			232,940			228,369
Time deposits			101,482,402			60,775,781
Deposits received under securities repurchase agreements	4b and 10c		89,093,892			156,074,058
Own portfolio			47,294,796			112,696,983
Free portfolio			41,799,096			43,377,075
Funds from acceptances and issuance of securities	4b and 10d		60,402,532			59,465,510
Real estate, mortgage, credit and similar notes			30,518,385			28,929,838
Foreign Borrowing through securities			26,282,543			28,012,941
Structured Operations Certificates			3,601,604			2,522,731
Borrowing and onlending	4b and 10e		27,796,898			32,602,408
Borrowing			9,562,626			10,700,078
Onlending			18,234,272			21,902,330
Derivative financial instruments	4d and 7g		12,438,355			16,319,864
Other liabilities			90,873,181			95,269,979
Foreign exchange portfolio	9		17,055,453			19,257,329
Tax and social security contributions	4m, 4n and 13c		15,624,032			10,845,406
Subordinated debt	10f		40,255,569			49,558,877
Provisions for contingent liabilities	11b		11,974,340			10,992,412
Sundry	12c		5,963,787			4,615,955
Deferred income	4o		2,143,527			1,714,374
Non-controlling interests	15f		11,745,788			13,241,325
Stockholders' equity	15		120,529,696			113,632,965
Capital			97,148,000			85,148,000
Capital reserves			1,352,881			1,329,803
Revenue reserves			27,405,084			30,613,893
Asset valuation adjustment	4c, 4d and 7d		(2,805,204	)		(2,012,085	)
(Treasury shares)			(2,571,065	)		(1,446,646	)
Total liabilities and stockholders' equity			1,286,366,819			1,259,655,695

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 3.2

ITAÚ UNIBANCO HOLDING S.A.

Prudential Consolidated Statement of Income (Note 2a)

(In thousands of Reais)

		01/01 to			01/01 to
	Note	06/30/2017			06/30/2016
Income from financial operations			70,267,036			69,937,748
Loan, lease and other credit operations			38,047,435			37,900,861
Securities and derivative financial instruments			27,837,646			28,282,198
Foreign exchange operations			553,027			539,033
Compulsory deposits			3,828,928			3,215,656
Expenses of financial operations			(38,440,240	)		(25,378,165	)
Money market			(35,502,051	)		(32,871,049	)
Borrowing and onlending	10e		(2,938,189	)		7,492,884
Income from financial operations before loan and losses			31,826,796			44,559,583
Result of allowance for loan losses	8d I		(8,581,656	)		(11,513,662	)
Expenses for allowance for loan losses			(10,485,647	)		(13,314,788	)
Income from recovery of credits written off as loss			1,903,991			1,801,126
Gross income from financial operations			23,245,140			33,045,921
Other operating revenues (expenses)			(8,166,609	)		(12,823,680	)
Banking service fees	12d		11,416,826			10,978,057
Income from bank charges	12e		5,744,971			5,150,013
Personnel expenses	12f		(10,199,086	)		(9,239,121	)
Other administrative expenses	12g		(8,958,133	)		(8,721,716	)
Tax expenses	4n and 13a II		(3,245,673	)		(4,207,325	)
Equity in earnings of affiliates, jointly controlled entities and other investments	14a II		1,690,877			(2,625,390	)
Other operating revenues	12h		472,101			367,015
Other operating expenses	12i		(5,088,492	)		(4,525,213	)
Operating income			15,078,531			20,222,241
Non-operating income			(181,900	)		13,356
Income before taxes on income and profit sharing			14,896,631			20,235,597
Income tax and social contribution	4n and 13a I		(3,567,745	)		(10,808,608	)
Due on operations for the period			(2,183,691	)		(2,661,331	)
Related to temporary differences			(1,384,054	)		(8,147,277	)
Profit sharing – Management Members - Statutory			(94,893	)		(88,509	)
Non-controlling interests	15f		(149,357	)		(145,433	)
Net income			11,084,636			9,193,047
Weighted average of the number of outstanding shares	15a		6,510,663,755			6,518,802,076
Net income per share – R$			1.70			1.41
Book value per share - R$ (outstanding at 06/30)			18.55			17.42

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 3.3

ITAÚ UNIBANCO HOLDING S.A.

Prudential Statement of Changes in Stockholders’ Equity (Note 15)

(In thousands of Reais)

	Capital		Capital reserves			Revenue reserves			Asset valuation adjustment (Note 7d)			Retained earnings			(Treasury shares)			Total
Balance at 01/01/2016		85,148,000		1,537,219			29,189,479			(1,375,886	)		-			(4,353,380	)		110,145,432
Purchase of treasury shares		-		-			-			-			-			(200,200	)		(200,200	)
Cancellation of shares - ESM April 27, 2016 – Approved on June 7, 2016		-		-			(2,670,000	)		-			-			2,670,000			-
Granting of stock options		-		(33,608	)		-			-			-			436,934			403,326
Granting of options recognized		-		(29,345	)		-			-			-			-			(29,345	)
Share-based payment – variable compensation		-		(144,463	)		-			-			-			-			(144,463	)
Payment of interest on capital on 02/29/2016 – declared after 12/31/2015 - R$ 0.4564 per share		-		-			(2,697,116	)		-			-			-			(2,697,116	)
Asset valuation adjustments:
Change in adjustment to market value		-		-			-			(624,504	)		-			-			(624,504	)
Remeasurements in liabilities of post-employment benefits		-		-			-			(11,695	)		-			-			(11,695	)
Unrealized result of unconsolidated company		-		-			1,845			-			-			-			1,845
Net income		-		-			-			-			9,193,047			-			9,193,047
Appropriations:
Legal reserve		-		-			459,652			-			(459,652	)		-			-
Statutory reserves		-		-			5,834,205			-			(5,834,205	)		-			-
Dividends and interest on capital		-		-			495,828			-			(2,899,190	)		-			(2,403,362	)
Balance at 06/30/2016		85,148,000		1,329,803			30,613,893			(2,012,085	)		-			(1,446,646	)		113,632,965
Changes in the period		-		(207,416	)		1,424,414			(636,199	)		-			2,906,734			3,487,533
Balance at 01/01/2017		97,148,000		1,589,343			24,487,354			(2,975,797	)		-			(1,882,353	)		118,366,547
Purchase of treasury shares		-		-			-			-			-			(1,282,092	)		(1,282,092	)
Granting of stock options		-		(23,635	)		-			-			-			593,380			569,745
Granting of options recognized		-		(46,256	)		-			-			-			-			(46,256	)
Share-based payment – variable compensation		-		(166,571	)		-			-			-			-			(166,571	)
Payment of interest on capital on 03/03/2017 – declared after 12/31/2016 - R$ 0.6591 per share		-		-			(5,047,692	)		-			-			-			(5,047,692	)
Financial Guarantees Provided - CMN Resolution nº 4,512 (Note 8c)		-		-			-			-			(220,902	)		-			(220,902	)
Asset valuation adjustments:
Change in adjustment to market value		-		-			-			116,553			-			-			116,553
Remeasurements in liabilities of post-employment benefits		-		-			-			(66,856	)		-			-			(66,856	)
Foreign exchange variation on investments abroad		-		-			-			120,896			-			-			120,896
Net income		-		-			-			-			11,084,636			-			11,084,636
Appropriations:
Legal reserve		-		-			554,232			-			(554,232	)		-			-
Statutory reserves		-		-			4,842,862			-			(4,842,862	)		-			-
Dividends and interest on capital		-		-			2,568,328			-			(5,466,640	)		-			(2,898,312	)
Balance at 06/30/2017		97,148,000		1,352,881			27,405,084			(2,805,204	)		-			(2,571,065	)		120,529,696
Changes in the period		-		(236,462	)		2,917,730			170,593			-			(688,712	)		2,163,149

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 3.4

ITAÚ UNIBANCO HOLDING S.A.

Prudential Consolidated Statement of Cash Flows

(In thousands of Reais)

		01/01 to			01/01 to
	Note	06/30/2017			06/30/2016
Adjusted net income			8,058,497			40,882,081
Net income			11,084,636			9,193,047
Adjustments to net income:			(3,026,139	)		31,689,034
Granted options recognized and share-based payment – variable compensation			(212,827	)		(173,808	)
Adjustment to market value of securities and derivative financial instruments (assets/liabilities)	7h		2,667,495			(2,838,084	)
Effects of changes in exchange rates on cash and cash equivalents			(20,003,500	)		14,825,909
Allowance for loan losses	8c		10,485,647			13,314,788
Interest and foreign exchange expense related to operations with subordinated debt			2,697,701			(2,769,773	)
Depreciation and amortization	14b		2,802,759			2,496,676
Interest expense from provision for contingent and legal liabilities	11b		726,092			799,715
Provision for contingent and legal liabilities	11b		1,718,614			1,703,334
Interest income from escrow deposits	11b		(91,810	)		(203,364	)
Deferred taxes (excluding hedge tax effects)			2,605,693			576,531
Equity in earnings of affiliates, jointly controlled entities and other investments	14a I		(1,690,877	)		2,625,390
Interest and foreign exchange income from available-for-sale securities			(4,396,346	)		1,886,948
Interest and foreign exchange income from held-to-maturity securities			(618,779	)		1,326,458
(Gain) loss from sale of available-for-sale financial assets	7i		(212,221	)		403,839
(Gain) loss from sale of investments			1,448			(13,339	)
(Gain) loss from sale of foreclosed assets			237,593			51,989
(Gain) loss from sale of fixed assets			5,204			10,363
Non-controlling interests			149,357			145,433
Other			102,618			(2,479,971	)
Change in assets and liabilities			(47,103,698	)		(18,132,965	)
(Increase) decrease in assets			(52,993,511	)		65,783,012
Interbank investments			(35,305,815	)		16,350,309
Securities and derivative financial instruments (assets/liabilities)			(7,438,313	)		10,104,872
Compulsory deposits with the Central Bank of Brazil			(2,906,583	)		(2,142,375	)
Interbank and interbranch accounts (assets/liabilities)			1,306,224			(74,770	)
Loan, lease and other credit operations			(1,366,528	)		38,317,976
Other receivables and other assets			(3,492,138	)		1,181,108
Foreign exchange portfolio and negotiation and intermediation of securities (assets/liabilities)			(3,790,358	)		2,045,893
(Decrease) increase in liabilities			5,889,813			(83,915,977	)
Deposits			23,022,578			(54,953,337	)
Deposits received under securities repurchase agreements			(27,011,212	)		(2,685,275	)
Funds for issuance of securities			14,365,516			(3,522,548	)
Borrowing and onlending			(6,083,931	)		(25,738,745	)
Credit card operations (assets/liabilities)			(2,677,213	)		(923,642	)
Collection and payment of taxes and contributions			3,701,461			3,705,768
Other liabilities			2,478,851			3,161,011
Deferred income			133,601			(252,596	)
Payment of income tax and social contribution			(2,039,838	)		(2,706,613	)
Net cash provided by (used in) operating activities			(39,045,201	)		22,749,116
Interest on capital / dividends received from affiliated companies			745,612			3,809,189
Funds received from sale of available-for-sale securities			7,674,587			11,021,148
Funds received from redemption of held-to-maturity securities			2,047,442			1,638,550
Disposal of assets not for own use			(68,615	)		149,477
Disposal of investments			(1,403	)		15,136
Cash and cash equivalents net assets and liabilities arising from the merger with CorpBanca	2c		-			5,869,160
Cash and cash equivalents net assets and liabilities due from Recovery acquisition	2c		-			(713,914	)
Sale of fixed assets			16,623			6,080
Termination of intangible asset agreements			18,329			4,911
Purchase of available-for-sale securities			(1,284,950	)		(9,300,554	)
Purchase of held-to-maturity securities			(95,579	)		(1,202,652	)
Purchase of investments			(206,324	)		(2,832,601	)
Purchase of fixed assets	14b		(370,441	)		(284,825	)
Disposal (Purchase) of intangible assets	14b		(432,142	)		461,701
Net cash provided by (used in) invesment activities			8,043,139			8,640,805
Decrease in subordinated debt			(8,013,566	)		(7,596,476	)
Non-controlling interests	15f		171,269			707,390
Granting of stock options			569,745			403,326
Purchase of treasury shares			(1,282,092	)		(200,200	)
Dividends and interest on capital paid to Non-controlling interests			(143,228	)		(47,175	)
Dividends and interest on capital paid			(7,567,167	)		(5,092,915	)
Net cash provided by (used in) financing activities			(16,265,039	)		(11,826,050	)
Net increase (decrease) in cash and cash equivalents			(47,267,101	)		19,563,872
Cash and cash equivalents at the beginning of the period			93,514,459			85,717,090
Effects of changes in exchange rates on cash and cash equivalents			20,003,500			(14,825,909	)
Cash and cash equivalents at the end of the period	4a and 5		66,250,858			90,455,053

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 3.5

ITAÚ UNIBANCO HOLDING S.A.

Notes to the Prudential Consolidated Financial Statements

Exercise from January 1 to June 30, 2017 and 2016

(In thousands of Reais)

Note 1 - Operations

Itaú Unibanco Holding S.A. (ITAÚ UNIBANCO HOLDING) is a publicly-held company which, together with its affiliated and subsidiaries companies, operates in Brazil and abroad, with all types of banking activities, through its commercial, investment, real estate loan, finance and investment credit, and lease portfolios, including foreign exchange operations. By means of its subsidiaries, it directly or indirectly carries out many other activities, with an emphasis on Insurance, Private Pension Plans, Capitalization, Securities Brokerage and Administration of Credit Cards, Consortia, Investment Funds and Managed Portfolios.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.1

Note 2 – Presentation and Consolidation of the financial statements

a) Presentation

The Consolidated Financial Statements of ITAÚ UNIBANCO HOLDING PRUDENTIAL have been prepared in accordance with CMN Resolution No. 4,280 of October 31, 2013 and BACEN Circular No. 3,701 of March 13, 2014, and they fit for the specific purposes of this resolution.

The definitions and criteria for the valuation and recognition of assets, liabilities, income and expenses set forth in the regulation embodied in the Accounting Plan for National Financial System Institutions (COSIF) were applied. For entities not subject to the rules of COSIF, necessary adjustments were made to ensure that the valuation and recognition of assets, liabilities, income and expenses could properly reflected the required regulation.

As set forth in the sole paragraph of article 7 of BACEN Circular No. 3,068, of November 8, 2001, securities classified as trading securities (Note 4c) are presented in the Prudential Consolidated Balance Sheet under Current Assets regardless of their maturity dates.

Lease Operations are presented, at present value, in the Prudential Consolidated Balance Sheet, and the related income and expenses, which represent the financial result of these operations, are presented, grouped together, under loan, lease and other loan operations in the Statement of Income. Advances on exchange contracts are reclassified from Other Liabilities – Foreign exchange portfolio to Loan Operations. The foreign exchange result is presented on an adjusted basis, with the reclassification of expenses and income, in order exclusively to represent the impact of variations and differences of rates on the balance sheet accounts denominated in foreign currencies.

ITAU UNIBANCO HOLDING PRUDENTIAL prepares its Consolidated Financial Statements, which are available on its Investor Relations website (www.itau.com.br/relacoes-com-investidores).

b) Consolidation

As set forth by article 1^st of CMN Resolution No. 4,280, of October 31, 2013, the consolidated financial statements of ITAÚ UNIBANCO HOLDING PRUDENTIAL include the consolidation of entities located either in Brazil or abroad, over which it has direct or indirect control, except for the insurance group which is not governed by item 6, article 1^st of CMN Resolution No. 4,280.

Intercompany transactions, intercompany balances and intercompany results have been eliminated on consolidation. The investment funds of which ITAÚ UNIBANCO HOLDING PRUDENTIAL’s companies are the main beneficiaries or holders of principal obligations are consolidated. The investments in these fund portfolios are classified by type of transaction and were distributed by type of security, based on the same categories to which these securities were originally allocated. The effects of foreign exchange variations on investments abroad are classified under the heading Securities and derivative financial instruments in the Statement of Income for subsidiaries with the same functional currency as the parent company, and in Asset valuation adjustment for subsidiaries with a functional currency different from that of the parent company(Note 4s).

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.2

The Consolidated Financial Statements comprise ITAÚ UNIBANCO HOLDING PRUDENTIAL its direct and indirect subsidiaries. We present below the main subsidiaries which together represent over 95% of total consolidated assets:

					Interest % in voting						Interest % in total
		Functional	Country of		capital at						capital at
		currency	Incorporation	Activity	06/30/2017			06/30/2016			06/30/2017			06/30/2016
Domestic
Banco Itaú BBA S.A.			Brazil	Financial Institution		100.00	%		100.00	%		100.00	%		100.00	%
Banco Itaú Consignado S.A.	(2)		Brazil	Financial Institution		100.00	%		60.00	%		100.00	%		60.00	%
Banco Itaucard S.A.			Brazil	Financial Institution		100.00	%		100.00	%		100.00	%		100.00	%
Banco Itauleasing S.A.			Brazil	Financial Institution		100.00	%		100.00	%		100.00	%		100.00	%
Dibens Leasing S.A. - Arrendamento Mercantil			Brazil	Leasing		100.00	%		100.00	%		100.00	%		100.00	%
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento	(1)		Brazil	Consumer Finance Credit		50.00	%		50.00	%		50.00	%		50.00	%
Hipercard Banco Múltiplo S.A.			Brazil	Financial Institution		100.00	%		100.00	%		100.00	%		100.00	%
Itaú Corretora de Valores S.A.			Brazil	Broker		100.00	%		100.00	%		100.00	%		100.00	%
Itaú Unibanco S.A.			Brazil	Financial Institution		100.00	%		100.00	%		100.00	%		100.00	%
Luizacred S.A. Soc. Cred. Financiamento Investimento	(1)		Brazil	Consumer Finance Credit		50.00	%		50.00	%		50.00	%		50.00	%
Redecard S.A.			Brazil	Acquier		100.00	%		100.00	%		100.00	%		100.00	%
Foreign
Itaú Corpbanca Colombia S.A.	(Note 2c)	Colombian Peso	Colombia	Financial Institution		23.67	%		22.25	%		23.67	%		22.25	%
Banco Itaú (Suisse) S.A.		Swiss Franc	Switzerland	Financial Institution		100.00	%		100.00	%		100.00	%		100.00	%
Banco Itaú Argentina S.A.		Argentine Peso	Argentina	Financial Institution		100.00	%		100.00	%		100.00	%		100.00	%
Banco Itaú Paraguay S.A.		Guarani	Paraguay	Financial Institution		100.00	%		100.00	%		100.00	%		100.00	%
Banco Itaú Uruguay S.A.		Uruguayan Peso	Uruguay	Financial Institution		100.00	%		100.00	%		100.00	%		100.00	%
Itau Bank, Ltd.		Real	Cayman Islands	Financial Institution		100.00	%		100.00	%		100.00	%		100.00	%
Itaú BBA Colombia S.A. Corporacion Financiera		Colombian Peso	Colombia	Financial Institution		100.00	%		100.00	%		100.00	%		100.00	%
Itau BBA International plc		Dollar	United Kingdom	Financial Institution		100.00	%		100.00	%		100.00	%		100.00	%
Itau BBA USA Securities Inc.		Real	United States	Broker		100.00	%		100.00	%		100.00	%		100.00	%
Itaú CorpBanca	(Note 2c)	Chilean Peso	Chile	Financial Institution		35.71	%		33.58	%		35.71	%		33.58	%

(1) As from June 30, 2016 they are fully consolidated to ensure the total coverage of the entity’s risks, as determined by the Central Bank of Brazil.

(2) New company name of Banco Itaú BMG Consignado S.A..

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.3

c) Business development

Gestora de Inteligência de Crédito

On January 21, 2016, ITAÚ UNIBANCO HOLDING PRUDENTIAL, through its subsidiary Itaú Unibanco S.A. (Itaú Unibanco), executing a non-binding Memorandum of Understanding with Banco Bradesco S.A., Banco do Brasil S.A., Banco Santander S.A. and Caixa Econômica Federal, aiming at the creation of a credit intelligence bureau that will develop a databank with the purpose of aggregating, reconciling and addressing master file and credit data of individuals and legal entities.

The Gestora de Inteligência de Crédito, located in the city of São Paulo, was organized as a corporation, and each of its shareholders will have a 20% interest in its capital.

After compliance with the precedent conditions and approval by proper regulatory authorities, the operation was consummated on June 14, 2017. Ownership interest acquired will be assessed under the Equity Method.

Banco Itaú BMG Consignado S.A.

On September 29, 2016, ITAÚ UNIBANCO HOLDING PRUDENTIAL, through its subsidiary Itaú Unibanco S.A. (Itaú Unibanco), entered into a purchase and sale agreement with Banco BMG S.A. (BMG) for acquisition of a 40% interest in the capital of Banco Itaú BMG Consignado S.A. (Itaú BMG Consignado), corresponding to BMG’s total interest in Itaú BMG Consignado, for the amount of R$ 1,460,406, and now holds 100% of Itaú BMG Consignado.

Itaú Unibanco and BMG will maintain an association by means of the execution of a new commercial agreement for the distribution of payroll loans of Itaú BMG Consignado and its affiliates, on an exclusive basis, through certain distribution channels linked to BMG and its affiliates.

After compliance with the precedent conditions and approval by proper regulatory authorities, the transaction was completed on December 28, 2016.

Currently, Itaú Consignado S.A. (current corporate name of Itaú BMG Consignado) is controlled by ITAÚ UNIBANCO HOLDING PRUDENTIAL and, therefore, this acquisition did not have accounting effects on its results on initial recognition.

ConectCar Soluções de Mobilidade Eletrônica S.A.

On October 21, 2015, ITAÚ UNIBANCO HOLDING PRUDENTIAL, through its subsidiary Redecard S.A. (Rede), entered into a share purchase and sale commitment with Odebrecht Transport S.A. for the acquisition of 50% of capital stock of ConectCar Soluções de Mobilidade Eletrônica S.A. (ConectCar) for the amount of R$ 170 million.

ConectCar, located in Barueri, São Paulo, is an institution engaged in own payment arrangements and a provider of intermediation services for automatic payment of tolls, fuels and parking lots. It was organized in 2012 as the result of a partnership between Odebrecht Transport S.A. and Ipiranga Produtos de Petróleo S.A., a company controlled by Ultrapar Participações S.A., which currently holds the remaining 50% of ConectCar’s capital stock.

After compliance with the precedent conditions and approval of proper regulatory authorities, the operation was closed on January 29, 2016. The investment acquired is measured using the equity method.

The acquisition did not have accounting effects on the results of ITAÚ UNIBANCO HOLDING PRUDENTIAL on initial recognition.

Recovery do Brasil Consultoria S.A.

At December 31, 2015, ITAÚ UNIBANCO HOLDING PRUDENTIAL, through its subsidiary Itaú Unibanco S.A., entered into an agreement for purchase and sale and other covenants with Banco BTG Pactual S.A. (BTG) and with Misben S.A. to acquire 89.08% of interest in the capital stock of Recovery do Brasil Consultoria S.A. (Recovery), corresponding to the total interest of the parties in Recovery, for R$ 734,755.

In the same transaction, ITAÚ UNIBANCO HOLDING PRUDENTIAL agreed on the acquisition of approximately 70% of the portfolio of R$ 38 billion in credit rights related to the recovery of portfolios held by BTG, for the amount of R$ 570 million.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.4

Established in 2000 in Argentina and present in Brazil since 2006, Recovery is the market leader in the management of overdue receivables portfolio. Recovery’s activities consist in prospecting and assessing portfolios, structuring and managing operations, acting in all segments, from individual to corporate loans, with financial and non-financial institutions, and offering a competitive advantage to its clients.

After the compliance with the precedent conditions and approval by regulatory authorities, the transaction was closed on March 31, 2016.

The acquisition did not have accounting effects on the results of ITAÚ UNIBANCO HOLDING PRUDENTIAL on initial recognition.

On July 7, 2016, ITAÚ UNIBANCO HOLDING PRUDENTIAL, through its subsidiary Itaú Unibanco S.A., acquired from International Finance Corporation, a 6.92% additional interest, for the amount of R$ 59,186 and now holds 96% of Recovery´s capital.

Itaú CorpBanca

On January 29, 2014, ITAÚ UNIBANCO HOLDING PRUDENTIAL, through its subsidiary Banco Itaú Chile S.A. (BIC), entered into a Transaction Agreement with CorpBanca and its controlling stockholders (Corp Group), establishing the terms and conditions of the merger of operations of BIC and CorpBanca in Chile and in the other jurisdictions in which CorpBanca operates.

CorpBanca is a commercial bank headquartered in Chile, which also operates in Colombia and Panama, focused on individuals and large and middle-market companies. In 2015, an accordance with the Chilean Superintendence of Banks, it was one of the largest private banks in Chile, in terms of overall size of loan portfolio, with a market share of 7.1%.

This agreement represents an important step in ITAÚ UNIBANCO HOLDING PRUDENTIAL’s internationalization process.

The merger was approved by the stockholders of CorpBanca and BIC and by all proper regulatory authorities in Chile, Brazil, Colombia and Panama. As set forth in the amendment to the Transaction Agreement, entered into on June 2, 2015, the parties closed the operation on April 1^st, 2016, when they had full conditions for the corporate reorganization process.

The operation was consummated by means of:

i. Increase in BIC’ capital in the amount of R$ 2,308,917 concluded on March 22, 2016;

ii. Merger of BIC into CorpBanca, with the cancellation of BIC’s shares and issue of new shares by CorpBanca, at the rate of 80,240 shares of CorpBanca for one share of BIC, so that interests resulting from the merger, named Itaú CorpBanca, are 33.58% for ITAÚ UNIBANCO HOLDING PRUDENTIAL and 33.13% for Corp Group.

The following corporate structure resulted from the transaction:

Ownership interest
ITAÚ UNIBANCO HOLDING PRUDENTIAL	33.58	%
Corp Group	33.13	%
Other non-controlling stockholders	33.29	%

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.5

The Itaú CorpBanca is controlled as of April 1^st, 2016 by ITAÚ UNIBANCO HOLDING PRUDENTIAL. On the same date, ITAU UNIBANCO HOLDING PRUDENTIAL entered into a shareholders’ agreement with Corp Group, which sets forth, among others, the right of ITAÚ UNIBANCO HOLDING PRUDENTIAL and Corp Group to appoint members for the Board of Directors of Itaú CorpBanca in accordance to their interests in capital stock, and this group of shareholders will have the right to appoint the majority of members of the Board of Directors of Itaú CorpBanca and ITAÚ UNIBANCO HOLDING PRUDENTIAL will be entitled to appoint the majority of members elected by this block. Except for certain strategic matters of Itaú CorpBanca, on which Corp Group has the right of veto, the members of the board of directors appointed by Corp Group should vote as recommended by ITAÚ UNIBANCO HOLDING PRUDENTIAL.

The fair value of the consideration transferred by ITAÚ UNIBANCO HOLDING PRUDENTIAL due to its interest in Itaú CorpBanca was R$ 10,517,487, based on the quotation of CorpBanca’s shares listed on the Santiago Stock Exchange.

The consideration transferred resulted in goodwill for future expected profitability of R$ 6,590,106 (Recorded in Intangible assets - Note 14b III). Additionally, a goodwill of R$ 675,362 was generated in Brazil due to the difference between the equity value of BIC and the equity value of Itaú CorpBanca resulting from the merger. The goodwill will be amortized over 10 years. This amount will not be deducted for tax purposes, except in case of disposal or merger of the investment.

The table below summarizes the main assets acquired and liabilities assumed on the acquisition date.

CorpBanca

	04/01/2016
Current Assets and Long Term Receivables		110,630,546
Cash and cash equivalents		5,869,160
Interbank investments		3,897,540
Securities and derivative financial instruments		19,632,775
Interbank accounts and Interbranch accounts		154,230
Loan, lease and other credit operations		75,543,990
Other receivables and Other assets		5,532,851
Permanent assets		4,056,062
Investments		71,517
Fixed assets and operating lease		494,001
Goodwill and Intangible assets		3,490,544
Total assets		114,686,608
Current Liabilities and Long Term Liabilities		107,324,988
Deposits		68,387,102
Deposits received under securities repurchase agreements		4,052,218
Funds from acceptances and issuance of securities		12,161,294
Interbank accounts and Interbranch accounts		259,445
Borrowing and onlending		6,410,574
Derivative financial instruments		5,749,062
Other liabilities		10,305,293
Total liabilities		107,324,988
Plan net assets		7,361,620
Non-controlling interests		1,487,970
Net assets assumed		5,873,650
Adjustment to fair value of net assets assumed		(1,946,269	)
Net Assets Assumed at Fair Value		3,927,381

Contingent liabilities have not been recorded due to the acquisition.

Additionally, on October 26, 2016, ITAÚ UNIBANCO HOLDING PRUDENTIAL through its controlled subsidiary, ITB Holding Brasil Participações Ltda., it has indirectly acquired 10,908,002,836 shares of Itaú CorpBanca, for the equivalent of R$ 288.1 million.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.6

The right to acquire such shares was set forth in the April 1^st, 2016 shareholders’ agreement between ITAÚ UNIBANCO HOLDING PRUDENTIAL and Corp Group and certain of its affiliates. As a consequence, ITAÚ UNIBANCO HOLDING PRUDENTIAL’s ownership in Itaú CorpBanca increased from approximately 33.58% to 35.71%, without altering its current governance.

This transaction was effected upon the acquisition of 100% of the capital stock of CGB II SpA, the then holder of the shares. All the required regulatory approvals were obtained in October of 2016.

The acquisitions did not have accounting effects on the results of ITAÚ UNIBANCO HOLDING PRUDENTIAL on initial recognition.

MaxiPago

On September 3, 2014, ITAÚ UNIBANCO HOLDING PRUDENTIAL, through its subsidiary Redecard S.A. (Rede) entered into a share and purchase agreement with the controlling shareholders of MaxiPago Serviços de Internet S.A.(MaxiPago), a gateway company – network interconnection for mobile electronic payments.

On the same date, subscription and payment of 19,336 shares (33.33%) and acquisition of 24,174 shares (41.67%) were carried out, so that Rede became the holder of 43,510 common shares, representing 75% of total voting capital of MaxiPago.

After the compliance with the precedent conditions and approval by proper regulatory authorities, the operation was closed on January 8, 2015.

The difference between the amount paid and net assets at fair value resulted in the recognition of goodwill due to expected future profitability.

Purchase price	14,500
(-) Fair value of identified assets and liabilities	(3,994	)
(=)Goodwill	10,506

In the second semester of 2016, ITAÚ UNIBANCO HOLDING PRUDENTIAL, through its subsidiary Rede, increased the capital of MaxiPago by 21.98% and acquired additional interest ownership of 3.02%, for R$ 2,000, and now holds 100% of MaxiPago’s capital stock.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.7

Note 3 – Requirements regarding capital and fixed asset limits

ITAÚ UNIBANCO HOLDING CONSOLIDATED is subject to the requirements of the Central Bank of Brazil (BACEN), which determines minimum capital requirements, procedures to assess information on globally systemic important banks (G-SIB), fixed asset limits, loan limits, accounting practices and compulsory deposit requirements, thereby requiring banks to conform to the regulation based on the Basel Accord for capital adequacy purposes. Additionally, both the National Council of Private Insurance (CNSP) and the Superintendence of Private Insurance (SUSEP) issue regulations on capital requirements that impact our insurance operations, and private pension and capitalization plans.

Further details on the Capital Management of ITAÚ UNIBANCO HOLDING CONSOLIDATED, which are not an integral part of the financial statements, can be found on the website www.itau.com.br/investor-relations Corporate Governance / Risk and Capital Management – Pillar 3.

a) Capital Requirements in Place and in Progress

ITAÚ UNIBANCO HOLDING’s minimum capital requirements comply with the set of BACEN resolutions and circulars, which established in Brazil the global capital requirement standards known as Basel III. They are expressed as indices obtained from the ratio between available capital - represented by Referential Equity (PR), or Total Capital, composed of Tier I Capital (which comprises Common Equity and Additional Tier I Capital) and Tier II Capital, and the Risk-Weighted Assets (RWA).

For purposes of calculating these minimum capital requirements, the total RWA is determined as the sum of the risk weighted asset amounts for credit, market, and operational risks. ITAÚ UNIBANCO HOLDING CONSOLIDATED uses the standardized approaches to calculate credit and operational risk-weighted asset amounts.

As from September 1, 2016, BACEN authorized ITAÚ UNIBANCO HOLDING to use market risk internal models to determine the total amount of regulatory capital (RWA_MINT), replacing the RWA_MPAD portion, as set forth in BACEN Circular 3,646.

From January 1, 2017 to December 31, 2017, the minimum capital ratio required is 9.25%, and, following the gradual decrease schedule, it will be 8% on January 1, 2019.

The table below shows Basel III implementation calendar for Brazil, as defined by BACEN, in which the figures refer to the percentage of ITAÚ UNIBANCO HOLDING CONSOLIDATED risk-weighted assets.

	As from January 1st
Schedule for Basel III implementation	2015			2016			2017			2018			2019
Common Equity Tier I		4.5	%		4.5	%		4.5	%		4.5	%		4.5	%
Tier I		6.0	%		6.0	%		6.0	%		6.0	%		6.0	%
Total capital		11	%		9.875	%		9.25	%		8.625	%		8.0	%
Additional Common Equity Tier I (ACP)		0.0	%		0.625	%		1.50	%		2.375	%		3.5	%
ACPconservation		0	%		0.625	%		1.25	%		1.875	%		2.5	%
ACPcountercyclical (*)		0	%		0	%		0	%		0	%		0	%
ACPsystemic		0	%		0	%		0.25	%		0.5	%		1.0	%
Common Equity Tier I + ACP		4.5	%		5.125	%		6.0	%		6.875	%		8.0	%
Total capital + ACP		11.0	%		10.5	%		10.75	%		11.0	%		11.5	%
Prudential adjustment deductions		40	%		60	%		80	%		100	%		100	%

(*) ACP _{Countercyclical} is triggered during the credit cycle expansion phase, and, currently, according to BACEN Circular 3.769, the amount required for the countercyclical capital is zero. Furthermore, in the event of increase in ACPCountercyclical, the new percentage will be effective only twelve months after it is announced.

Additionally, in March 2015, Circular 3,751, of March 19, 2015, of the BACEN came into force, It provides for the calculation of the relevant indicators for assessing the Global Systemically Important Banks (G-SIBs) of financial institutions in Brazil. Information on the values of the G-SIBs indicators, which are not part of its financial statements, can be found at www.itau.com.br/investor-relations, “Corporate Governance” section, “Global Systemically Important Banks”.

In March 2017, Additional Common Equity Tier I Capital of systemic importance (ACP_Systemic) went into effect, regulated by BACEN Circular 3.768, of October 29, 2015. The purpose of ACP_Systemic is to reduce the probability of insolvency of an institution systemically important in the domestic level (D-SIB: Domestic Systemically Important Bank) and the impact on the stability of the financial system and economy. The calculation of ACP_Systemic associates the system importance, represented by the institution’s total exposure, with the Gross Domestic Product (GDP).

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.8

Further details on ACP_Systemic, which are not part of the financial statements, can be viewed on the website www.itau.com.br/investor-relations, “Corporate Governance” / Risk and Capital Management – Pillar 3.

b) Capital management governance

The Board of Directors is the main body in the management of ITAÚ UNIBANCO HOLDING’s capital and it is responsible for approving the institutional capital management policy and guidelines for the institution’s capitalization level. The Board is also responsible for fully approving the ICAAP report (Internal Capital Adequacy Assessment Process), which is intended to assess the adequacy of ITAÚ UNIBANCO HOLDING’s capital.

The “Public Access Report – Capital Management“, which are not part of its financial statements, which provides the guidelines established in the institutional capital management policy can be accessed at www.itau.com.br/investor-relations, under Corporate Governance, Regulations and Policies.

c) Composition of capital

The Referential Equity (PR) used to monitor compliance with the operational limits imposed by BACEN is the sum of three items, namely:

· Common Equity Tier I: the sum of capital, reserves and retained earnings, less deductions and prudential adjustments.

· Additional Tier I Capital: consists of instruments of a perpetual nature, which meet eligibility requirements. Together with Common Equity Tier I it makes up Tier I.

· Tier II: consists of subordinated debt instruments with defined maturity dates that meet eligibility requirements. Together with Common Equity Tier I and Additional Tier I Capital, makes up Total Capital.

The table below presents the composition of the referential equity segregated into Common Equity Tier I, Additional Tier I Capital and Tier II Capital, taking into consideration their respective prudential adjustments, as required by current regulations.

Composition of Reference Equity	06/30/2017			06/30/2016
Stockholders’ equity of Itaú Unibanco Holding S.A. (Consolidated)		118,379,456			110,586,685
Non-controlling interests		11,745,788			13,241,325
Changes in Subsidiaries´ Interests in Capital Transactions		2,150,240			3,046,280
Consolidated stockholders’ equity (BACEN)		132,275,484			126,874,290
Common Equity Tier I prudential adjustments		(18,459,368	)		(15,410,251	)
Common Equity Tier I		113,816,116			111,464,039
Additional Tier I Prudential Adjustments		49,446			685,032
Additional Tier I Capital		49,446			685,032
Tier I (Common Equity Tier I + Additional Tier I Capital)		113,865,562			112,149,071
Instruments Eligible to Comprise Tier II		19,722,563			23,488,432
Tier II prudential adjustments		65,928			197,869
Tier II		19,788,491			23,686,301
Reference Equity (Tier I + Tier II)		133,654,053			135,835,372

d) Risk-Weighted Assets (RWA)

According to CMN Resolution No. 4,193, as amended, minimum capital requirements are calculated by the RWA amount, which is obtained by adding the terms listed below:

RWA = RWA_CPAD + RWA_MINT + RWA_OPAD

RWA_CPAD = portion related to exposures to credit risk, calculated using the standardized approach;

RWA_MINT = portion related to capital required for market risk, compose of the maximum between the internal model and 90% of the standardized model, regulated by BACEN Circulars 3,646 and 3,674;

RWA_OPAD =portion related to capital required for operational risk, calculated based on the standardized approach.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.9

The table below shows the amounts of risk weighted assets for Credit Risk (RWA_CPAD):

Risk exposures	06/30/2017		06/30/2016
Exposure Weighted by Credit Risk (RWACPAD)		642,616,355		690,963,020
a) Per Weighting Factor (FPR):
FPR at 2%		132,955		160,533
FPR at 20%		6,962,653		7,121,222
FPR at 35%		13,114,680		11,396,184
FPR at 50%		43,328,038		47,094,990
FPR at 75%		137,414,645		141,481,929
FPR at 85%		87,749,877		116,582,126
FPR at 100%		301,571,083		314,034,393
FPR at 250%		32,718,795		28,267,445
FPR at 300%		4,407,893		7,967,899
FPR up to 1250%(*)		3,547,039		1,744,447
Derivatives -  Changes in the Counterparty Credit Quality		5,999,508		8,858,296
Derivatives – Future potential gain		5,669,189		6,253,556
b) Per Type:		642,616,355		690,963,020
Securities		43,523,940		44,191,232
Loan operations – Retail		109,075,216		113,499,965
Loan operations – Non-retail		237,793,998		254,015,710
Joint Liabilities - Retail		186,221		206,671
Joint Liabilities - Non-Retail		44,901,854		48,712,820
Loan commitments – Retail		28,147,213		27,773,255
Loan commitments – Non-retail		8,977,310		11,009,175
Other exposures		170,010,604		191,554,192

(*) Taking into consideration the application of the “F” factor required by Article 29 of BACEN Circular 3,644.

The table below presents the market risk weighted assets (RWA_MINT)

Composition of Market Risk-Weighted Assets (RWA_MINT)

	06/30/2017(1)			06/30/2016(2)
Market Risk-Weighted Assets (RWAMPAD)		30,499,541			17,709,478
Operations subject to interest rate variation		28,682,155			15,655,797
Fixed rate denominated in reais		4,373,818			3,507,483
Foreign exchange coupons		17,706,588			7,033,063
Price index coupon		6,601,746			5,115,251
Interest rate coupon		3			-
Operations subject to commodity price variation		331,241			510,066
Operations subject to stock price variation		272,856			312,405
Operations subject to risk exposures in gold, foreign currency and foreign exchange variation		1,213,289			1,231,210
Capital benefit – Internal models		(3,049,954	)
Market Risk-Weighted Assets (RWAMINT)		27,449,587
Market risk–weighted assets calculated by internal methodology		22,630,423

(1) Market risk weighted assets calculated based on internal models.

(2) Market risk weighted assets calculated based on standardized models.

At June 30, 2017, RWA_MINT totaled R$ 27,450 million, which corresponds to 90% of RWA_MPAD, higher than the need for capital verified through internal models, which totaled R$ 22,630 million.

The table below presents the composition of the operational risk weighted assets (RWA_OPAD):

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.10

	06/30/2017		06/30/2016
Operational Risk-Weighted Assets (RWAOPAD)		54,417,146		43,447,870
Retail		11,252,291		7,989,605
Commercial		24,549,209		23,069,045
Corporate finance		2,581,300		2,946,218
Negotiation and sales		4,135,005		577,407
Payments and settlements		3,667,021		3,419,408
Financial agent services		3,729,326		3,070,052
Asset management		4,487,685		2,374,561
Retail brokerage		15,309		1,574

e) Capital Adequacy

ITAÚ UNIBANCO HOLDING CONSOLIDATED, through the ICAAP, assesses the adequacy of its capital to face the incurred risks, for ICAAP, capital is composed by regulatory capital for credit, market and operational risks and by the necessary capital to face other risks.

In order to ensure the soundness of ITAÚ UNIBANCO HOLDING CONSOLIDATED and the availability of capital to support business growth, maintains PR levels above the minimum level required to face risks, as evidenced by the Common Equity, Tier I Capital and Basel ratios.

Taking into consideration the capital base on June 30, 2017, should the Basel III rules established by the Central Bank of Brazil be applied immediately and fully, the core capital ratio would be 14.5% (14.1% on June 30, 2016, including the use of tax credits), including the merger of Citibank and XP Investimentos and the use of tax credits.

Composition of Referential Equity (PR)	06/30/2017		06/30/2016
Tier I		113,865,562		112,149,071
Common Equity Tier I		113,816,116		111,464,039
Additional Tier I Capital		49,446		685,032
Tier II		19,788,491		23,686,301
Deductions				-
Reference Equity		133,654,053		135,835,372
Minimum Referential Equity Required		67,014,686		74,271,886
Surplus Capital in relation to the Minimum Referential Equity Required		66,639,367		61,563,486
Additional Common Equity Tier I Required (ACPRequired)		10,867,246		4,700,752
Reference equity calculated for covering the interest rate risk of operations not classified in the trading portfolio (RBAN)		2,366,093		1,820,229

The table below shows the Basel and Fixed Asset Ratios:

	06/30/2017			06/30/2016
Basel Ratio		18.4	%		18.1	%
Tier I		15.7	%		14.9	%
Common Equity Tier I		15.7	%		14.8	%
Additional Tier I Capital		0.0	%		0.1	%
Tier II		2.7	%		3.2	%
Fixed Asset Ratio		24.0	%		24.4	%
Surplus Capital in Relation to Fixed Assets		34,772,638			34,834,406

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.11

f) Capital for insurance activity

In July 2015, the National Council of Private Insurance (CNSP) issued CNSP Resolution No. 321, which, among other things, addresses the minimum capital requirements for underwriting, credit, operational and market risks for insurers, open private pension entities, capitalization companies and reinsurers.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.12

Note 4 – Summary of the main accounting practices

a) Cash and cash equivalents - For the purpose of the Consolidated Statement of Cash Flows, this item includes cash and current accounts in banks (considered in the heading cash and cash equivalents), interbank deposits and securities purchased under agreements to resell – funded positions that have original maturities of up to 90 days.

b) Interbank investments, Remunerated restricted credits – Brazilian Central Bank, Remunerated deposits, Deposits received under securities repurchase agreements, funds from acceptance and issuance of securities, Borrowing and onlending, Subordinated debt and Other receivables and payables – Operations with fixed remuneration and charges are accounted for at present value. Operations with post-fixed or floating remuneration and charges are accounted for at the adjusted principal amount. Operations subject to foreign exchange variation are accounted for at the corresponding amount in local currency. Liabilities are presented net of the transaction costs incurred, when relevant, calculated pro rate die.

c) Securities - Recorded at the cost of acquisition restated by the index and/or effective interest rate and presented in the Balance Sheet, according to BACEN Circular No. 3,068, of November 8, 2001. Securities are classified into the following categories:

· Trading securities – securities acquired to be actively and frequently traded, and adjusted to market value, with a counter-entry to the results for the period;

· Available-for-sale securities – securities that can be negotiated but are not acquired to be actively and frequently traded. They are adjusted to their market value with a counter-entry to an account disclosed in stockholders’ equity;

· Held-to-maturity securities – securities, except for non-redeemable shares, for which the bank has the financial condition and intends or is required to hold them in the portfolio up to their maturity, are recorded at cost of acquisition, or market value, whenever these are transferred from another category. The securities are adjusted using the accrual method through their maturity date, not being adjusted to market value.

Gains and losses on available-for-sale securities, when realized, are recognized at the trade date in the statement of income, with a counter-entry to a specific stockholders’ equity account.

Decreases in the market value of available-for-sale and held-to-maturity securities below their related costs, resulting from non-temporary reasons, are recorded in results as realized losses.

d) Derivative financial instruments - these are classified on the date of their acquisition, according to management's intention of using them either as a hedge or not, according to BACEN Circular No. 3,082, of January 30, 2002. Transactions involving financial instruments, carried out upon the client’s request, for their own account, or which do not comply with the hedging criteria (mainly derivatives used to manage the overall risk exposure), are stated at market value, including realized and unrealized gains and losses, which are recorded directly in the Statement of Income.

The derivatives that are used for protection against risk exposure or to modify the characteristics of financial assets and liabilities, which have changes in market value highly associated with those of the items being protected at the beginning and throughout the duration of the contract, and which are found effective to reduce the risk related to the exposure being protected, are classified as a hedge, in accordance with their nature:

· Market Risk Hedge – financial assets and liabilities, as well as their related financial instruments, are accounted for at their market value plus realized and unrealized gains and losses, which are recorded directly in the Statement of Income.

· Cash Flow Hedge - the effective amount of the hedge of financial assets and liabilities, as well as their related financial instruments, are accounted for at their market value plus realized and unrealized gains and losses, net of tax effects, when applicable, and recorded in a specific account in stockholders’ equity. The ineffective portion of the hedge is recorded directly in the Statement of Income.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.13

· Net Investment Hedge of Foreign Operations - accounted for similarly to cash flow hedge, i.e. the portion of gains or losses on a hedging instrument that is determined to be an effective hedge is recognized in stockholders’ equity, and reclassified to income for the period in the event of the disposal of the foreign operation. The ineffective portion is recognized in income for the period.

e) Loan, lease and other credit operations (operations with credit granting characteristics) – These transactions are recorded at present value and calculated pro rata die based on the variation of the contracted index and interest rate, and are recorded on the accrual basis until the 60th day overdue in financial companies, according to the estimate of receipt. After the 60th day, income is recognized upon the effective receipt of installments. Credit card operations include receivables arising from the purchases made by cardholders. The funds related to these amounts are recorded in Other Liabilities – Credit Card Operations, which also include funds arising from other credits related to transactions with credit card issuers.

f) Allowance for loan losses - the balance of the allowance for loan losses was recorded based on a credit risk analysis, at an amount considered sufficient to cover loan losses according to the rules determined by CMN Resolution No. 2,682 of December 21, 1999, which are:

· Provisions are recorded from the date loans are granted, based on the client’s risk rating and on the periodic quality evaluation of clients and industries, and not only in the event of default;

· Taking into account default exclusively, the write-off as losses occur after 360 days of credits have matured or after 540 days for operations that mature after a period of 36 months.

g) Other assets - these assets are mainly comprised of assets held for sale relating to real estate available for sale, own real estate not in use and real estate received as payment in kind, which are adjusted to market value through the set-up of a provision, according to current regulations; and prepaid expenses, corresponding to disbursements, the benefit of which will occur in future periods.

From January 1, 2015, ITAÚ UNIBANCO HOLDING PRUDENTIAL adopts the option provided for in BACEN Circular No. 3,693, of December 20, 2013, which establishes accounting procedures for the compensation of local correspondents in connection with credit origination. These compensation amounts for local correspondents in connection with transactions originated after January 1^st, 2017 will be fully recorded as expenses for the period.

h) Investments – investments in subsidiary and affiliated companies are accounted for based on the equity method. The consolidated financial statements of foreign branches and subsidiaries are adapted to comply with Brazilian accounting practices and converted into Reais. Other investments are recorded at cost and adjusted to market value by making a provision in accordance with current standards.

i) Fixed assets - As provided for in CMN Resolution No. 4,535, of November 24, 2016, these correspond to proprietary tangible assets and leasehold improvements, provided that they were used to carry out the company`s activities for a period of time longer than one year, and they should be recorded at fair value and adjusted for impairment, if applicable. Fair value comprises the purchase or construction price on demand, plus any import taxes and taxes not recoverable upon purchase, directly attributable costs required for the operation, and the initial estimate of costs of disassembling and removal of the asset and restoration of the place it is located, if the institution agrees to bear such costs at the asset purchase date. Monthly recognized depreciation takes into account the systematic allocation of the depreciated amount over the useful life of the asset.

j) Goodwill – corresponds to the amount paid in excess for the purchase of investments and is amortized based on expected future profitability or as realized. It is tested semiannually for impairment.

k) Intangible assets – Corresponds to non-monetary assets identified as intangible, purchased or developed by ITAÚ UNIBANCO HOLDING PRUDENTIAL, intended to be held by the company or exercised with that purpose, as provided for by CMN Resolution No. 4,534, of November 24, 2016. It is composed of: (i) the goodwill amount paid on the acquisition of the company, transferred to intangible assets in view of the transfer of the acquirer’s equity by the acquired, as set forth by Law No. 9,532, of December 10, 1997, to be amortized based on the period defined in the appraisal reports; (ii) usage rights and rights acquired to credit payrolls and partnership agreements, amortized over the terms of the contracts or to the extent that the economic benefits flow to the company; and (iii) software and customer portfolios, amortized over terms varying from five to ten years.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.14

l) Impairment of assets – a loss is recognized when there is clear evidence that assets are stated at a non-recoverable value. This procedure is adopted semiannually.

m) Contingent assets and liabilities and legal liabilities – tax and social security - assessed, recognized and disclosed according to the provisions set forth in CMN Resolution No. 3,823 of December 16, 2009, and BACEN Circular Letter No. 3,429 of February 11, 2010.

I - Contingent assets and liabilities

Refer to potential rights and obligations arising from past events for which materialization depends on uncertain future events:

· Contingent assets - not recognized, except upon evidence ensuring a high reliability level of realization, usually represented by claims awarded a final and unappealable judgment and confirmation of the recoverability of the claim through receipt of amounts or offset against another liability;

· Contingent liabilities - basically arise from administrative proceedings and lawsuits inherent in the normal course of business filed by third parties, former employees and governmental bodies, in connection with civil, labor, tax and social security lawsuits and other risks. These contingencies are calculated on a conservative basis, usually recorded based on the opinion of legal advisors and considering the probability that financial resources shall be required to settle the obligation, the amount of which may be estimated with sufficient certainty. Contingencies are classified either as probable, for which provisions are recognized; possible, which are disclosed but not recognized; and remote, for which recognition or disclosure are not required. Any contingent amounts are measured through the use of models and criteria which allow adequate measurement, in spite of the uncertainty of their terms and amounts.

Escrow deposits are restated in accordance with the current legislation.

Contingencies guaranteed by indemnity clauses in privatization processes and with liquidity are only recognized upon judicial notification with the simultaneous recognition of receivables, without any effect on results.

II - Legal liabilities – tax and social security

Represented by amounts payable related to tax liabilities, the legality or constitutionality of which are subject to judicial defense, recognized in the full amount under discussion.

Liabilities and related escrow deposits are adjusted in accordance with the current legislation.

n) Provision for Financial Guarantees Provided – Recognized based on the expected loss model, in an amount sufficient to cover any probable losses over the whole guarantee period. As of January 1^st, 2017, it is recorded in liabilities with a counter-entry to income for the period, in accordance with CMN Resolution No. 4,512 of July 28, 2016. Any adjustments arising from the initial application of said resolution were recorded with a counter-entry to Stockholders’ Equity.

o) Taxes - these provisions are calculated in accordance with to current legislation at the rates shown below, using the related calculation bases.

Income tax	15.00	%
Additional income tax	10.00	%
Social contribution (1)	20.00	%
PIS (2)	0.65	%
COFINS (2)	4.00	%
ISS up to	5.00	%

(1) On October 06, 2015, Law No. 13,169, a conversion of Provisional Measure No. 675, which increased the Social Contribution tax rate from 15.00% to 20.00% until December 31, 2018, for financial institutions, insurance companies and credit card management companies, was introduced. For the other companies, the tax rate remains at 9.00%.

(2) For non-financial subsidiaries that fall into the non-cumulative calculation system, the PIS rate is 1.65% and COFINS rate is 7.60%.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.15

p) Deferred income – this refers to: (i) unexpired interest received in advance that is recognized in income as earned, and (ii) the negative goodwill on acquisition of investments arising from expected future losses, which has not been absorbed in the consolidation process.

q) Transactions with Non-Controlling Stockholders – Changes in ownership interest in subsidiaries, which do not result in loss of ownership control, are recorded as capital transactions, and any difference between the amount paid and the amount corresponding to the non-controlling stockholders is directly recorded in the Consolidated Stockholders` Equity.

r) Post-employments benefits

Pension plans - defined benefit plans

The liability (or asset, as the case may be) recognized in the consolidated balance sheet with respect to the defined benefit plan corresponds to the present value of the defined benefit obligations on the balance sheet date less the fair value of the plan assets. The defined benefit obligation is annually calculated by an independent actuarial consulting company using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated amount of future cash flows of benefit payments based on the Brazilian treasury long term securities denominated in Reais and with maturity periods similar to the term of the pension plan liabilities.

The following amounts are recognized in the Consolidated Statement of Income:

· current service cost – defined as the increase in the present value of obligations resulting from employee service in the current period;

· interest on the net amount of assets (liabilities) of defined benefit plans is the change, during the period, in the net amount recognized in assets and liabilities, due to the time elapsed, which comprises the interest income on plan assets, interest expense on the obligations of the defined benefit plan and interest on the asset ceiling effects.

Actuarial gains and losses arise from the non-realization of the actuarial assumptions established in the latest actuarial evaluation as compared to those effectively carried out, as well as the effects of changes in such assumptions. Gains and losses are fully recognized in asset valuation adjustments.

Pension plans - defined contribution

For defined contribution plans, contributions to plans made by ITAÚ UNIBANCO HOLDING PRUDENTIAL, through pension plan funds, are recognized as an expenses when due.

Other post-employment benefit obligations

Certain companies that merged into ITAÚ UNIBANCO HOLDING PRUDENTIAL over the past few years were sponsors of post-employment healthcare benefit plans and ITAÚ UNIBANCO HOLDING PRUDENTIAL is contractually committed to maintaining these benefits over specific periods, as well as in relation to the benefits granted due to a judicial ruling.

Similarly to the defined benefit pension plans, these obligations are assessed annually by independent and qualified actuaries, and the costs expected from these benefits are accrued during the length of service. Gains and losses arising from adjustments and changes in actuarial assumptions are debited from or credited to stockholders’ equity in Asset Valuation adjustments in the period in which they occur.

s) Foreign currency translation

I- Functional and presentation currency

The Consolidated financial statements of ITAÚ UNIBANCO HOLDING PRUDENTIAL are presented in Reais, which is its functional and presentation currency. For each subsidiary and investment in associates and joint ventures, ITAÚ UNIBANCO HOLDING PRUDENTIAL defined the functional currency, as provided for in CVM Resolution Nº 4,524, of September 29, 2016.

The assets and liabilities of subsidiaries are translated as follows:

· Assets and liabilities are translated at the closing rate at the balance sheet date;

· Income and expenses are translated at monthly average exchange rates.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.16

Equity in the earnings of subsidiaries abroad is recognized as follows:

· For those with functional currency equal to Real: Income for the period:

· For those with functional currency equal to Real:

a) Income for the period; Portion related to the subsidiary’s effective income; and

b) Stockholders’ equity: Portion related to foreign exchange adjustments arising from the translation process, net of tax effects.

II  - Foreign Currency Transactions

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the consolidated statement of income as part of securities and derivative financial instruments.

For subsidiaries abroad with functional currency equal to Real, any operations carried out in a currency other than their respective functional currencies will be translated at the foreign currency rates of the respective trial balance or balance sheet of ITAÚ UNIBANCO HOLDING PRUDENTIAL for monetary items, assets and liabilities recognized at fair or market value and for items not classified as monetary, provided that the subsidiary’s functional currency is equal to the Real. For other cases, operations are translated at the foreign exchange rate at the transaction date.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.17

Note 5 - Cash and cash equivalents

For purposes of Statement of Cash Flows, cash and cash equivalents of ITAÚ UNIBANCO HOLDING PRUDENTIAL are composed of the following:

	06/30/2017		06/30/2016
Cash and cash equivalents		22,575,276		21,711,321
Interbank deposits		20,207,857		17,436,990
Securities purchased under agreements to resell – Funded position		23,467,725		51,306,742
Total		66,250,858		90,455,053

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.18

Note 6 - Interbank investments

	06/30/2017												06/30/2016
	0 - 30		31 - 180		181 - 365		Over 365		Total		%		Total		%
Money market		198,551,941		56,421,062		-		101,338		255,074,341		89.9		240,261,775		90.5
Funded position (*)		23,794,513		18,875,935		-		48,577		42,719,025		15.1		76,851,834		28.9
Financed position		171,362,301		8,141,967		-		52,761		179,557,029		63.2		126,134,842		47.5
With free movement		5,657,393		8,141,967		-		-		13,799,360		4.8		13,037,526		4.9
Without free movement		165,704,908		-		-		52,761		165,757,669		58.4		113,097,316		42.6
Short position		3,395,127		29,403,160		-		-		32,798,287		11.6		37,275,099		14.0
Interbank deposits		20,656,900		5,612,404		996,604		1,447,233		28,713,141		10.1		25,358,643		9.5
Total		219,208,841		62,033,466		996,604		1,548,571		283,787,482				265,620,418
% per maturity term		77.2		21.9		0.4		0.5
Total at 06/30/2016		200,557,699		60,576,558		3,607,465		878,696		265,620,418
% per maturity term		75.5		22.8		1.4		0.3

^(*) Includes R$ 3,574,712 (R$ 8,586,241 at 06/30/2016) related to money market with free movement, in which securities are restricted to guarantee transactions at the B3 and BACEN.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.19

Note 7 – Securities and derivative financial instruments (assets and liabilities)

See below the composition by Securities and Derivatives type, maturity and portfolio already adjusted to their respective market values.

a) Summary per maturity

	06/30/2017																																06/30/2016
				Adjustment to market value
				reflected in:
	Cost									Market value			%		0 - 30			31 - 90			91 - 180			181 - 365			366 - 720			Over 720 days			Market value
				Results			Stockholders’  equity
Government securities - domestic		122,256,873			394,687			401,244			123,052,804			56.3		3,014,146			935,463			1,066,396			12,608,117			20,947,578			84,481,104			99,238,400
Financial treasury bills		33,634,991			8,668			(140	)		33,643,519			15.3		-			919,841			-			1,744,348			1,947,994			29,031,336			13,133,639
National treasury bills		28,549,123			73,026			171,752			28,793,901			13.2		2,979,558			-			714,095			9,667,902			6,492,978			8,939,368			19,988,793
National treasury notes		30,149,342			207,942			144,102			30,501,386			14.0		6,492			15,253			19,604			501,868			6,619,417			23,338,752			33,000,115
National treasury/securitization		208,458			(223	)		18,285			226,520			0.1		54			360			26			97			228			225,755			232,786
Brazilian external debt bonds		29,714,959			105,274			67,245			29,887,478			13.7		28,042			9			332,671			693,902			5,886,961			22,945,893			32,883,067
Government securities - abroad		23,017,491			175,780			(68,637	)		23,124,634			10.6		1,880,882			706,292			2,366,976			4,655,713			6,180,831			7,333,940			15,737,369
Argentina		1,429,353			86,952			-			1,516,305			0.7		1,024,238			62,688			103,631			191,278			10,094			124,376			669,747
Chile		5,872,229			(89	)		3,448			5,875,588			2.7		234,664			-			-			560,372			1,332,497			3,748,055			3,947,063
Colombia		3,663,819			88,606			8,886			3,761,311			1.7		60,212			-			217,877			630,476			8,358			2,844,388			4,003,503
Korea		2,954,495			-			1			2,954,496			1.4		-			-			1,005,073			500,369			1,449,054			-			1,672,171
Denmark		2,281,907			-			(1	)		2,281,906			1.0		-			-			331,572			1,457,921			492,413			-			1,385,813
Spain		2,940,948			-			-			2,940,948			1.3		357,310			324,970			-			407,883			1,850,785			-			753,221
United States		1,679,803			80			(15,122	)		1,664,761			0.8		-			-			344,001			256,463			612,615			451,682			1,655,931
Netherlands		-			-			-			-			0.0		-			-			-			-			-			-			100,090
Mexico		9,372			117			-			9,489			0.0		-			-			-			-			-			9,489			2,565
Paraguay		1,781,296			-			(71,775	)		1,709,521			0.8		94,146			268,623			360,252			574,457			406,108			5,935			1,149,687
Uruguay		403,576			89			5,922			409,587			0.2		110,312			50,011			4,570			76,494			18,878			149,322			389,470
Other		693			25			4			722			0.0		-			-			-			-			29			693			8,108
Corporate securities		53,782,834			(163,568	)		(724,235	)		52,895,031			24.4		4,470,016			1,624,164			2,977,966			3,146,404			6,072,679			34,603,802			61,677,674
Shares		2,553,809			(236,265	)		192,612			2,510,156			1.2		2,510,156			-			-			-			-			-			1,775,364
Rural product note		1,519,043			-			7,919			1,526,962			0.7		23,137			157,706			47,525			163,166			136,399			999,029			1,366,340
Bank deposit certificates		571,612			536			(77	)		572,071			0.3		162,345			150,153			195,720			17,838			41,284			4,731			1,017,499
Securitized real estate loans		15,634,446			(1,061	)		(19,641	)		15,613,744			7.2		4,329			179,019			-			108,983			722,858			14,598,555			17,436,580
Fund quotas		1,006,039			4,533			-			1,010,572			0.5		1,010,572			-			-			-			-			-			1,101,656
Credit rights		20,677			-			-			20,677			0.0		20,677			-			-			-			-			-			-
Fixed income		805,965			1,871			-			807,836			0.4		807,836			-			-			-			-			-			965,731
Variable income		179,397			2,662			-			182,059			0.1		182,059			-			-			-			-			-			135,925
Debentures		21,833,608			53,824			(969,900	)		20,917,532			9.6		245,324			245,246			628,600			902,953			2,533,710			16,361,699			20,982,709
Eurobonds and others		7,001,409			8,359			57,025			7,066,793			3.2		55,670			506,316			783,944			1,516,182			1,924,910			2,279,771			9,177,887
Financial bills		640,794			-			(279	)		640,515			0.3		-			74,030			-			30,127			536,358			-			6,978,306
Promissory notes		2,155,512			-			9,626			2,165,138			1.0		341,776			104,396			1,081,547			407,155			177,160			53,104			1,083,103
Other		866,562			6,506			(1,520	)		871,548			0.4		116,707			207,298			240,630			-			-			306,913			758,230
Subtotal - securities		199,057,198			406,899			(391,628	)		199,072,469			91.3		9,365,044			3,265,919			6,411,338			20,410,234			33,201,088			126,418,846			176,653,443
Trading securities		81,739,154			406,899			-			82,146,053			37.7		6,822,217			1,051,313			1,518,324			4,362,572			14,799,920			53,591,707			59,560,904
Available-for-sale securities		82,797,404			-			(391,628	)		82,405,776			37.8		2,311,640			1,836,518			4,550,495			7,040,142			15,621,392			51,045,589			80,990,108
Held-to-maturity securities(*)		34,520,640			-			-			34,520,640			15.8		231,187			378,088			342,519			9,007,520			2,779,776			21,781,550			36,102,431
Derivative financial instruments		15,109,719			3,850,681			-			18,960,400			8.7		5,446,457			1,048,234			1,481,391			2,150,225			2,134,892			6,699,201			37,197,606
Total securities and derivative financial instruments (assets)		214,166,917			4,257,580			(391,628	)		218,032,869			100.0		14,811,501			4,314,153			7,892,729			22,560,459			35,335,980			133,118,047			213,851,049
Derivative financial instruments (liabilities)		(18,656,954	)		(2,070,082	)		-			(20,727,036	)		100.0		(4,195,008	)		(1,062,378	)		(1,348,488	)		(1,682,807	)		(4,194,863	)		(8,243,492	)		(34,506,096	)

(*) Unrecorded adjustment to market value in the amount of R$ 745,583 (R$ (460,076) at 06/30/2016) according to Note 7e.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.20

b) Summary by portfolio

	06/30/2017
			Restricted to
	Own portfolio		Repurchase agreements		Free portfolio		Pledged guarantees (*)		Central Bank		Derivative financial instruments		Total
Government securities - domestic		91,649,704		4,873,307		18,625,372		4,046,432		3,857,989		-		123,052,804
Financial treasury bills		30,362,149		1,575,044		-		1,706,326		-		-		33,643,519
National treasury bills		21,712,303		3,152,296		-		71,313		3,857,989		-		28,793,901
National treasury notes		28,451,523		145,967		-		1,903,896		-		-		30,501,386
National treasury/securitization		226,520		-		-		-		-		-		226,520
Brazilian external debt bonds		10,897,209		-		18,625,372		364,897		-		-		29,887,478
Government securities - abroad		17,954,857		216,313		592		4,952,872		-		-		23,124,634
Argentina		1,323,178		166,799		-		26,328		-		-		1,516,305
Chile		5,840,623		29,277		-		5,688		-		-		5,875,588
Colombia		2,381,371		-		592		1,379,348		-		-		3,761,311
Korea		1,947,730		-		-		1,006,766		-		-		2,954,496
Denmark		916,673		-		-		1,365,233		-		-		2,281,906
Spain		2,051,080		-		-		889,868		-		-		2,940,948
United States		1,391,881		-		-		272,880		-		-		1,664,761
Mexico		9,489		-		-		-		-		-		9,489
Paraguay		1,683,752		20,237		-		5,532		-		-		1,709,521
Uruguay		408,358		-		-		1,229		-		-		409,587
Other		722		-		-		-		-		-		722
Corporate securities		43,874,333		4,851,129		381,630		3,787,939		-		-		52,895,031
Shares		2,485,431		-		-		24,725		-		-		2,510,156
Rural product note		1,526,962		-		-		-		-		-		1,526,962
Bank deposit certificates		565,991		1,876		-		4,204		-		-		572,071
Securitized real estate loans		15,613,744		-		-		-		-		-		15,613,744
Fund quotas		1,010,198		-		-		374		-		-		1,010,572
Credit rights		20,677		-		-		-		-		-		20,677
Fixed income		807,462		-		-		374		-		-		807,836
Variable income		182,059		-		-		-		-		-		182,059
Debentures		12,316,785		4,849,253		-		3,751,494		-		-		20,917,532
Eurobonds and other		6,678,021		-		381,630		7,142		-		-		7,066,793
Financial bills		640,515		-		-		-		-		-		640,515
Promissory notes		2,165,138		-		-		-		-		-		2,165,138
Other		871,548		-		-		-		-		-		871,548
Subtotal - securities		153,478,894		9,940,749		19,007,594		12,787,243		3,857,989				199,072,469
Trading securities		70,416,796		4,252,043		4,108,124		3,369,090		-		-		82,146,053
Available-for-sale securities		55,213,472		5,688,706		12,085,449		9,418,149		-		-		82,405,776
Held-to-maturity securities		27,848,626		-		2,814,021		4		3,857,989		-		34,520,640
Derivative financial instruments		-		-		-		-		-		18,960,400		18,960,400
Total securities and derivative financial instruments (assets)		153,478,894		9,940,749		19,007,594		12,787,243		3,857,989		18,960,400		218,032,869
Total securities and derivative financial instruments (assets) – 06/30/2016		117,128,093		25,290,994		19,728,644		11,146,504		3,359,208		37,197,606		213,851,049

(*) Represent securities deposited with Contingent Liabilities (Note 11b), Stock Exchanges and the Clearing House for the Custody and Financial Settlement of Securities.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.21

c) Trading securities

See below the composition of the portfolio of trading securities by type, stated at cost and market value and by maturity term.

	06/30/2017																					06/30/2016
	Cost		Adjustment to market value (in results)			Market value		%		0 - 30		31 - 90		91 - 180		181 - 365		366 - 720		Over 720 days		Market value
Government securities - domestic		74,283,540		394,687			74,678,227		91.0		2,964,162		935,463		1,066,341		3,633,047		14,540,140		51,539,074		54,357,040
Financial treasury bills		33,102,028		8,668			33,110,696		40.4		-		919,841		-		1,409,706		1,947,994		28,833,155		10,681,495
National treasury bills		13,549,566		73,026			13,622,592		16.6		2,929,574		-		714,095		1,027,514		2,717,062		6,234,347		12,149,739
National treasury notes		20,961,180		207,942			21,169,122		25.8		6,492		15,253		19,549		501,828		6,438,975		14,187,025		26,133,295
National treasury/securitization		1,295		(223	)		1,072		0.0		54		360		26		97		228		307		2,789
Brazilian external debt bonds		6,669,471		105,274			6,774,745		8.2		28,042		9		332,671		693,902		3,435,881		2,284,240		5,389,722
Government securities - abroad		3,174,029		175,780			3,349,809		4.0		1,078,139		95,342		291,198		563,658		23,042		1,298,430		2,019,095
Argentina		1,429,130		86,952			1,516,082		1.8		1,024,238		62,688		103,631		191,055		10,094		124,376		669,484
Chile		176,874		(89	)		176,785		0.2		53,852		-		-		68		4,561		118,304		88,611
Colombia		1,441,470		88,606			1,530,076		1.9		49		-		107,972		372,327		8,358		1,041,370		1,127,865
United States		79,515		80			79,595		0.1		-		-		79,595		-		-		-		77,153
Mexico		9,372		117			9,489		0.0		-		-		-		-		-		9,489		2,565
Paraguay		-		-			-		0.0		-		-		-		-		-		-		51,373
Uruguay		37,182		89			37,271		0.0		-		32,654		-		208		-		4,409		1,045
Other		486		25			511		0.0		-		-		-		-		29		482		999
Corporate securities		4,281,585		(163,568	)		4,118,017		5.0		2,779,916		20,508		160,785		165,867		236,738		754,203		3,184,769
Shares		2,174,301		(236,265	)		1,938,036		2.4		1,938,036		-		-		-		-		-		1,620,039
Bank deposit certificates		83,201		536			83,737		0.1		3,831		20,508		51,342		7,372		-		684		18,850
Securitized real estate loans		35,264		(1,061	)		34,203		0.0		-		-		-		-		-		34,203		-
Fund quotas		832,764		4,533			837,297		1.0		837,297		-		-		-		-		-		474,884
Credit rights		20,677		-			20,677		0.0		20,677		-		-		-		-		-		-
Fixed income		632,690		1,871			634,561		0.8		634,561		-		-		-		-		-		339,342
Variable income		179,397		2,662			182,059		0.2		182,059		-		-		-		-		-		135,542
Debentures		358,376		53,824			412,200		0.5		-		-		11,810		69,485		145,387		185,518		435,870
Eurobonds and other		749,911		8,359			758,270		0.9		752		-		97,633		89,010		91,351		479,524		590,424
Other		47,768		6,506			54,274		0.1		-		-		-		-		-		54,274		44,702
Total		81,739,154		406,899			82,146,053		100.0		6,822,217		1,051,313		1,518,324		4,362,572		14,799,920		53,591,707		59,560,904
% per maturity term											8.3		1.3		1.8		5.3		18.0		65.3
Total – 06/30/2016		59,156,515		404,389			59,560,904		100.0		3,010,896		7,586,505		2,759,074		2,888,787		3,313,553		40,002,089
% per maturity term											5.1		12.7		4.6		4.9		5.6		67.2

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.22

d) Available-for-sale securities

See below the composition of the portfolio of available-for-sale securities by type, stated at cost and market value and by maturity term.

	06/30/2017																					06/30/2016
	Cost		Adjustments to market value (in stockholders' equity)			Market value		%		0 - 30		31 - 90		91 - 180		181 - 365		366 - 720		Over 720 days		Market value
Government securities - domestic		28,044,639		401,244			28,445,883		34.5		-		-		55		334,682		4,350,520		23,760,626		25,033,874
Financial treasury bills		532,963		(140	)		532,823		0.6		-		-		-		334,642		-		198,181		2,452,144
National treasury bills		6,309,185		171,752			6,480,937		7.9		-		-		-		-		3,775,916		2,705,021		-
National treasury notes		9,188,162		144,102			9,332,264		11.3		-		-		55		40		180,442		9,151,727		6,866,820
National treasury/securitization		207,163		18,285			225,448		0.3		-		-		-		-		-		225,448		229,997
Brazilian external debt bonds		11,807,166		67,245			11,874,411		14.4		-		-		-		-		394,162		11,480,249		15,484,913
Government securities - abroad		19,402,491		(68,637	)		19,333,854		23.5		742,580		610,950		1,965,873		3,833,906		6,157,789		6,022,756		13,161,063
Argentina		223		-			223		0.0		-		-		-		223		-		-		263
Chile		5,695,355		3,448			5,698,803		6.9		180,812		-		-		560,304		1,327,936		3,629,751		3,858,452
Colombia		1,794,132		8,886			1,803,018		2.2		-		-		-		-		-		1,803,018		2,330,734
Korea		2,954,495		1			2,954,496		3.6		-		-		1,005,073		500,369		1,449,054		-		1,672,171
Denmark		2,281,907		(1	)		2,281,906		2.8		-		-		331,572		1,457,921		492,413		-		1,385,813
Spain		2,940,948		-			2,940,948		3.6		357,310		324,970		-		407,883		1,850,785		-		753,221
United States		1,600,288		(15,122	)		1,585,166		1.9		-		-		264,406		256,463		612,615		451,682		1,578,778
Netherlands		-		-			-		0.0		-		-		-		-		-		-		100,090
Paraguay		1,781,296		(71,775	)		1,709,521		2.1		94,146		268,623		360,252		574,457		406,108		5,935		1,098,314
Uruguay		353,664		5,922			359,586		0.4		110,312		17,357		4,570		76,286		18,878		132,183		376,139
Other		183		4			187		0.0		-		-		-		-		-		187		7,088
Corporate securities		35,350,274		(724,235	)		34,626,039		42.0		1,569,060		1,225,568		2,584,567		2,871,554		5,113,083		21,262,207		42,795,171
Shares		379,508		192,612			572,120		0.7		572,120		-		-		-		-		-		155,325
Rural product note		1,519,043		7,919			1,526,962		1.9		23,137		157,706		47,525		163,166		136,399		999,029		1,366,340
Bank deposit certificate		488,407		(77	)		488,330		0.6		158,510		129,645		144,378		10,466		41,284		4,047		998,645
Securitized real estate loans		2,011,647		(19,641	)		1,992,006		2.4		-		-		-		-		-		1,992,006		2,133,556
Fund quotas		173,275		-			173,275		0.2		173,275		-		-		-		-		-		626,772
Fixed income		173,275		-			173,275		0.2		173,275		-		-		-		-		-		626,389
Variable income		-		-			-		0.0		-		-		-		-		-		-		383
Debentures		21,475,232		(969,900	)		20,505,332		24.9		245,324		245,246		616,790		833,468		2,388,323		16,176,181		20,546,839
Eurobonds and other		6,237,654		57,025			6,294,679		7.6		54,918		506,316		686,311		1,427,172		1,833,559		1,786,403		8,546,438
Financial bills		640,794		(279	)		640,515		0.8		-		74,030		-		30,127		536,358		-		6,978,306
Promissory notes		2,155,512		9,626			2,165,138		2.6		341,776		104,396		1,081,547		407,155		177,160		53,104		1,083,103
Other		269,202		(1,520	)		267,682		0.3		-		8,229		8,016		-		-		251,437		359,847
Total		82,797,404		(391,628	)		82,405,776		100.0		2,311,640		1,836,518		4,550,495		7,040,142		15,621,392		51,045,589		80,990,108
% per maturity term											2.8		2.2		5.5		8.5		19.0		61.9
Total – 06/30/2016		82,276,991		(1,286,883	)		80,990,108		100.0		4,759,622		4,104,622		5,822,221		11,632,767		8,219,790		46,451,086
% per maturity term											5.9		5.1		7.2		14.4		10.1		57.3

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.23

e) Held-to-maturity securities

See below the composition of the portfolio of held-to-maturity securities by type, stated at cost and by maturity term. Included in the carrying value at June 30, 2017, not considered in results, is an impairment loss of R$ 461,653 (R$ 539,091 at 06/30/2016) relating to the market adjustment of the reclassified securities.

	06/30/2017																		06/30/2016
	Carrying value		%		0 - 30		31 - 90		91 - 180		181 - 365		366 - 720		Over 720 days		Market value		Carrying value		Market value
Government securities - domestic		19,928,694		57.7		49,984		-		-		8,640,388		2,056,918		9,181,404		20,366,067		19,847,486		19,783,311
National treasury bills		8,690,372		25.2		49,984		-		-		8,640,388		-		-		8,828,914		7,839,054		7,778,039
Brazilian external debt bonds		11,238,322		32.6		-		-		-		-		2,056,918		9,181,404		11,537,153		12,008,432		12,005,272
Government securities - abroad		440,971		1.3		60,163		-		109,905		258,149		-		12,754		446,545		557,211		557,261
Colombia		428,217		1.2		60,163		-		109,905		258,149		-		-		427,957		544,904		544,969
Uruguay		12,730		0.0		-		-		-		-		-		12,730		18,586		12,286		12,286
Other		24		0.0		-		-		-		-		-		24		2		21		6
Corporate securities		14,150,975		41.0		121,040		378,088		232,614		108,983		722,858		12,587,392		14,453,611		15,697,734		15,301,783
Bank deposit certificate		4		0.0		4		-		-		-		-		-		4		4		4
Securitized real estate loans		13,587,535		39.4		4,329		179,019		-		108,983		722,858		12,572,346		13,890,254		15,303,024		14,907,107
Eurobonds and other		13,844		0.0		-		-		-		-		-		13,844		13,761		41,025		40,991
Other		549,592		1.6		116,707		199,069		232,614		-		-		1,202		549,592		353,681		353,681
Total		34,520,640		100.0		231,187		378,088		342,519		9,007,520		2,779,776		21,781,550		35,266,223		36,102,431		35,642,355
% per maturity term						0.7		1.1		1.0		26.1		8.1		63.1
Total – 06/30/2016		36,102,431		100.0		481,305		550,245		132,131		1,351,198		8,081,392		25,506,160		35,642,355
% per maturity term						1.3		1.5		0.4		3.7		22.4		70.6

f) Reclassification of securities

No reclassification was made in the period.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.24

g) Derivative financial Instruments

The globalization of the markets in recent years has resulted in a high level of sophistication of financial products used. As a result of this process, there has been increasing demand for derivative financial instruments to manage market risks, mainly arising from fluctuations in interest and exchange rates, commodities and other asset prices. Accordingly, ITAÚ UNIBANCO HOLDING PRUDENTIAL and its subsidiaries operate in the derivatives markets for meeting the growing needs of their clients, as well as enacting their risk management policy. This policy is based on the use of derivative instruments to minimize the risks resulting from commercial and financial operations.

The derivative financial instrument business with clients is carried out after the approval of credit limits. The process of limit approval takes into consideration potential stress scenarios.

Knowing the client, the sector in which it operates and its risk appetite profile, in addition to providing information on the risks involved in the transaction and the negotiated conditions, ensures transparency in the relationship between the parties and the supply of a product that better meets the needs of the client.

The derivative transactions carried out by ITAÚ UNIBANCO HOLDING PRUDENTIAL and its subsidiaries with clients are neutralized in order to eliminate market risks.

The derivative contracts traded by the institution with clients in Brazil include swaps, forwards, options and futures contracts, which are registered at the B3. Overseas transactions are carried out with futures, forwards (onshore), options and swaps mostly listed on the Chicago, New York and London Exchanges. It should be emphasized that there are over-the-counter operations, but their risks are low compared to the institutions’ total. Noteworthy is also the fact that there are no structured operations based on subprime assets and all operations are based on risk factors traded on stock exchanges.

The main risk factors of the derivatives, assumed at 06/30/2017, were related to the foreign exchange rate, interest rate, commodities, US Dollar coupon, Reference Rate coupon, LIBOR and variable income. The management of these and other market risk factors is supported by sophisticated statistical and deterministic models. Based on this management model, the institution, through the use of transactions involving derivatives, has been able to optimize the risk-return ratios, even in highly volatile situations.

Most derivatives included in the institution’s portfolio are traded on stock exchanges. The prices disclosed by stock exchanges are used for these derivatives, except in cases in which the low representativeness of price due to the liquidity of a specific contract is identified. Derivatives typically valued in this way are futures contracts. Likewise, there are other instruments whose quotations (fair prices) are directly disclosed by independent institutions and which are valued based on this direct information. A substantial portion of the Brazilian government securities, highly-liquid international (public and private) securities and shares are in this situation.

For derivatives the prices of which are not directly disclosed by stock exchanges, fair prices are obtained based on pricing models which use market information, deducted based on the prices disclosed for higher liquidity assets. Interest and market volatility curves which provide input for the models are extracted from those prices. Over- the-counter derivatives, forward contracts and securities with limited liquidity are in this situation.

The total value of margins pledged in guarantee was R$ 7,089,954 (R$ 7,029,225 at 06/30/2016) and was basically composed of government securities.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.25

I - Derivatives by index

	Memorandum account / Notional amount				Balance sheet account receivable / (received) (payable) paid			Adjustment to market value (in results / stockholders' equity)			Market value
	06/30/2017		06/30/2016		06/30/2017			06/30/2017			06/30/2017			06/30/2016
Futures contracts		547,494,974		517,193,802		(30,736	)		162,761			132,025			238,291
Purchase commitments		207,685,277		162,433,997		122,297			173,468			295,765			(44,468	)
Commodities		103,858		237,987		241			-			241			(705	)
Indexes		56,892,863		54,746,984		10,837			(5,406	)		5,431			(293,769	)
Interbank market		106,631,837		85,474,320		102,951			(45	)		102,906			(2,620	)
Foreign currency		32,936,812		11,763,994		5,818			178,919			184,737			251,331
Fixed rates		-		320,980		-			-			-			295
Securities		11,119,907		9,803,500		2,450			-			2,450			352
Other		-		86,232		-			-			-			648
Commitments to sell		339,809,697		354,759,805		(153,033	)		(10,707	)		(163,740	)		282,759
Commodities		213,058		285,142		(377	)		-			(377	)		1,200
Indexes		82,134,618		66,922,562		(15,760	)		10,396			(5,364	)		251,425
Interbank market		192,875,013		200,073,545		(138,265	)		1,612			(136,653	)		(438	)
Foreign currency		52,753,782		76,285,487		1,713			(23,661	)		(21,948	)		31,504
Fixed rates		816,464		-		-			946			946			-
Securities		10,980,060		11,182,670		-			-			-			(932	)
Other		36,702		10,399		(344	)		-			(344	)		-
Swap contracts						(4,327,012	)		868,997			(3,458,015	)		(1,901,862	)
Asset position		509,456,335		429,731,049		5,774,692			3,140,659			8,915,351			12,001,025
Commodities		-		227,877		-			-			-			278
Indexes		201,059,355		171,803,121		98,863			562,436			661,299			1,585,328
Interbank market		39,124,016		58,411,499		917,786			(53,611	)		864,175			3,395,193
Foreign currency		14,313,093		15,518,547		1,024,403			148,890			1,173,293			1,631,594
Floating rate		40,741,731		32,286,276		(12,021	)		678,683			666,662			324,481
Fixed rates		214,194,749		151,469,943		3,745,661			1,804,108			5,549,769			5,063,948
Securities		3,908		11,514		(15	)		110			95			-
Other		19,483		2,272		15			43			58			203
Liability position		513,783,347		432,412,499		(10,101,704	)		(2,271,662	)		(12,373,366	)		(13,902,887	)
Commodities		1,207		178,202		-			(3	)		(3	)		(113	)
Indexes		177,377,787		139,329,738		(1,732,016	)		(1,695,331	)		(3,427,347	)		(4,816,044	)
Interbank market		28,710,916		39,463,888		(343,801	)		(23,920	)		(367,721	)		(322,199	)
Foreign currency		20,426,030		27,124,677		(775,496	)		(12,998	)		(788,494	)		(1,381,719	)
Floating rate		39,395,277		33,365,325		(120,108	)		(546,632	)		(666,740	)		(1,198,439	)
Fixed rates		247,839,847		192,908,429		(7,129,053	)		7,139			(7,121,914	)		(6,167,305	)
Securities		5,504		33,184		1			(55	)		(54	)		(16,754	)
Other		26,779		9,056		(1,231	)		138			(1,093	)		(314	)
Option contracts		750,241,713		396,237,799		279,175			506,315			785,490			(36,199	)
Purchase commitments - long position		166,400,604		90,991,384		1,339,783			(366,788	)		972,995			1,095,450
Commodities		516,978		549,301		13,572			2,628			16,200			25,370
Indexes		97,643,083		23,299,928		89,406			(40,440	)		48,966			135,202
Interbank market		11,129,288		611,554		28,250			31,760			60,010			13,752
Foreign currency		50,908,490		60,794,165		1,004,575			(606,687	)		397,888			638,033
Fixed rates		16,290		5,970		-			29			29			5
Securities		6,117,167		5,661,414		196,421			232,688			429,109			267,140
Other		69,308		69,052		7,559			13,234			20,793			15,948
Commitments to sell - long position		208,434,061		108,053,551		1,562,604			610,101			2,172,705			5,319,939
Commodities		292,843		290,275		4,858			3,275			8,133			8,906
Indexes		155,591,073		64,770,544		144,031			56,313			200,344			104,168
Interbank market		13,158,676		2,193,697		16,122			28,892			45,014			476
Foreign currency		32,178,968		34,119,401		1,161,885			448,648			1,610,533			4,534,913
Fixed rates		147,579		142,547		6,572			(4,054	)		2,518			5,825
Securities		7,056,056		6,510,342		228,827			77,324			306,151			664,488
Other		8,866		26,745		309			(297	)		12			1,163
Purchase commitments - short position		154,669,645		82,320,599		(1,323,415	)		430,970			(892,445	)		(1,535,547	)
Commodities		363,959		363,329		(4,647	)		(5,445	)		(10,092	)		(7,755	)
Indexes		87,770,384		23,351,185		(75,987	)		35,030			(40,957	)		(214,222	)
Interbank market		10,658,967		281,452		(26,942	)		9,647			(17,295	)		(527	)
Foreign currency		50,741,116		53,591,361		(1,151,182	)		624,788			(526,394	)		(1,144,516	)
Fixed rates		95,640		92,153		-			(133	)		(133	)		(70	)
Securities		4,970,271		4,572,067		(57,098	)		(219,683	)		(276,781	)		(152,496	)
Other		69,308		69,052		(7,559	)		(13,234	)		(20,793	)		(15,961	)
Commitments to sell - short position		220,737,403		114,872,265		(1,299,797	)		(167,968	)		(1,467,765	)		(4,916,041	)
Commodities		309,507		394,555		(16,620	)		(3,312	)		(19,932	)		(27,534	)
Indexes		176,223,154		69,728,132		(165,383	)		(33,613	)		(198,996	)		(303,772	)
Interbank market		9,037,367		1,086,433		(17,787	)		(17,977	)		(35,764	)		(2,344	)
Foreign currency		29,876,540		37,480,304		(917,892	)		(16,834	)		(934,726	)		(3,922,770	)
Fixed rates		36,139		19,612		(965	)		346			(619	)		(824	)
Securities		5,245,830		6,136,652		(180,841	)		(96,875	)		(277,716	)		(657,660	)
Other		8,866		26,577		(309	)		297			(12	)		(1,137	)
Forward contracts		7,946,452		27,870,325		887,050			883			887,933			1,224,154
Purchases receivable		925,088		4,035,781		926,491			287			926,778			3,388,636
Foreign currency		-		-		-			-			-			-
Floating rate		572,411		1,186,516		571,758			280			572,038			1,189,220
Fixed rates		347,236		2,116,199		349,292			24			349,316			2,185,296
Securities		-		146		-			-			-			13,985
Other		5,441		-		5,441			(17	)		5,424			-
Purchases payable		-		4,908,415		(926,492	)		-			(926,492	)		(3,380,729	)
Interbank market		-		4,908,415		-			-			-			(1	)
Floating rate		-		-		(571,759	)		-			(571,759	)		(1,187,785	)
Fixed rates		-		-		(349,292	)		-			(349,292	)		(2,178,968	)
Securities		-		-		-			-			-			(13,975	)
Other		-		-		(5,441	)		-			(5,441	)		-
Sales receivable		4,553,714		3,123,230		2,985,062			1,768			2,986,830			3,100,237
Commodities		-		17		-			-			-			17
Indexes		112		182		110			-			110			178
Interbank market		1,586,100		258		2,460			46			2,506			257
Floating rate		797,565		883,436		796,642			-			796,642			884,609
Fixed rates		1,268,880		991,833		1,295,925			-			1,295,925			994,939
Securities		901,057		1,247,504		884,481			1,722			886,203			1,220,237
Other		-		-		5,444			-			5,444			-
Sales deliverable		2,467,650		15,802,899		(2,098,011	)		(1,172	)		(2,099,183	)		(1,883,990	)
Interbank market		2,462,206		15,802,725		-			(238	)		(238	)		(2,851	)
Floating rate		-		-		(796,642	)		(139	)		(796,781	)		(885,168	)
Fixed rates		-		-		(1,295,925	)		(815	)		(1,296,740	)		(995,797	)
Securities		-		174		-			-			-			(174	)
Other		5,444		-		(5,444	)		20			(5,424	)		-

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.26

	Memorandum account / Notional amount				Balance sheet account receivable / (received) (payable) / paid			Adjustments to market value (in results / stockholders' equity)			Market value
	06/30/2017		06/30/2016		06/30/2017			06/30/2017			06/30/2017			06/30/2016
Credit derivatives		13,047,596		12,160,490		(5,887	)		76,298			70,411			11,971
Asset position		7,800,633		4,972,867		221,700			32,533			254,233			244,084
Foreign currency		6,023,108		3,965,708		221,208			(19,760	)		201,448			213,120
Fixed rate		148,869		32,098		(565	)		3,263			2,698			802
Securities		1,302,456		791,980		849			42,236			43,085			25,243
Other		326,200		183,081		208			6,794			7,002			4,919
Liability position		5,246,963		7,187,623		(227,587	)		43,765			(183,822	)		(232,113	)
Foreign currency		4,641,239		4,801,057		(227,643	)		60,540			(167,103	)		(140,024	)
Fixed rate		-		337,029		-			-			-			(3,269	)
Securities		442,249		1,675,447		25			(10,881	)		(10,856	)		(76,111	)
Other		163,475		374,090		31			(5,894	)		(5,863	)		(12,709	)
Forwards operations		259,294,196		227,421,067		(203,223	)		159,081			(44,142	)		2,479,732
Asset position		126,981,834		122,709,002		2,166,674			232,554			2,399,228			6,709,687
Commodities		127,260		259,565		17,167			(1,070	)		16,097			32,543
Indexes		285,101		331,463		5,312			-			5,312			38,252
Foreign currency		126,568,660		122,092,949		2,144,158			233,624			2,377,782			6,637,641
Securities		813		25,025		37			-			37			1,251
Liability position		132,312,362		104,712,065		(2,369,897	)		(73,473	)		(2,443,370	)		(4,229,955	)
Commodities		184,397		104,726		(34,644	)		1,242			(33,402	)		(5,497	)
Indexes		582,274		198,974		(15,095	)		-			(15,095	)		(19,342	)
Foreign currency		131,509,453		104,408,365		(2,319,057	)		(74,715	)		(2,393,772	)		(4,205,116	)
Securities		36,238		-		(1,101	)		-			(1,101	)		-
Target flow of swap		1,214,580		1,479,490		(273,663	)		21,304			(252,359	)		(221,390	)
Asset position - Foreign currency		754,580		909,490		16,454			12,584			29,038			121,910
Liability position - Interbank market		460,000		570,000		(290,117	)		8,720			(281,397	)		(343,300	)
Other derivative financial instruments		4,609,325		17,595,613		127,061			(15,040	)		112,021			896,813
Asset position		2,718,729		13,078,471		146,995			24,222			171,217			4,978,347
Foreign currency		100,064		8,999,022		3,655			938			4,593			4,589,939
Fixed rate		1,573,234		1,306,618		85,657			7,672			93,329			64,581
Securities		891,450		2,415,432		57,710			9,382			67,092			311,492
Other		153,981		357,399		(27	)		6,230			6,203			12,335
Liability position		1,890,596		4,517,142		(19,934	)		(39,262	)		(59,196	)		(4,081,534	)
Indexes		-		11,220		-			-			-			(470	)
Foreign currency		48,944		3,444,698		(9,561	)		8,583			(978	)		(4,037,401	)
Fixed rate		82,705		-		(988	)		(1,880	)		(2,868	)		-
Securities		1,423,252		866,909		(9,106	)		(39,554	)		(48,660	)		(39,522	)
Other		335,695		194,315		(279	)		(6,411	)		(6,690	)		(4,141	)
				Assets		15,109,719			3,850,681			18,960,400			37,197,606
				Liabilities		(18,656,954	)		(2,070,082	)		(20,727,036	)		(34,506,096	)
				Total		(3,547,235	)		1,780,599			(1,766,636	)		2,691,510

Derivative contracts mature as follows (in days):

Memorandum account/notional amount	0 - 30		31 - 180		181 - 365		Over 365		06/30/2017		06/30/2016
Futures		134,439,897		149,678,614		112,653,802		150,722,661		547,494,974		517,193,802
Swaps		18,808,132		69,211,127		73,187,165		342,475,219		503,681,643		420,971,322
Options		285,236,949		266,996,438		176,360,756		21,647,570		750,241,713		396,237,799
Forwards (onshore)		6,465,896		722,606		757,568		382		7,946,452		27,870,325
Credit derivatives		165,410		898,635		506,165		11,477,386		13,047,596		12,160,490
Forwards (offshore)		61,532,994		120,466,052		61,364,384		15,930,766		259,294,196		227,421,067
Target flow of swap		-		921,788		292,792		-		1,214,580		1,479,490
Other derivative financial instruments		24,398		401,714		544,612		3,638,601		4,609,325		17,595,613

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.27

II - Derivatives by counterparty

See below the composition of the Derivative Financial Instruments portfolio (assets and liabilities) by type of instrument, stated at cost, market value, and maturity term.

	06/30/2017																											06/30/2016
	Cost			Adjustments to market value (in results / stockholders' equity)			Market value			%		0 - 30		31 - 90			91 - 180			181 - 365			366 - 720		Over 720 days			Market value
Asset
Futures		(30,736	)		162,761			132,025			0.7		184,880		(12,476	)		2,649			(1,584	)		4,742		(46,186	)		238,291
B3		(30,736	)		163,767			133,031			0.7		184,880		(11,835	)		2,773			(1,343	)		4,742		(46,186	)		238,291
Companies		-			(758	)		(758	)		0.0		-		(474	)		(101	)		(183	)		-		-			-
Financial institutions		-			(248	)		(248	)		0.0		-		(167	)		(23	)		(58	)		-		-			-
Swaps - adjustment receivable		5,774,692			3,140,659			8,915,351			47.0		73,911		206,992			355,669			875,173			1,387,024		6,016,582			12,001,025
B3		748,619			237,581			986,200			5.2		26,554		8,174			11,962			122,439			159,164		657,907			1,987,657
Companies		2,319,714			1,307,708			3,627,422			19.1		28,650		137,641			224,217			356,970			433,285		2,446,659			6,367,255
Financial institutions		2,590,142			1,301,243			3,891,385			20.5		17,309		60,212			111,223			392,780			580,916		2,728,945			3,364,475
Individuals		116,217			294,127			410,344			2.2		1,398		965			8,267			2,984			213,659		183,071			281,638
Option premiums		2,902,387			243,313			3,145,700			16.7		1,356,980		283,318			351,933			574,510			409,277		169,682			6,415,389
B3		1,479,058			301,617			1,780,675			9.5		1,251,264		136,187			95,941			218,293			36,488		42,502			2,498,003
Companies		480,937			(22,982	)		457,955			2.4		23,448		52,618			46,026			139,140			144,059		52,664			697,944
Financial institutions		938,030			(33,601	)		904,429			4.8		82,268		93,724			209,771			215,722			228,428		74,516			3,214,976
Individuals		4,362			(1,721	)		2,641			0.0		-		789			195			1,355			302		-			4,466
Forwards (onshore)		3,911,553			2,055			3,913,608			20.6		3,502,909		133,272			178,720			98,400			13		294			6,488,873
B3		887,051			1,768			888,819			4.7		478,120		133,272			178,720			98,400			13		294			1,233,851
Financial institutions		1,163,651			15			1,163,666			6.1		1,163,666		-			-			-			-		-			2,318,878
Companies		1,860,851			272			1,861,123			9.8		1,861,123		-			-			-			-		-			2,936,144
Credit derivatives - Financial institutions		221,700			32,533			254,233			1.3		1,306		289			1,100			3,256			14,523		233,759			244,084
Forwards (offshore)		2,166,674			232,554			2,399,228			12.6		326,417		388,986			587,712			594,500			309,096		192,517			6,709,687
B3		192,935			(1	)		192,934			1.0		44,305		45,288			53,019			50,261			61		-			267,520
Companies		764,896			125,810			890,706			4.7		126,657		173,432			196,611			214,845			109,348		69,813			3,099,917
Financial institutions		1,208,172			106,645			1,314,817			6.9		155,404		169,887			337,981			329,194			199,647		122,704			3,327,898
Individuals		671			100			771			0.0		51		379			101			200			40		-			14,352
Target flow of swap - Companies		16,454			12,584			29,038			0.2		-		29,038			-			-			-		-			121,910
Other derivative financial instruments		146,995			24,222			171,217			0.9		54		18,815			3,608			5,970			10,217		132,553			4,978,347
Companies		61,339			16,548			77,887			0.4		54		18,803			3,335			5,782			5,362		44,551			1,252,846
Financial institutions		85,656			7,672			93,328			0.5		-		12			273			188			4,853		88,002			3,721,350
Individuals		-			2			2			0.0		-		-			-			-			2		-			4,151
Total		15,109,719			3,850,681			18,960,400			100.0		5,446,457		1,048,234			1,481,391			2,150,225			2,134,892		6,699,201			37,197,606
% per maturity term													28.8		5.5			7.8			11.3			11.3		35.3
Total – 06/30/2016		30,496,009			6,701,597			37,197,606			100.0		8,456,297		3,921,302			3,910,389			7,273,546			4,865,305		8,770,767
% per maturity term													22.7		10.5			10.5			19.6			13.1		23.6

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.28

	06/30/2017																													06/30/2016
	Cost			Adjustments to market value (in results / stockholders' equity)			Market value			%		0 - 30			31 - 90			91 - 180			181 - 365			366 - 720			Over 720 days			Market value
Liabilities
Swaps - difference payable		(10,101,704	)		(2,271,662	)		(12,373,366	)		59.6		(83,586	)		(178,594	)		(466,566	)		(775,066	)		(3,534,815	)		(7,334,739	)		(13,902,887	)
B3		(754,920	)		(535,565	)		(1,290,485	)		6.2		(22,262	)		(8,260	)		(50,541	)		(46,900	)		(234,528	)		(927,994	)		(1,674,837	)
Companies		(2,098,413	)		(47,808	)		(2,146,221	)		10.4		(26,222	)		(58,908	)		(213,045	)		(311,102	)		(410,441	)		(1,126,503	)		(2,709,615	)
Financial institutions		(2,747,382	)		(1,712,329	)		(4,459,711	)		21.4		(28,791	)		(75,545	)		(165,279	)		(382,848	)		(770,999	)		(3,036,249	)		(4,305,465	)
Individuals		(4,500,989	)		24,040			(4,476,949	)		21.6		(6,311	)		(35,881	)		(37,701	)		(34,216	)		(2,118,847	)		(2,243,993	)		(5,212,970	)
Option premiums		(2,623,212	)		263,002			(2,360,210	)		11.4		(700,139	)		(266,754	)		(380,413	)		(478,958	)		(407,848	)		(126,098	)		(6,451,588	)
B3		(1,166,303	)		254,073			(912,230	)		4.4		(554,159	)		(52,537	)		(101,819	)		(142,421	)		(60,948	)		(346	)		(2,454,677	)
Companies		(347,117	)		(231,776	)		(578,893	)		2.8		(20,492	)		(67,994	)		(103,081	)		(153,350	)		(168,176	)		(65,800	)		(767,123	)
Financial institutions		(1,099,163	)		249,689			(849,474	)		4.1		(125,393	)		(141,268	)		(171,804	)		(180,261	)		(173,129	)		(57,619	)		(3,203,041	)
Individuals		(10,629	)		(8,984	)		(19,613	)		0.1		(95	)		(4,955	)		(3,709	)		(2,926	)		(5,595	)		(2,333	)		(26,747	)
Forwards (onshore)		(3,024,503	)		(1,172	)		(3,025,675	)		14.6		(3,025,438	)		(16	)		(69	)		(152	)		-			-			(5,264,719	)
B3		-			(237	)		(237	)		0.0		-			(16	)		(69	)		(152	)		-			-			(16,061	)
Companies		(1,860,852	)		(136	)		(1,860,988	)		9.0		(1,860,988	)		-			-			-			-			-			(2,934,802	)
Financial institutions		(1,163,651	)		(799	)		(1,164,450	)		5.6		(1,164,450	)		-			-			-			-			-			(2,313,856	)
Credit derivatives - Financial institutions		(227,587	)		43,765			(183,822	)		0.9		-			-			(800	)		(769	)		(2,961	)		(179,292	)		(232,113	)
Forwards (offshore)		(2,369,897	)		(73,473	)		(2,443,370	)		11.8		(385,694	)		(396,285	)		(500,167	)		(360,916	)		(237,656	)		(562,652	)		(4,229,955	)
B3		(165,961	)		1			(165,960	)		0.8		(34,781	)		(51,221	)		(42,576	)		(37,400	)		18			-			(319,549	)
Companies		(562,266	)		(23,605	)		(585,871	)		2.8		(147,090	)		(132,890	)		(178,935	)		(77,301	)		(25,416	)		(24,239	)		(1,254,053	)
Financial institutions		(1,640,355	)		(49,818	)		(1,690,173	)		8.2		(203,800	)		(211,288	)		(278,364	)		(246,178	)		(212,130	)		(538,413	)		(2,652,824	)
Individuals		(1,315	)		(51	)		(1,366	)		0.0		(23	)		(886	)		(292	)		(37	)		(128	)		-			(3,529	)
Target flow of swap - Companies		(290,117	)		8,720			(281,397	)		1.4		-			(220,612	)		-			(60,785	)		-			-			(343,300	)
Other derivative financial instruments		(19,934	)		(39,262	)		(59,196	)		0.3		(151	)		(117	)		(473	)		(6,161	)		(11,583	)		(40,711	)		(4,081,534	)
B3		-			(187	)		(187	)		0.0		-			-			-			(187	)		-			-			-
Companies		(19,934	)		(39,075	)		(59,009	)		0.3		(151	)		(117	)		(473	)		(5,974	)		(11,583	)		(40,711	)		(686,752	)
Financial institutions		-			-			-			0.0		-			-			-			-			-			-			(3,393,279	)
Individuals		-			-			-			0.0		-			-			-			-			-			-			(1,503	)
Total		(18,656,954	)		(2,070,082	)		(20,727,036	)		100.0		(4,195,008	)		(1,062,378	)		(1,348,488	)		(1,682,807	)		(4,194,863	)		(8,243,492	)		(34,506,096	)
% per maturity term													20.2			5.1			6.5			8.1			20.2			39.9
Total – 06/30/2016		(31,292,709	)		(3,213,387	)		(34,506,096	)		100.0		(7,075,708	)		(2,522,423	)		(2,479,700	)		(6,108,401	)		(3,370,890	)		(12,948,974	)
% per maturity term													20.5			7.3			7.2			17.7			9.8			37.5

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.29

III - Derivatives by notional amount

See below the composition of the Derivative Financial Instruments portfolio by type of instrument, stated at their notional amounts, per trading location (organized or over-the-counter market) and counterparties.

	06/30/2017
	Futures		Swaps		Options		Forwards (onshore)		Credit derivatives		Forwards (offshore)		Target flow of swap		Other derivative financial instruments
B3		436,697,700		31,431,598		646,223,234		4,949,475		-		68,325,787		-		-
Overt-the-counter market		110,797,274		472,250,045		104,018,479		2,996,977		13,047,596		190,968,409		1,214,580		4,609,325
Financial institutions		110,469,279		301,887,079		74,625,347		1,142,368		13,047,596		131,699,264		-		1,573,234
Companies		327,995		121,305,045		28,936,436		1,854,609		-		59,190,938		1,214,580		3,036,091
Individuals		-		49,057,921		456,696		-		-		78,207		-		-
Total		547,494,974		503,681,643		750,241,713		7,946,452		13,047,596		259,294,196		1,214,580		4,609,325
Total – 06/30/2016		517,193,802		420,971,322		396,237,799		27,870,325		12,160,490		227,421,067		1,479,490		17,595,613

IV - Credit derivatives

See below the composition of the Credit Derivatives (assets and liabilities) portfolio stated at their notional amounts, and their effect on calculation of Required Referential Equity.

	06/30/2017								06/30/2016
	Notional amount of credit protection sold			Notional amount of credit protection purchased with identical underlying amount		Net position			Notional amount of credit protection sold			Notional amount of credit protection purchased with identical underlying amount		Net position
Credit swaps		(7,837,834	)		5,209,762		(2,628,072	)		(8,055,377	)		4,105,113		(3,950,264	)
Total		(7,837,834	)		5,209,762		(2,628,072	)		(8,055,377	)		4,105,113		(3,950,264	)

The effect on the referential equity (Note 3) was R$ 65,943 (R$ 336,215 at 06/30/2016).

During the period, there was no occurrence of a credit event as defined in the agreements.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.30

V - Accounting hedge

The effectiveness computed for the hedge portfolio was in conformity with the provisions of BACEN Circular No. 3,082 of January 30, 2002, and the following accounting hedge structures are established:

I) Cash flow - the purpose of this hedge of ITAÚ UNIBANCO HOLDING PRUDENTIAL is to hedge cash flows of interest receipt and payment (CDB / Redeemable Preferred Shares / Syndicated Loans / Assets Transactions, Asset-backed Repurchase and Funding) and exposures to future exchange rate (anticipated transactions and unrecognized firm commitments) related to its variable interest rate risk (CDI / LIBOR / SELIC/ UF* / TPM*), and foreign exchange rate risk, making the cash flow constant (fixed rate) and regardless of the variations of DI Cetip Over, LIBOR, SELIC, UF*, TPM* and foreign exchange rate.

*UF (Chilean Unit of Account) / *TPM (Monetary Policy Rate).

	06/30/2017							06/30/2016
	Hedge Instrument					Hedge assets		Hedge Instrument					Hedge assets
Strategies	Nominal value		Adjustment to market value (*)			Book value		Nominal value		Adjustment to market value (*)			Book value
Hedge of deposits and securities purchased under agreements to resell		71,522,389		(3,639,747	)		69,964,363		86,503,505		(1,286,957	)		87,581,336
Hedge of syndicated loan		2,646,560		(8,824	)		2,646,560		6,740,580		(95,196	)		6,740,580
Hedge of Highly Probable Expected Transaction		260,747		1,213			260,701		-		-			-
Hedge of assets transactions		22,775,621		616,271			22,159,018		11,199,531		20,844			12,223,651
Hedge of Asset-backed Securities under Repurchase Agreements		16,247,558		255,675			16,035,159		-		-			-
Hedge of UF - denominated assets		13,337,682		9,888			13,337,682		8,162,552		5,615			8,162,552
Hedge of funding		4,883,252		(23,685	)		4,883,252		2,984,360		(24,750	)		2,984,360
Hedge of loan operations		1,037,457		20,376			1,037,457		738,950		8,602			738,950
Total				(2,768,833	)						(1,371,842	)

(*) Recorded in Stockholders’ Equity under heading Asset Valuation Adjustments.

The gains or losses related to the accounting hedge of cash flows that we expect to recognize in Results in the following 12 months amount to R$ (921,116) (R$ 380,205 at 06/30/2016).

To hedge future cash flows of highly probable forecast transactions, arising from futures contracts in foreign currency, against the exposure to future interest rate, ITAÚ UNIBANCO HOLDING PRUDENTIAL negotiated DDI Futures contracts on B3 and NDF (Non Deliverable Forward) contracts traded in the over-the-counter market. During the second quarter of 2016, part of the flow of these agreements was realized, and, accordingly, Asset Valuation Adjustment was reclassified and included in the deemed cost of assets related to Hedge of Highly Probable Forecast Transaction.

To hedge future cash flows of futures receipts and payments against exposure to variable interest rate (CDI / LIBOR/ SELIC / TPM and UF), ITAÚ UNIBANCO HOLDING PRUDENTIAL negotiated DI futures contracts on B3, interest rate swap and Euro-Dollar Futures on Chicago Stock Exchange.

II) Market risk – The hedging strategy against market risk of ITAÚ UNIBANCO HOLDING PRUDENTIAL consists of hedging the exposure to variation in market risk, in interest receipts, which are attributable to changes in interest rates related to recognized assets.

	06/30/2017									06/30/2016
	Hedge instrument					Hedge assets				Hedge instrument					Hedge assets
Strategies	Nominal value		Adjustment to market value (*)			Book value		Adjustment to market value (*)		Nominal value		Adjustment to market value (*)			Book value		Adjustment to market value (*)
Hedge of loan operations		3,291,118		(94,568	)		3,291,118		94,925		3,159,409		(89,437	)		3,159,409		84,387
Hedge of available-for-sale securities		472,410		(32,305	)		472,410		33,769		10,980		46			10,980		(201	)
Hedge of syndicated loan		795,064		(1,534	)		795,064		1,667		-		-			-		-
Hedge of funding		11,081,876		(36,833	)		11,081,876		22,037		6,403,644		12,347			6,403,644		(12,851	)
Total				(165,240	)				152,398				(77,044	)				71,335

(*) Recorded under heading Results from Securities and Derivative Financial Instruments.

To hedge the variation in market risk in interest receipt, ITAÚ UNIBANCO HOLDING PRUDENTIAL uses interest rate swap contracts. Hedge assets are related to fixed-rate assets expressed in unidad de fomento (CLF) and denominated in Euros, issued by subsidiaries in Chile and London, respectively and with maturities between 2017 and 2030.

Receipts (payments) of interest flows are expected to occur and will affect the statement of income in monthly periods.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.31

III) Hedge of net investment in foreign operations – ITAÚ UNIBANCO HOLDING PRUDENTIAL's strategy of net investments in foreign operations consist of a hedge of the exposure in foreign currency arising from the functional currency of foreign operations, compared to the functional currency of the head office.

	06/30/2017							06/30/2016
	Hedge instrument					Hedge assets		Hedge instrument				Hedge assets
Strategies	Nominal value		Adjustment to market value (*)			Nominal value		Nominal value		Adjustment to market value (*)		Nominal value
Hedge of net investment in foreign operations (*)		21,624,382		(508,946	)		12,397,245		-		-		-
Total				(508,946	)						-

(*) Recorded in Stockholders’ Equity under heading Asset Valuation Adjustments.

To hedge the changes of future cash flows of exchange variation of net investments in foreign operations, ITAÚ UNIBANCO HOLDING PRUDENTIAL uses DDI Futures contracts traded on B3, Financial Assets and Forward contracts or NDF contracts entered into by our subsidiaries abroad.

IV) We present below the maturity terms of cash flow hedge and market risk hedge strategies:

	06/30/2017
Strategies	0-1 year		1-2 years		2-3 years		3-4 years		4-5 years		5-10 years		Over 10 years		Total
Hedge of deposits and securities purchased under agreements to resell		33,456,257		15,136,015		7,822,144		13,299,196		131,878		1,676,899		-		71,522,389
Hedge of syndicated loan		2,646,560		-		-		-		-		-		-		2,646,560
Hedge of Highly Probable Expected Transaction		148,733		98,041		13,973		-		-		-		-		260,747
Hedge of assets transactions		15,223,711		6,389,914		-		1,161,996		-		-		-		22,775,621
Hedge of assets denominated in UF		11,821,078		332,514		1,160,150		-		23,940		-		-		13,337,682
Hedge of funding (Cash flow)		1,420,582		798,579		396,047		879,384		556,661		831,999		-		4,883,252
Hedge of loan operations (Cash flow)		-		-		24,940		19,952		169,592		822,973		-		1,037,457
Hedge of loan operations (Market risk)		433,131		200,203		146,269		25,631		633,355		293,508		1,559,021		3,291,118
Hedge of syndicated loan (Market risck)		-		795,064		-		-		-		-		-		795,064
Hedge of funding (Market risk)		3,522,024		100,207		4,098,364		346,590		8,760		1,157,155		1,848,776		11,081,876
Hedge of available-for-sale securities		-		-		-		218,286		-		254,124		-		472,410
Asset-backed securities under repurchase agreements		28,182		10,988,574		4,581,168		649,634		-		-		-		16,247,558
Hedge of net investment in foreign operations (*)		21,624,382		-		-		-		-		-		-		21,624,382
Total		90,324,640		34,839,111		18,243,055		16,600,669		1,524,186		5,036,658		3,407,797		169,976,116
	06/30/2016
Strategies	0-1 year		1-2 years		2-3 years		3-4 years		4-5 years		5-10 years		Over 10 years		Total
Hedge of deposits and securities purchased under agreements to resell		31,189,985		29,163,887		12,480,638		6,233,224		7,316,765		119,006		-		86,503,505
Hedge of syndicated loan		6,740,580		-		-		-		-		-		-		6,740,580
Hedge of assets transactions		4,627,346		5,308,970		728,884		-		534,331		-		-		11,199,531
Hedge of assets denominated in UF		6,595,556		-		-		1,566,996		-		-		-		8,162,552
Hedge of funding (Cash flow)		-		1,389,254		-		-		354,143		1,240,963		-		2,984,360
Hedge of loan operations (Cash flow)		123,560		-		-		24,390		19,512		571,488		-		738,950
Hedge of loan operations (Market risk)		188,861		726,749		159,869		78,972		32,432		360,302		1,612,224		3,159,409
Hedge of funding (Market risk)		483,817		2,930,138		97,603		2,563,048		329,038		-		-		6,403,644
Hedge of available-for-sale securities		10,980		-		-		-		-		-		-		10,980
Total		49,960,685		39,518,998		13,466,994		10,466,630		8,586,221		2,291,759		1,612,224		125,903,511

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.32

h) Changes in adjustments to unrealized ^(*) market value for the period

	01/01 to			01/01 to
	06/30/2017			06/30/2016
Opening balance		1,788,218			(5,710,497	)
Adjustments with impact on:
Results		(2,667,495	)		2,838,084
Trading securities		(60,701	)		1,513,930
Derivative financial instruments		(2,606,794	)		1,324,154
Stockholders’ equity		(602,632	)		4,106,287
Available-for-sale		458,362			2,795,885
Accounting hedge – derivative financial instruments - Futures		(1,060,994	)		1,310,402
Closing balance		(1,481,909	)		1,233,874
Adjustment to market value		(1,481,909	)		1,233,874
Trading securities		406,899			404,389
Available-for-sale securities		(391,628	)		(1,286,883	)
Derivative financial instruments		(1,497,180	)		2,116,368
Trading securities		1,780,599			3,488,210
Accounting hedge		(3,277,779	)		(1,371,842	)
Futures		(3,277,779	)		(1,371,842	)

(*) The term unrealized in the context of Circular nº. 3.068 of 11/08/2001, of the Central Bank means not converted into cash.

i) Realized gain of securities portfolio and derivatives financial instruments

	01/01 to		01/01 to
	06/30/2017		06/30/2016
Gain (loss) – trading securities		1,107,339		967,664
Gain (loss) – available-for-sale securities		212,221		(403,839	)
Gain (loss) – derivatives		5,219,685		7,824,977
Gain (loss) – foreign exchange variation on investments abroad		684,412		(8,884,374	)
Total		7,223,657		(495,572	)

During the period ended 06/30/2017, ITAÚ UNIBANCO HOLDING PRUDENTIAL recognized impairment expenses of R$ 578,844, with on Available-for-sale securities in the amount R$ 279,179 and Held-to-Maturity Financial Assets in the amount of R$ 299,665. Total loss, net of reversals, amounted to R$ 366,401 (R$ 223,914 of loss at 06/30/2016) and was recorded in the statement of income in line item Securities and derivative financial instruments.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.33

j) Sensitivity analysis (trading and banking portfolios)

In compliance with CVM Instruction No. 475, ITAÚ UNIBANCO HOLDING PRUDENTIAL carried out a sensitivity analysis by market risk factors considered relevant to which it was exposed. The biggest losses arising, by risk factor, in each scenario, were stated with impact on result, net of tax effects, by providing a vision of the ITAÚ UNIBANCO HOLDING PRUDENTIAL exposure under exceptional scenarios.

The sensitivity analyses of the non-trading and the trading portfolio shown in this report are an evaluation of a static position of the portfolio exposure and, therefore, do not consider the management’s quick response capacity (treasury and control areas), which triggers risk mitigating measures, whenever a situation of high loss or risk is identified by minimizing the sensitivity towards significant losses. In addition, we point out that the presented results do not necessarily translate into accounting results, because the study's sole purpose is to disclose the exposure to risks and the respective protective actions, taking into account the fair value of financial instruments, irrespective of the accounting practices adopted by the ITAÚ UNIBANCO HOLDING PRUDENTIAL.

Trading portfolio	Exposures	06/30/2017 (*)
		Scenarios
Risk factors	Risk of variation in:	I			II			III
Interest Rate	Fixed Income Interest Rates in reais		(647	)		(128,658	)		(220,365	)
Foreign Exchange Linked	Foreign Exchange Linked Interest Rates		(418	)		(36,538	)		(74,027	)
Foreign Exchange Rates	Prices of Foreign Currencies		(632	)		54,222			85,661
Price Index Linked	Interest of Inflation coupon		(192	)		(33,721	)		(65,059	)
TR	TR Linked Interest Rates		(0	)		(4	)		(9	)
Equities	Prices of Equities		164			(2,992	)		52,902
Other	Exposures that do not fall under the definitions above		6			(25	)		(68	)
TOTAL			(1,719	)		(147,716	)		(220,966	)

(*) Amounts net of tax effects.

Trading and Banking portfolios	Exposures	06/30/2017 (*)
		Scenarios
Risk factors	Risk of variation in:	I			II			III
Interest Rate	Fixed Income Interest Rates in reais		(8,420	)		(1,917,113	)		(3,744,260	)
Foreign Exchange Linked	Foreign Exchange Linked Interest Rates		(4,132	)		(370,406	)		(728,104	)
Foreign Exchange Rates	Prices of Foreign Currencies		(5,873	)		58,131			114,968
Price Index Linked	Interest of Inflation coupon		(1,935	)		(265,878	)		(508,161	)
TR	TR Linked Interest Rates		514			(125,338	)		(295,113	)
Equities	Prices of Equities		3,578			(36,797	)		22,030
Other	Exposures that do not fall under the definitions above		18			(973	)		(6,242	)
TOTAL			(16,249	)		(2,658,373	)		(5,144,882	)

(*) Amounts net of tax effects.

The following scenarios are used to measure the sensitivity:

· Scenario I: Addition of 1 base point to the fixed interest rate, currency coupon, inflation, and interest rate index, and 1 percentage point in currency and share prices;

· Scenario II: Shocks of 25 percent in interest fixed rates, currency coupon, inflation, interest rate indexes and currency and share prices, both for growth and fall, considering the largest resulting losses per risk factor;

· Scenario III: Shocks of 50 percent in interest fixed rates, currency coupon, inflation, interest rate indexes and currency and share prices, both for growth and fall, considering the largest resulting losses per risk factor.

Derivative financial instruments engaged by ITAÚ UNIBANCO HOLDING PRUDENTIAL are shown in the item Derivative financial instruments in this note.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.34

Note 8 - Loan, lease and other credit operations

a) Composition of the portfolio with credit granting characteristics

I – By type of operations and risk level

	06/30/2017																				06/30/2016
Risk levels	AA		A		B		C		D		E		F		G		H		Total		Total
Loan operations		200,080,288		104,054,629		42,147,569		18,349,551		10,315,379		7,467,203		7,009,996		4,205,222		10,854,867		404,484,704		419,219,652
Loans and discounted trade receivables		74,077,292		84,594,561		32,379,570		14,301,929		7,861,138		5,524,887		5,054,226		3,407,156		9,358,255		236,559,014		247,411,126
Financing		56,905,027		12,094,744		7,371,800		3,049,132		1,863,311		1,078,005		1,320,035		657,160		960,817		85,300,031		93,401,722
Farming and agribusiness financing		8,695,030		1,105,824		652,372		60,253		111,014		143,310		173		419		21,565		10,789,960		9,213,813
Real estate financing		60,402,939		6,259,500		1,743,827		938,237		479,916		721,001		635,562		140,487		514,230		71,835,699		69,192,991
Lease operations		2,440,633		3,457,264		1,008,160		442,828		181,721		89,947		94,408		32,891		188,243		7,936,095		9,368,074
Credit card operations		-		53,000,352		2,230,746		1,547,478		821,210		502,364		565,691		489,474		2,767,257		61,924,572		59,747,668
Advance on exchange contracts (1)		2,094,808		713,823		1,153,290		115,337		61,790		74,266		65,340		-		13,294		4,291,948		5,031,842
Other sundry receivables (2)		165,127		774,983		2,476		29,937		3,923		1,123		12,245		1,356		246,526		1,237,696		4,581,680
Total operations with credit granting characteristics		204,780,856		162,001,051		46,542,241		20,485,131		11,384,023		8,134,903		7,747,680		4,728,943		14,070,187		479,875,015		497,948,916
Financial Guarantees Provided(3)		-		-		-		-		-		-		-		-		-		72,628,744		75,198,859
Total with Financial Guarantees Provided		204,780,856		162,001,051		46,542,241		20,485,131		11,384,023		8,134,903		7,747,680		4,728,943		14,070,187		552,503,759		573,147,775
Total – 06/30/2016		227,567,645		154,696,218		47,265,149		22,171,669		10,561,512		8,708,625		5,944,528		4,481,600		16,551,970		497,948,916

(1) Includes Advances on exchange contracts and Income receivable from advances granted, reclassified from Liabilities – Foreign exchange portfolio / Other receivables (Note 2a);

(2) Includes Securities and credits receivable, Debtors for purchase of assets and Financial Guarantees Provided paid;

(3) Recorded in Memorandum Accounts.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.35

II – By maturity and risk level

	06/30/2017																													06/30/2016
	AA		A			B			C			D			E			F			G			H			Total			Total
	Overdue Operations (1) (2)
Falling due installments		-		-			1,957,538			1,901,757			1,564,374			1,209,075			1,528,904			1,434,615			4,019,650			13,615,913			15,212,324
01 to 30		-		-			88,911			76,561			57,116			38,966			61,703			41,704			165,660			530,621			746,456
31 to 60		-		-			58,435			64,102			49,117			33,632			56,609			45,206			157,578			464,679			582,148
61 to 90		-		-			77,801			58,232			47,037			34,463			54,987			35,162			143,323			451,005			525,862
91 to 180		-		-			141,343			176,542			141,358			97,340			128,686			113,545			402,172			1,200,986			1,552,554
181 to 365		-		-			232,959			283,938			264,292			182,186			218,037			239,277			724,839			2,145,528			2,665,308
Over 365		-		-			1,358,089			1,242,382			1,005,454			822,488			1,008,882			959,721			2,426,078			8,823,094			9,139,996
Overdue installments		-		-			932,594			1,084,544			1,020,096			1,134,788			1,111,720			1,140,377			6,162,817			12,586,936			16,569,777
01 to 14		-		-			8,046			39,793			31,983			22,360			20,318			19,175			81,817			223,492			248,216
15 to 30		-		-			775,652			129,229			95,136			278,579			48,200			41,255			121,369			1,489,420			1,748,226
31 to 60		-		-			148,896			777,821			185,592			154,556			140,655			92,106			492,669			1,992,295			3,386,238
61 to 90		-		-			-			109,933			645,669			131,475			141,906			96,799			405,102			1,530,884			1,677,081
91 to 180		-		-			-			27,768			61,716			479,525			716,469			835,372			1,142,395			3,263,245			4,169,910
181 to 365		-		-			-			-			-			68,293			44,172			55,670			3,828,041			3,996,176			5,099,888
Over 365		-		-			-			-			-			-			-			-			91,424			91,424			240,218
Subtotal		-		-			2,890,132			2,986,301			2,584,470			2,343,863			2,640,624			2,574,992			10,182,467			26,202,849			31,782,101
Specific allowance		-		-			(28,901	)		(89,590	)		(258,447	)		(703,159	)		(1,320,312	)		(1,802,494	)		(10,182,467	)		(14,385,370	)		(18,351,934	)
Subtotal - 06/30/2016		-		-			3,234,144			3,306,977			3,085,442			2,760,879			2,939,568			2,804,332			13,650,759			31,782,101
		Non-overdue operations
Falling due installments		204,287,480		160,661,505			43,107,461			17,260,336			8,516,224			5,736,548			5,020,405			2,011,782			3,848,560			450,450,301			463,216,735
01 to 30		15,614,365		33,768,517			6,647,046			3,068,849			932,721			563,243			481,932			253,874			517,474			61,848,021			72,845,201
31 to 60		14,975,332		14,332,987			3,787,982			975,210			421,797			311,044			607,036			38,739			206,038			35,656,165			30,849,471
61 to 90		9,114,575		9,680,192			2,737,923			875,814			230,679			161,246			618,595			40,845			110,842			23,570,711			25,037,681
91 to 180		21,085,863		18,578,150			6,119,400			1,702,095			713,369			467,084			420,692			237,279			257,007			49,580,939			50,444,690
181 to 365		25,673,199		20,296,714			6,247,522			2,835,269			892,108			537,502			399,933			240,590			566,122			57,688,959			58,553,170
Over 365		117,824,146		64,004,945			17,567,588			7,803,099			5,325,550			3,696,429			2,492,217			1,200,455			2,191,077			222,105,506			225,486,522
Overdue up to 14 days		493,376		1,339,546			544,648			238,494			283,329			54,492			86,651			142,169			39,160			3,221,865			2,950,080
Subtotal		204,780,856		162,001,051			43,652,109			17,498,830			8,799,553			5,791,040			5,107,056			2,153,951			3,887,720			453,672,166			466,166,815
Generic allowance		-		(810,005	)		(436,521	)		(524,965	)		(879,955	)		(1,737,312	)		(2,553,528	)		(1,507,766	)		(3,887,720	)		(12,337,772	)		(9,889,442	)
Subtotal - 06/30/2016		227,567,645		154,696,218			44,031,005			18,864,692			7,476,070			5,947,746			3,004,960			1,677,268			2,901,211			466,166,815
Grand total		204,780,856		162,001,051			46,542,241			20,485,131			11,384,023			8,134,903			7,747,680			4,728,943			14,070,187			479,875,015			497,948,916
Existing allowance		-		(810,005	)		(465,422	)		(614,555	)		(1,138,402	)		(9,477,501	)		(11,619,970	)		(6,146,680	)		(14,070,187	)		(37,417,334	)		(38,465,025	)
Minimum allowance required		-		(810,005	)		(465,422	)		(614,555	)		(1,138,402	)		(2,440,471	)		(3,873,840	)		(3,310,260	)		(14,070,187	)		(26,723,142	)		(28,241,376	)
Additional allowance included Financial
Guarantees Provided		-		-			-			-			-			(3,518,515	)		(3,873,065	)		(1,418,210	)		-			(10,694,192	)		(10,223,649	)
Financial Guarantees Provided		-		-			-			-			-			-			-			-			-			(1,884,402	)		(879,029	)
Additional allowance (3)		-		-			-			-			-			(3,518,515	)		(3,873,065	)		(1,418,210	)		-			(8,809,790	)		(9,344,620	)
Grand total - 06/30/2016		227,567,645		154,696,218			47,265,149			22,171,669			10,561,512			8,708,625			5,944,528			4,481,600			16,551,970			497,948,916
Existing allowance		-		(773,481	)		(472,651	)		(665,151	)		(1,056,152	)		(12,670,423	)		(8,915,604	)		(5,825,184	)		(16,551,970	)		(38,465,025	)
Minimum allowance required		-		(773,481	)		(472,651	)		(665,151	)		(1,056,152	)		(2,612,587	)		(2,972,264	)		(3,137,120	)		(16,551,970	)		(28,241,376	)
Additional allowance included Financial
Guarantees Provided		-		-			-			-			-			(5,028,918	)		(2,971,670	)		(1,344,032	)		-			(10,223,649	)
Financial Guarantees Provided (4)		-		-			-			-			-			-			-			-			-			(879,029	)
Additional allowance (3)		-		-			-			-			-			(5,028,918	)		(2,971,670	)		(1,344,032	)		-			(9,344,620	)

(1) Operations with overdue installments for more than 14 days or under control of administrators or in companies in the process of declaring bankruptcy.

(2) The balance of non-accrual operations amounts to R$ 18,644,587 (R$ 21,613,117 at 06/30/2016);

(3) Allocated to each level of risk in order to explain the additional volume.

(4) Provision for financial guarantees provided, recorded in liabilities in accordance with Resolution No. 4,512/2016 of the National Monetary Council (CMN) and Circular Letter No. 3,782/2016 of the Central Bank of Brazil. The amount on June 30, 2016 was reclassified for comparison purposes.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.36

III –  By business sector

	06/30/2017		%			06/30/2016		%
Public Sector		1,970,207		0.4	%		3,046,356		0.6	%
Private sector		477,904,808		99.6	%		494,902,560		99.4	%
Companies		249,100,486		51.9	%		265,047,701		53.2	%
Individuals		228,804,322		47.7	%		229,854,859		46.2	%
Grand total		479,875,015		100.0	%		497,948,916		100.0	%

IV - Financial guarantees provided by type

	06/30/2017					06/30/2016 (*)
Type of guarantees	Portfolio		Provision			Portfolio		Provision
Endorsements or sureties pledged in legal and administrative tax proceedings		36,343,398		(854,690	)		29,043,235		(164,832	)
Sundry bank guarantees		24,527,088		(841,492	)		35,358,841		(509,036	)
Other financial guarantees provided		4,518,126		(110,046	)		5,818,777		(131,327	)
Tied to the distribution of marketable securities via a Public Offering		2,713,120		(1,137	)		-		-
Restricted to bids, auctions, service provision or execution of works		3,715,888		(70,566	)		3,605,288		(52,167	)
Restricted to supply of goods		566,529		(5,654	)		722,752		(3,461	)
Restricted to international trade of goods		244,595		(817	)		495,350		(18,206	)
Total		72,628,744		(1,884,402	)		75,044,243		(879,029	)

(*) The breakdown of balances as at 06/30/2016 was adjusted to conform to the new classification requirement set out by the Regulator.

b) Credit concentration

	06/30/2017				06/30/2016
Loan, lease and other credit operations (*)	Risk		% of total		Risk		% of total
Largest debtor		4,770,679		0.9		4,090,276		0.7
10 largest debtors		30,035,211		5.4		31,780,724		5.5
20 largest debtors		47,742,002		8.6		48,773,149		8.5
50 largest debtors		77,607,529		14.1		82,219,900		14.3
100 largest debtors		103,633,970		18.8		110,162,906		19.2

(*) The amounts include financial guarantees provided.

	06/30/2017				06/30/2016
Loan, lease and other credit operations and securities of companies and financial institutions (*)	Risk		% of total		Risk		% of total
Largest debtor		6,620,682		1.1		7,708,999		1.1
10 largest debtors		41,074,823		6.5		46,124,087		6.8
20 largest debtors		66,190,097		10.5		75,579,690		11.2
50 largest debtors		109,056,704		17.4		122,706,046		18.2
100 largest debtors		143,634,534		22.9		162,511,940		24.1

(*) The amounts include financial guarantees provided.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.37

c) Changes in allowance for loan losses

	01/01 to			01/01 to
	06/30/2017			06/30/2016
Opening balance		(37,431,102	)		(33,520,941	)
Balance arising from the merger with Corpbanca (Note 2c)		-			(2,282,754	)
Effect of change in consolidation criteria (Note 2b)		-			(475,019	)
Adjustments arising from the first-time adoption of Resolution No. 4,512/16		(401,640	)		-
Net increase for the period		(10,485,647	)		(13,314,788	)
Required by Resolution No. 2,682/99		(10,632,744	)		(14,076,323	)
Required by Resolution No. 4,512/16		(37,317	)		-
Additional allowance (1)		184,414			761,535
Others		6,707			-
Write-Off		10,818,949			10,674,201
Exchange variation		75,399			454,276
Closing balance (2)		(37,417,334	)		(38,465,025	)
Required by Resolution No. 2,682/99		(26,723,142	)		(28,241,376	)
Specific allowance (3)		(14,385,370	)		(18,351,934	)
Generic allowance (4)		(12,337,772	)		(9,889,442	)
Additional allowance included Provision for Financial Guarantees Provided		(10,694,192	)		(10,223,649	)
Provision for Financial Guarantees Provided (5)		(1,884,402	)		(879,029	)
Additional allowance (1)		(8,809,790	)		(9,344,620	)

(1) Refers to the provision in excess of the minimum required percentage by CMN Resolution No. 2,682 of December 21, 1999.

(2) The allowance for loan losses related to the lease portfolio amounts to: R$ (344,140) (R$ (358,198) at 06/30/2016).

(3) Operations with overdue installments for more than 14 days or under responsibility of administrators or companies in the process of filing for bankruptcy.

(4) For operations not covered in the previous item due to the classification of the client or operation.

(5) Provision for financial guarantees provided, recorded in liabilities in accordance with Resolution No. 4,512/2016 of the National Monetary Council (CMN) and Circular Letter No. 3,782/2016 of the Central Bank of Brazil. The amount on June 30, 2016 was reclassified for comparison purposes.

At June 30, 2017, the balance of the allowance in relation to the loan portfolio is equivalent to 7.8% (7.7% at 06/30/2016).

d) Renegotiated loan operations

	06/30/2017									06/30/2016
	Portfolio (1)			Allowance for Loan Losses			%			Portfolio (1)			Allowance for Loan Losses			%
Amended Credit Agreements		26,385,631			(10,872,877	)		41.2	%		24,092,630			(10,436,166	)		43.3	%
(-) Renegotiated loans overdue up to 30 days (2)		(8,499,416	)		1,887,425			22.2	%		(7,811,328	)		2,181,373			27.9	%
Renegotiated loans overdue over 30 days (2)		17,886,215			(8,985,452	)		50.2	%		16,281,302			(8,254,793	)		50.7	%

(1) The amounts related to the lease portfolio are R$ 153,077 (R$ 206,391 at 06/30/2016).

(2) Delays determined upon renegotiation.

e) Restricted operations on assets

See below the information related to the restricted operations on assets, in accordance with CMN Resolution No. 2,921, of January 17, 2002.

	06/30/2017										01/01 to 06/30/2017			06/30/2016		01/01 to 06/30/2016
	0 - 30		31 - 180		181 - 365		Over 365 days		Total		Income (expenses)			Total		Income (expenses)
Restricted operations on assets
Loan operations		-		40,768		864		2,481,150		2,522,782		165,674			419,946		(15,285	)
Liabilities - restricted operations on assets
Foreign borrowing through securities		-		40,761		855		2,481,150		2,522,766		(165,889	)		422,235		19,057
Net revenue from restricted operations												(215	)				3,772

At June 30, 2017 and 2016 there were no balances in default.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.38

f) Operations of sale or transfers and acquisitions of financial assets

I - Credit assignments (transfers of receivables) carried out through December 2011 were recorded in accordance with the current regulations, together at that time with income recognition at the time of the assignment, regardless of the risks and benefits being retained or not, the amount of whereby the bank assumes joint obligations, at 06/30/2017 where the entity substantially retained the related risks and benefits, is R$ 120,188 (R$ 152,215 at 06/30/2016), composed of real estate financing of R$ 110,468 (R$ 140,663 at 06/30/2016) and farming financing of R$ 9,720 (R$ 11,552 at 06/30/2016).

II - Beginning January 2012, as provided for by CMN Resolution No. 3,533, of January 31, 2008 and supplementary regulation, accounting records take into consideration the retention or non-retention of risks and benefits on sale or transfers of financial assets.

The breakdown of financial assets sale or transfer transactions with risk and benefit retention is presented below.

	06/30/2017								06/30/2016
	Assets				Liabilities (1)				Assets				Liabilities (1)
Nature of operation	Book value		Fair value		Book value		Fair value		Book value		Fair value		Book value		Fair value
Mortgage Loan		2,623,983		2,645,438		2,621,809		2,643,264		2,738,947		2,678,466		2,737,712		2,677,231
Working capital		2,708,888		2,708,888		2,708,888		2,708,888		2,824,373		2,824,373		2,824,322		2,824,322
Vehicles (2)		-		-		3,146		3,146		-		-		5,281		5,281
Companies - loan (2)		-		-		5,843		5,843		-		-		9,809		9,809
Total		5,332,871		5,354,326		5,339,686		5,361,141		5,563,320		5,502,839		5,577,124		5,516,643

(1) Under Other sundry liabilities.

(2) Assignment of operations that had already been written down to losses.

Sales or transfers of financial assets without retention of risks and rewards amount to R$ 222,194 (R$ 192,938 at 06/30/2016) having effect on net income for the period R$ 37,308 (R$ 52,837 01/01 to 06/30/2016), net of the Allowance for loan and lease losses.

During the first half, financial assets were transferred without retention of risks and rewards between related companies in connection with those transactions whose likelihood of recovery was considered by Management as remote.

The portfolio, in the amount of R$ 10,556,672, fully written down to losses, was realized for the amount of R$ 141,565, according to an external appraisal report. The transaction did not have impact on the consolidated results.

There were no acquisitions of loan portfolios with the retention of assignor’s risks during the first half of 2017 (R$ 207,037 during the first half of 2016).

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.39

Note 9 - Foreign exchange portfolio

	06/30/2017			06/30/2016
Assets - other receivables		61,484,474			57,111,021
Exchange purchase pending settlement – foreign currency		32,410,389			32,568,271
Bills of exchange and term documents – foreign currency		17,318			2,075
Exchange sale rights – local currency		29,630,518			25,342,931
(Advances received) – local currency		(573,751	)		(802,256	)
Liabilities – other liabilities (Note 2a)		62,075,153			58,734,193
Exchange sales pending settlement – foreign currency		30,200,253			25,211,450
Liabilities from purchase of foreign currency – local currency		31,696,786			33,358,642
Other		178,114			164,101
Memorandum accounts		1,371,365			1,658,172
Outstanding import credits – foreign currency		817,797			903,131
Confirmed export credits – foreign currency		553,568			755,041

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.40

Note 10 – Funding, borrowing and onlending

a) Summary

	06/30/2017												06/30/2016
	0-30		31-180		181-365		Over 365 days		Total		%		Total		%
Deposits		200,952,390		32,483,556		19,429,352		101,715,342		354,580,640		38.3		311,712,656		34.8
Deposits received under securities repurchase agreements		201,422,117		19,649,762		31,392,486		89,093,892		341,558,257		36.9		355,053,582		39.6
Funds from acceptance and issuance of securities		5,476,323		23,735,405		18,467,922		60,402,532		108,082,182		11.7		84,234,786		9.4
Borrowing and onlending		4,958,585		21,219,920		15,554,575		27,796,898		69,529,978		7.5		85,261,104		9.5
Subordinated debt		1,003,754		8,275,875		2,569,012		40,255,569		52,104,210		5.6		60,282,082		6.7
Total		413,813,169		105,364,518		87,413,347		319,264,233		925,855,267				896,544,210
% per maturity term		44.7		11.4		9.4		34.5
Total – 06/30/2016		368,759,085		95,050,776		74,029,346		358,705,003		896,544,210
% per maturity term		41.1		10.6		8.3		40.0

b) Deposits

	06/30/2017												06/30/2016
	0-30		31-180		181-365		Over 365 days		Total		%		Total		%
Demand deposits		65,453,197		-		-		-		65,453,197		18.4		60,664,111		19.5
Savings accounts		109,542,150		-		-		-		109,542,150		30.9		104,493,158		33.5
Interbank		969,259		1,187,425		296,767		232,940		2,686,391		0.8		6,367,145		2.0
Time deposits		24,985,664		31,296,131		19,132,585		101,482,402		176,896,782		49.9		140,188,242		45.0
Other deposits		2,120		-		-		-		2,120		0.0		-		0.0
Total		200,952,390		32,483,556		19,429,352		101,715,342		354,580,640				311,712,656
% per maturity term		56.6		9.2		5.5		28.7
Total – 06/30/2016		198,977,831		34,111,516		17,619,159		61,004,150		311,712,656
% per maturity term		63.8		10.9		5.7		19.6

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.41

c) Deposits received under securities repurchase agreements

	06/30/2017												06/30/2016
	0 - 30		31 - 180		181 - 365		Over 365 days		Total		%		Total		%
Own portfolio		11,141,184		18,243,810		25,690,663		47,294,796		102,370,453		29.9		169,607,754		47.8
Government securities		4,838,877		56		4,266		432		4,843,631		1.4		22,250,918		6.3
Corporate Securities		4,318,952		516,210		-		-		4,835,162		1.4		1,624,785		0.4
Own issue		1,530,503		17,726,167		25,686,397		47,294,364		92,237,431		27.0		145,516,024		41.0
Foreign		452,852		1,377		-		-		454,229		0.1		216,027		0.1
Third-party portfolio		182,994,666		-		-		-		182,994,666		53.6		125,981,308		35.5
Free portfolio		7,286,267		1,405,952		5,701,823		41,799,096		56,193,138		16.5		59,464,520		16.7
Total		201,422,117		19,649,762		31,392,486		89,093,892		341,558,257				355,053,582
% per maturity term		59.0		5.7		9.2		26.1
Total – 06/30/2016		160,070,929		16,650,250		22,258,345		156,074,058		355,053,582
% per maturity term		45.1		4.6		6.3		44.0

d) Funds from acceptance and issuance of securities

	06/30/2017												06/30/2016
	0-30		31-180		181-365		Over 365 days		Total		%		Total		%
Funds from bills:		3,226,822		21,145,763		7,277,304		30,518,385		62,168,274		57.5		47,402,664		56.3
Financial		146,776		5,123,088		4,287,992		17,599,161		27,157,017		25.1		18,702,794		22.2
Real estate		1,104,526		10,499,842		1,440,067		5,827,459		18,871,894		17.5		16,331,474		19.4
Bill of credit related to agribusiness		1,975,520		5,522,833		1,549,245		7,091,765		16,139,363		14.9		12,368,396		14.7
Foreign securities		2,156,228		2,156,025		11,100,387		26,282,543		41,695,183		38.6		32,308,749		38.4
Brazil risk note programme		84,506		672,633		3,791,757		1,715,393		6,264,289		5.9		5,065,108		6.0
Structure note issued		126,631		649,307		1,039,576		3,530,907		5,346,421		4.9		6,688,114		7.9
Bonds		1,889,139		506,590		2,854,096		19,114,910		24,364,735		22.5		18,605,908		22.1
Fixed rate notes		2,218		-		3,089,757		-		3,091,975		2.9		786,443		0.9
Eurobonds		-		6,982		-		9,717		16,699		0.0		835,226		1.0
Mortgage notes		15,282		19,053		38,378		289,157		361,870		0.3		-		-
Other		38,452		301,460		286,823		1,622,459		2,249,194		2.1		327,950		0.4
Structured Operations Certificates (*)		93,273		433,617		90,231		3,601,604		4,218,725		3.9		4,523,373		5.3
Total		5,476,323		23,735,405		18,467,922		60,402,532		108,082,182				84,234,786
% per maturity term		5.0		22.0		17.1		55.9
Total – 06/30/2016		3,957,679		11,777,678		9,033,919		59,465,510		84,234,786
% per maturity term		4.7		14.0		10.7		70.6

(*) As of June 30, 2017, the market value of the funding from Structured Operations Certificates issued is R$ 4,418,309 (R$ 5,111,190 at 06/30/2016) according to BACEN Circular Letter No. 3,623.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.42

e) Borrowing and onlending

	06/30/2017												06/30/2016
	0-30		31-180		181-365		Over 365 days		Total		%		Total		%
Borrowing		3,990,086		17,157,745		11,626,294		9,562,626		42,336,751		60.9		52,311,909		61.4
Domestic		1,593,550		24,252		28,143		31,415		1,677,360		2.4		1,094,117		1.3
Foreign (*)		2,396,536		17,133,493		11,598,151		9,531,211		40,659,391		58.5		51,217,792		60.1
Onlending		968,499		4,062,175		3,928,281		18,234,272		27,193,227		39.1		32,949,195		38.6
Domestic – official institutions		968,499		4,062,175		3,928,281		18,234,272		27,193,227		39.1		32,948,550		38.6
BNDES		468,471		1,666,943		1,570,802		8,807,411		12,513,627		18.0		13,104,222		15.4
FINAME		492,780		2,266,776		2,306,252		8,971,135		14,036,943		20.2		19,188,195		22.5
Other		7,248		128,456		51,227		455,726		642,657		0.9		656,133		0.8
Foreign		-		-		-		-		-		0.0		645		0.0
Total		4,958,585		21,219,920		15,554,575		27,796,898		69,529,978				85,261,104
% per maturity term		7.1		30.5		22.4		40.0
Total – 06/30/2016		5,656,149		23,084,469		23,918,078		32,602,408		85,261,104
% per maturity term		6.6		27.1		28.1		38.2

(*) Foreign borrowing are basically represented by foreign exchange transactions related to export pre-financing and import financing.

Due to the exchange variation from the period from January 1 to June 30, 2016, the expense on financial operations – Borrowings and Onlending is presented with credit nature.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.43

f) Subordinated debt

	06/30/2017															06/30/2016
	0-30		31-180		181-365		Over 365 days			Total			%			Total			%
CDB		-		-		-		-			-			-			2,201,720			3.7
Financial treasury bills		975,076		8,061,046		2,499,345		9,044,417			20,579,884			39.5			27,473,209			45.5
Euronotes		-		-		-		26,148,134			26,148,134			50.2			25,368,718			42.1
Bonds		28,678		214,829		69,667		5,110,764			5,423,938			10.4			5,300,461			8.8
(-) Transaction costs incurred (Note 4b)		-		-		-		(47,746	)		(47,746	)		(0.1	)		(62,026	)		(0.1	)
Grand total (*)		1,003,754		8,275,875		2,569,012		40,255,569			52,104,210						60,282,082
% per maturity term		1.9		15.9		4.9		77.3
Total – 06/30/2016		96,497		9,426,863		1,199,845		49,558,877			60,282,082
% per maturity term		0.2		15.6		2.0		82.2

(*) According to current legislation, the accounting balance of subordinated debt as of June 2017 was used for the calculation of reference equity as of December, 2012, totaling R$ 46,433,564.

Description
Name of security / currency	Principal amount (original currency)		Issue	Maturity	Return p.a.	Account balance
Subordinated financial bills - BRL
		206,000	2010	2017	IPCA + 6.95% to 7.2%		354,045
		1,263,500	2011	2017	108% to 112% of CDI		1,576,558
		789,000			100% of CDI + 1.29% to 1.52%		866,424
		212,400			IPCA + 6.15% to 7.8%		455,254
		118,000			IGPM + 6.55% to 7.6%		239,367
		500,000	2012	2017	100% of CDI + 1.12%		504,973
		42,000	2011	2018	IGPM + 7%		61,681
		30,000			IPCA + 7.53% to 7.7%		48,142
		6,373,127	2012	2018	108% to 113% of CDI		7,312,404
		460,645			IPCA + 4.4% to 6.58%		771,538
		3,782,100			100% of CDI + 1.01% to 1.32%		3,885,543
		112,000			9.95% to 11.95%		183,103
		2,000	2011	2019	109% to 109.7% of CDI		3,812
		1,000	2012	2019	110% of CDI		1,873
		12,000			11.96%		22,073
		100,500			IPCA + 4.7% to 6.3%		166,881
		1,000	2012	2020	111% of CDI		1,883
		20,000			IPCA + 6% to 6.17%		38,689
		6,000	2011	2021	109.25% to 110.5% of CDI		11,753
		2,306,500	2012	2022	IPCA + 5.15% to 5.83%		4,047,012
		20,000			IGPM + 4.63%		26,876
					Total		20,579,884
Subordinated euronotes - USD
		1,000,000	2010	2020	6.2%		3,341,498
		1,000,000	2010	2021	5.75%		3,398,502
		750,000	2011	2021	5.75% to 6.2%		2,484,883
		550,000	2012	2021	6.2%		1,819,510
		2,625,000	2012	2022	5.5% to 5.65%		8,850,991
		1,870,000	2012	2023	5.13%		6,205,004
					Total		26,100,388
Subordinated bonds - CLP		13,739,331	2008	2022	7.4% to 7.99%		120,930
		41,528,200	2008	2033	3.5% to 4.5%		209,183
		110,390,929	2008	2033	4.8%		793,041
		98,151,772	2009	2035	4.8%		722,147
		2,000,000	2009	2019	10.7%		2,468
		94,500,000	2009	2019	IPC + 2%		112,198
		140,000,000	2010	2017	IPC + 2%		173,375
		11,311,860	2010	2032	4.4%		69,583
		24,928,312	2010	2035	3.9%		160,026
		125,191,110	2010	2036	4.4%		761,164
		87,087,720	2010	2038	3.9%		554,334
		68,060,124	2010	2040	4.1%		426,753
		33,935,580	2010	2042	4.4%		208,079
		104,000,000	2013	2023	IPC + 2%		113,318
		146,000,000	2013	2028	IPC + 2%		155,745
		510,107,100	2014	2024	LIB + 4%		570,717
		47,831,440	2014	2034	3.8%		270,877
					Total		5,423,938
Total							52,104,210

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.44

Note 11 – Contingent assets and liabilities and legal liabilities – tax and social security

ITAÚ UNIBANCO HOLDING PRUDENTIAL, as a result of the ordinary course of its business, may be a party to legal lawsuits of labor, civil and tax nature. The contingencies related to these lawsuits are classified as follows:

a) Contingent Assets: there are no contingent assets recorded.

b)   Provisions and contingencies: The criteria to quantify contingencies are adequate in relation to the specific characteristics of civil, labor and tax lawsuits portfolios, as well as other risks, taking into consideration the opinion of its legal advisors, the nature of the lawsuits, the similarity with previous lawsuits and the prevailing previous court decisions.

- Civil lawsuits:

In general, contingencies arise from claims related to the revision of contracts and compensation for damages and pain and suffering and the lawsuits are classified as follows:

Collective lawsuits: related to claims of a similar nature and with individual amounts that are not considered significant. Contingencies are determined on a monthly basis and the expected amount of losses is accrued according to statistical references that take into account the nature of the lawsuit and the characteristics of the court (Small Claims Court or Regular Court). Contingencies and provisions are adjusted to reflect the amounts deposited as guarantee for their execution when realized.

Individual lawsuits: related to claims with unusual characteristics or involving significant amounts. These are periodically calculated based on the calculation of the amount claimed. Probability of loss, which is estimated based on the characteristics of the lawsuit. The amounts considered as probable losses are recorded as provisions.

It should be mentioned that ITAÚ UNIBANCO HOLDING PRUDENTIAL is a party to specific lawsuits related to the collection of understated inflation adjustments to savings accounts resulting from economic plans implemented in the 80’s and 90’s as a measure to combat inflation.

Although ITAÚ UNIBANCO HOLDING PRUDENTIAL complied with the rules in effect at the time, the company is a defendant in lawsuits filed by individuals that address this topic, as well as in class actions filed by: (i) consumer protection associations; and (ii) the Public Prosecution Office on behalf of savings account holders. With respect to these lawsuits, ITAÚ UNIBANCO HOLDING PRUDENTIAL records provisions when it is served and when the individuals apply to enforce the decision rendered by the Judicial Branch, using the same criteria adopted to determine provisions for individual lawsuits.

The Federal Supreme Court (STF) has issued some decisions favorable to savings account holders, but it has not established its understanding with respect to the constitutionality of the economic plans and their applicability to savings accounts. Currently, the appeals involving these matters are suspended, as determined by the STF, until it pronounces a final decision.

No amount is recorded as a provision in relation to Civil lawsuits which likelihood of loss is considered possible, which total estimated risk is R$ 3,495,043 (R$ 2,536,817 at 06/30/2016), in this amount there are no values resulting from interests in joint ventures.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.45

- Labor claims

Contingencies arise from lawsuits in which labor rights provided for in labor legislation specific to the related profession are discussed, such as: overtime, salary equalization, reinstatement, transfer allowance, pension plan supplement, among others, are discussed. These lawsuits are classified as follows:

Collective lawsuits: related to claims considered similar and with individual amounts that are not considered relevant. The expected amount of loss is determined and accrued on a monthly basis in accordance with a statistical share pricing model and is reassessed taking into account the court rulings. These contingencies are adjusted to the amounts deposited as guarantee for their execution when realized.

Individual lawsuits: related to claims with unusual characteristics or involving significant amounts. These are periodically calculated based on the calculation of the amount claimed. Probability of loss which, in turn, is estimated in accordance with the actual and legal characteristics related to that lawsuit.

No amount is recorded as a provision for labor claims for which the likelihood of loss is considered possible, and for which the total estimated risk is R$ 53,063 (R$ 464,529 at 06/30/2016).

- Other Risks

These are quantified and accrued mainly based on the evaluation of rural credit transactions with joint liability and FCVS (salary variations compensation fund) credits assigned to Banco Nacional.

The table below shows the changes in the respective provisions for contingent liabilities and the respective escrow deposits balances:

	01/01 to 06/30/2017												01/01 to 06/30/2016
	Civil			Labor			Other			Total			Total
Opening balance		5,099,589			6,972,581			258,375			12,330,545			10,921,721
Effect of change in consolidation criteria (Note 2b)											-			23,996
Balance arising from the merger with Corpbanca (Note 2c)											-			140,132
(-) Contingencies guaranteed by indemnity clauses (Note 4m I)		(256,089	)		(1,060,459	)		-			(1,316,548	)		(1,219,585	)
Subtotal		4,843,500			5,912,122			258,375			11,013,997			9,866,264
Monetary restatement / charges		62,459			298,973			-			361,432			465,804
Changes in the period reflected in results (Notes 12f and 12i)		594,946			1,092,277			(13,625	)		1,673,598			1,619,835
Increase (*)		826,113			1,190,201			10			2,016,324			2,023,854
Reversal		(231,167	)		(97,924	)		(13,635	)		(342,726	)		(404,019	)
Payment		(628,033	)		(1,222,139	)		-			(1,850,172	)		(1,676,800	)
Subtotal		4,872,872			6,081,233			244,750			11,198,855			10,275,103
(+) Contingencies guaranteed by indemnity clauses (Note 4m I)		275,281			1,035,409			-			1,310,690			1,257,176
Closing balance		5,148,153			7,116,642			244,750			12,509,545			11,532,279
Closing balance at 06/30/2016		5,099,492			6,180,222			252,565			11,532,279
Escrow deposits at 06/30/2017		1,492,708			2,198,349			-			3,691,057
Escrow deposits at 06/30/2016		1,611,494			2,111,259			-			3,722,753

(*) Civil provisions include the provision for economic plans amounting to R$ 72,824 (R$ 102,330 from January 1 to June 30, 2016) (Note 21k).

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.46

- Tax and social security lawsuits

ITAÚ UNIBANCO HOLDING PRUDENTIAL classify as legal liability the lawsuits filed to discuss the legality and unconstitutionality of the legislation in force, which are the subject matter of a provision, regardless of the probability of loss.

Tax contingencies correspond to the principal amount of taxes involved in tax, administrative or judicial challenges, subject to tax assessment notices, plus interest and, when applicable, fines and charges. A provision is recognized whenever the likelihood of loss is probable.

The table below shows the changes in the provisions and respective balances of escrow deposits for Tax and Social Security lawsuits.

	01/01 to 06/30/2017									01/01 to 06/30/2016
Provisions	Legal obligation			Contingencies			Total			Total
Opening balance		3,767,411			3,506,134			7,273,545			6,553,688
(-) Contingencies guaranteed by indemnity clauses (Note 4m II)		-			(63,343	)		(63,343	)		(59,156	)
Subtotal		3,767,411			3,442,791			7,210,202			6,494,532
Monetary restatement/charges		133,770			230,890			364,660			333,911
Changes in the period reflected in results		39,670			5,346			45,016			83,499
Increase		39,736			209,616			249,352			152,351
Reversal		(66	)		(204,270	)		(204,336	)		(68,852	)
Payment		(715	)		(11,675	)		(12,390	)		(68,115	)
Subtotal		3,940,136			3,667,352			7,607,488			6,843,827
(+) Contingencies guaranteed by indemnity clauses (Note 4m II)		-			65,207			65,207			61,228
Closing balance (Note 13c)		3,940,136			3,732,559			7,672,695			6,905,055
Closing balance at 06/30/2016 (Note 13c)		3,606,025			3,299,030			6,905,055

	01/01 to 06/30/2017									01/01 to 06/30/2016
Escrow deposits	Legal obligation			Contingencies			Total			Total
Opening balance		3,872,128			528,561			4,400,689			3,884,176
Appropriation of income		59,994			31,816			91,810			203,364
Changes in the period		118,272			(28,519	)		89,753			112,084
Reclassification		-			(17,501	)		(17,501	)		-
Deposited		120,021			856			120,877			153,489
Withdrawals		(193	)		(11,874	)		(12,067	)		(16,309	)
Reversals to income		(1,556	)		-			(1,556	)		(25,096	)
Closing balance		4,050,394			531,858			4,582,252			4,199,624
Closing balance at 06/30/2016		3,706,986			492,638			4,199,624

The main discussions related to the provisions recognized for Tax and Social Security Lawsuits are as follows:

· CSLL – Isonomy – R$ 1,247,728: the company is discussing the lack of constitutional support for the increase, established by Law nº 11,727/08, of the CSLL rate for financial and insurance companies from 9% to 15%. The balance of the deposit in court totals R$ 1,230,863;

· INSS – Accident Prevention Factor (FAP) – R$ 1,042,375: the company is discussing the legality of FAP and inconsistent calculations made by the INSS. The balance of the deposit in court totals R$ 110,859;

· ISS – Banking Activities – R$ 912,875: it is being discussed that certain revenues do not constitute a taxable event of the local tax or it is not included in the list of services of Supplementary Law 116/03 and/or Decree Law 406/68. The total balance of escrow deposit is R$ 345,658;

· PIS and COFINS – Calculation basis – R$ 602,441: the company is challenging the levy of PIS and COFINS on revenue, which should be understood as revenue from the sales of assets and services. The balance of the deposit in court totals R$ 575,301;

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.47

Off-balance sheet contingencies

The amounts involved in tax and social security lawsuits for which the likelihood of loss is possible are not recognized in a provision. The estimated amounts at risk in the main tax and social security lawsuits with a likelihood of loss deemed possible, which total R$ 18,224,468, are described below:

· INSS – Non-compensatory amounts – R$ 4,788,326: the company defends the non-levy of this contribution on these amounts, among which are profit sharing, stock options, transportation vouchers and sole bonuses;

· IRPJ and CSLL – Goodwill – Deduction – R$ 3,469,734: the deductibility of goodwill with future expected profitability on the acquisition of investments, and R$ 688,729 of this amount is guaranteed in purchase agreements;

· PIS and COFINS - Reversal of Revenues from Depreciation in Excess – R$ 1,453,516: the company is discussing the accounting and tax treatment granted to PIS and COFINS upon settlement of leasing operations;

· IRPJ and CSLL – Interest on capital – R$ 1,422,732: the company is defending the deductibility of interest on capital declared to stockholders based on the Brazilian long term interest rate (TJLP) on the stockholders’ equity for the year and for prior years;

· IRPJ, CSLL, PIS and COFINS – Requests for offsetting dismissed - R$ 1,252,490: cases in which the liquidity and the ability of offset credits are discussed;

· ISS – Banking Institutions – R$ 1,025,816: these are banking operations, revenue from which may not be interpreted as prices for services rendered, and/or which arises from activities not listed under Supplementary Law No. 116/03 or Decree Law No. 406/68.

· IRPJ and CSLL – Disallowance of Tax Losses – R$ 607,157: Discussion on the amount of tax loss carryforwards, which may reduce the calculation basis of such taxes.

· IRPJ / CSLL – Deductibility of Losses in Credit Operations – R$ 556,518 – Assessments drawn up to require the payment of IRPJ and CSLL due to the alleged non-observance of the legal criteria for the deduction of losses upon the receipt of credits.

c) Receivables - reimbursement of contingencies

The receivables balance arising from reimbursements of contingencies totals R$ 1,145,150 (R$ 1,122,110 at 06/30/2016) (Note 12a). This value is derived basically from the guarantee in the privatization process of the Banco Banerj S.A., which occurred in 1997, when the State of Rio de Janeiro created a fund to guarantee civil, labor and tax contingencies.

d) Assets pledged as contingencies

Assets pledged in guarantee for contingencies are related to liability contingencies and restricted or deposited as presented below:

	06/30/2017		06/30/2016
Securities (basically financial treasury bills – Note 7b)		920,966		930,395
Deposits in guarantee		4,244,905		4,058,700

Deposits related to lawsuits must be made in court and can be withdrawn by the winning party in the lawsuit, with the respective additions provided for by law, according to the court decision.

Provisions for contingencies in connection with lawsuits involving ITAÚ UNIBANCO HOLDING PRUDENTIAL are usually for the long term, taking into account the time it takes for the prosecution of these actions in the Brazilian judicial system. Accordingly, we did not disclose an estimate for the specific year when these lawsuits would be settled.

Pursuant to the position of its legal advisors, ITAÚ UNIBANCO HOLDING PRUDENTIAL is not involved in any other administrative or judicial proceedings that may significantly impact the results of their operations.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.48

e) Programs for Cash or Installment Payment of Municipal Taxes

ITAÚ UNIBANCO HOLDING PRUDENTIAL adhere to PPIs – Installment Payment Incentive Programs substantially related to the local level, established the following by laws: Law No. 5,854, of April 27, 2015 - Rio de Janeiro; Law No. 8,927, of October 22, 2015 and Decree-Law No. 26,624, of October 26, 2015 - Salvador; Law No. 18,181, of November 30, 2015 and Decree Law No. 29,275, of November 30, 2015 - Recife; Supplementary Law No. 95, of October 19, 2015 – Curitiba; Law No. 3,546, of December 18, 2015 – Salto; Law No. 12,457, of October 3, 2016 – Londrina.

The PPIs promote the regularization of debts mentioned in these laws, arising from tax and non-tax credits, either recognized or not, including those that are part of the Enforceable Debt, either filed or to be filed in court.

The net effect of the PPIs in result was R$ 13,691, and it is recorded in Other Operating Income.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.49

Note 12 - Breakdown of accounts

a) Other sundry receivables

	06/30/2017			06/30/2016
Social contribution for offset (Note 13b I)		632,447			638,235
Taxes and contributions for offsetting		6,576,583			4,874,650
Escrow deposits for foreign fund raising program		526,499			1,352,720
Receivables from reimbursement of contingent liabilities (Note 11c)		1,145,150			1,122,110
Receivables from reimbursement of contingent liabilities		2,257,103			2,156,482
(Allowance for loan losses)		(1,111,953	)		(1,034,372	)
Sundry domestic debtors		1,363,489			1,834,622
Premiums from loan operations		568,291			1,212,676
Sundry foreign debtors		2,361,817			2,459,177
Retirement plan assets (Note 18)		1,088,301			2,246,088
Recoverable payments		32,520			43,484
Salary advances		290,008			297,008
Amounts receivable from related companies		109,516			129,178
Operations without credit granting characteristics		2,490,764			1,548,336
Securities and credits receivable		3,092,179			1,908,107
(Allowance for loan losses)		(601,415	)		(359,771	)
Other		462,931			528,701
Total		17,648,316			18,293,943

b) Prepaid expenses

	06/30/2017		06/30/2016
Commissions (*)		663,790		1,114,418
Related to vehicle financing		66,809		106,283
Linked to Payroll Advance Loans		437,779		858,469
Other		159,202		149,666
Advertising		334,075		311,033
Other		1,065,469		989,942
Total		2,063,334		2,415,393

(*) In the first half of 2017, the impact on income from commissions from local correspondents, as described in Note 4g, was R$ 192,496 (R$ 158,462 at 06/30/2016).

c) Other sundry liabilities

	06/30/2017		06/30/2016
Provisions for sundry payments		2,334,154		2,657,909
Personnel provision		1,698,487		1,629,644
Sundry creditors - local		2,486,461		1,645,210
Sundry creditors - foreign		3,997,022		3,784,544
Liabilities for official agreements and rendering of payment services		816,584		1,154,754
Creditors of funds to be released		757,374		1,009,696
Funds from consortia participants		158,781		107,750
Provision for Retirement Plan Benefits (Note 18)		780,321		691,552
Provision financial guarantees provided (Note 8c)		1,884,402		879,029
Liabilities from transactions related to credit assignments (Note 8f)		5,339,686		5,577,124
Liabilities from sales operations or transfer of financial assets		37,443		38,615
Minority interest of investment funds		5,041,409		4,018,490
Other		275,596		428,338
Total		25,607,720		23,622,655

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.50

d) Banking service fees

	01/01 to		01/01 to
	06/30/2017		06/30/2016
Asset management		2,439,397		2,106,067
Funds management fees		2,128,987		1,765,996
Consortia management fees		310,410		340,071
Current account services		397,161		405,047
Credit cards -  Relationship with stores		5,080,410		5,025,250
Sureties and credits granted		1,272,719		1,191,459
Loan operations		520,034		491,897
Guarantees provided		752,685		699,562
Receipt services		813,983		765,320
Collection fees		684,092		645,709
Collection services		129,891		119,611
Other		1,413,156		1,484,914
Custody services and management of portfolio		197,933		177,434
Economic and financial advisory		308,745		249,242
Foreign exchange services		57,661		44,612
Other services		848,817		1,013,626
Total		11,416,826		10,978,057

e) Income from bank charges

	01/01 to		01/01 to
	06/30/2017		06/30/2016
Loan operations/registration		445,613		400,435
Credit cards – annual fees and other services		1,740,554		1,552,130
Deposit account		96,429		77,507
Transfer of funds		139,163		104,505
Income from securities brokerage		298,566		183,061
Service package fees		3,024,646		2,832,375
Total		5,744,971		5,150,013

f) Personnel expenses

	01/01 to			01/01 to
	06/30/2017			06/30/2016
Compensation		(4,096,205	)		(3,555,886	)
Charges		(1,378,953	)		(1,237,647	)
Welfare benefits (Note 18)		(1,644,054	)		(1,392,508	)
Training		(98,689	)		(73,281	)
Labor claims and termination of employees (Note 11b)		(1,322,406	)		(1,298,091	)
Stock Option Plan		(100,043	)		(175,709	)
Total		(8,640,350	)		(7,733,122	)
Employees’ profit sharing		(1,558,736	)		(1,505,999	)
Total including employees’ profit sharing		(10,199,086	)		(9,239,121	)

g) Other administrative expenses

	01/01 to			01/01 to
	06/30/2017			06/30/2016
Data processing and telecommunications		(1,977,153	)		(1,888,181	)
Depreciation and amortization		(1,075,131	)		(1,070,388	)
Installations		(1,650,217	)		(1,593,786	)
Third-party services		(2,023,254	)		(2,098,619	)
Financial system services		(383,528	)		(357,630	)
Advertising, promotions and publication		(499,581	)		(431,172	)
Transportation		(165,693	)		(198,141	)
Materials		(154,526	)		(138,499	)
Security		(363,192	)		(357,591	)
Travel expenses		(95,506	)		(86,163	)
Other		(570,352	)		(501,546	)
Total		(8,958,133	)		(8,721,716	)

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.51

h) Other operating revenue

	01/01 to		01/01 to
	06/30/2017		06/30/2016
Reversal of operating provisions		38,312		19,307
Recovery of charges and expenses		65,078		62,266
Program for Settlement or Installment Payment of Federal (Note 11e)		-		11,443
Other		368,711		273,999
Total		472,101		367,015

i) Other operating expenses

	01/01 to			01/01 to
	06/30/2017			06/30/2016
Provision for contingencies (Note 11b)		(550,852	)		(691,173	)
Civil lawsuits		(594,946	)		(561,956	)
Tax and social security contributions		30,469			(142,266	)
Other		13,625			13,049
Selling - credit cards		(1,665,527	)		(1,427,333	)
Claims		(149,642	)		(132,026	)
Refund of interbank costs		(152,161	)		(141,598	)
Amortization of goodwill on investments and acquisition		(1,551,700	)		(1,265,701	)
Other		(1,018,610	)		(867,382	)
Total		(5,088,492	)		(4,525,213	)

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.52

Note 13 - Taxes

a) Composition of expenses for taxes and contributions

I - Statement of calculation of income tax and social contribution:

Due on operations for the period	01/01 to 06/30/2017			01/01 to 06/30/2016
Income before income tax and social contribution		14,896,631			20,235,597
Charges (income tax and social contribution) at the rates in effect (Note 4n)		(6,703,484	)		(9,106,019	)
Increase/decrease to income tax and social contribution charges arising from:
Investments in affiliates		725,778			(1,061,398	)
Foreign exchange variation on investments abroad		280,446			(3,957,175	)
Interest on capital		1,919,395			1,164,539
Dividends and interest on external debt bonds		219,925			174,573
Other nondeductible expenses net of non taxable income (*)		1,374,249			10,124,149
Income tax and social contribution expenses		(2,183,691	)		(2,661,331	)
Related to temporary differences
Increase (reversal) for the period		(1,369,529	)		(8,147,464	)
Increase (reversal) of prior periods		(14,525	)		187
(Expenses)/Income from deferred taxes		(1,384,054	)		(8,147,277	)
Total income tax and social contribution expenses		(3,567,745	)		(10,808,608	)

(*) Includes temporary (additions) and exclusions.

II - Composition of tax expenses:

	01/01 to			01/01 to
	06/30/2017			06/30/2016
PIS and COFINS		(2,425,704	)		(3,369,962	)
ISS		(523,756	)		(497,810	)
Other		(296,213	)		(339,553	)
Total (Note 4n)		(3,245,673	)		(4,207,325	)

III- Tax effects on foreign exchange management of investments abroad

In order to minimize the effects on income in connection with the foreign exchange variation on investments abroad, net of respective tax effects, ITAÚ UNIBANCO HOLDING PRUDENTIAL carries out derivative transactions in foreign currency (hedge), as mentioned in Note 21b.

The results of these transactions are considered in the calculation base of income tax and social contribution, in accordance with their nature, while the foreign exchange variations on investments abroad are not included therein, pursuant to the tax legislation in force.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.53

b) Deferred taxes

I - The deferred tax asset balance and its changes, segregated based on its origin and disbursements incurred, are represented as follows:

	Provisions				Deferred Tax Assets
	06/30/2016		06/30/2017		12/31/2016		Realization / Reversal			Increase			06/30/2017		06/30/2016
Reflected in income and expense accounts						49,832,699		(7,439,028	)		6,830,194			49,223,865		50,969,997
Related to income tax and social contribution loss carryforwards						5,479,894		(393,467	)		1,627,576			6,714,003		6,000,822
Related to disbursed provisions						29,342,552		(4,568,648	)		2,762,671			27,536,575		30,672,447
Allowance for loan losses						26,689,256		(4,302,209	)		2,269,798			24,656,845		27,221,657
Adjustment to market value of securities and derivative financial instruments (assets/liabilities)						95,347		(95,347	)		219,240			219,240		1,224,718
Allowance for real estate						181,931		(109,792	)		67,814			139,953		191,879
Goodwill on purchase of investments						316,026		(49,724	)		45,730			312,032		362,443
Other						2,059,992		(11,576	)		160,089			2,208,505		1,671,750
Related to non-disbursed provisions (1)		36,989,599		38,878,709		15,010,253		(2,476,913	)		2,439,947			14,973,287		14,296,728
Related to the operation		26,765,950		28,184,517		10,834,393		(2,476,913	)		2,087,284			10,444,764		10,207,268
Provision for contingent liabilities		14,438,567		13,956,695		5,410,156		392,452			19,256			5,821,864		5,257,928
Civil lawsuits		5,093,596		4,777,325		1,929,649		(5,159	)		17,857			1,942,347		2,058,214
Labor claims		6,095,618		5,417,019		2,099,859		494,786			(398,317	)		2,196,328		1,900,430
Tax and social security contributions		3,237,802		3,732,559		1,377,116		(97,175	)		399,711			1,679,652		1,295,121
Other		11,551		29,792		3,532		-			5			3,537		4,163
Adjustments of operations carried out on the futures settlement market		1,321,127		1,282,467		537,938		(19,447	)		21,862			540,353		553,162
Legal obligation - tax and social security contributions		2,133,609		2,288,789		396,170		(238,774	)		86,844			244,240		548,730
Other non-deductible provisions		8,872,647		10,656,566		4,490,129		(2,611,144	)		1,959,322			3,838,307		3,847,448
Related to Additional Provisions in Relation to the Minimum Required Not Disbursed – Loan Losses, including Financial Guarantees Provided.		10,223,649		10,694,192		4,175,860		-			352,663			4,528,523		4,089,460
Provision for Financial Guarantees Provided (Note 8c)(2)		879,029		1,884,402		650,450		-			197,531			847,981		395,563
Additional allowance		9,344,620		8,809,790		3,525,410		-			155,132			3,680,542		3,693,897
Reflected in stockholders’ equity accounts						1,568,476		(241,662	)		264,543			1,591,357		1,392,567
Adjustment to market value of available-for-sale securities		1,929,568		868,827		625,293		(241,662	)		-			383,631		825,385
Provision for retirement plan benefits		-		16,564		-		-			7,454			7,454		-
Cash flow hedge		1,260,405		2,667,273		943,183		-			257,089			1,200,272		567,182
Total (3)		40,179,572		42,431,373		51,401,175		(7,680,690	)		7,094,737			50,815,222		52,362,564
Social contribution for offset arising from Option established in article 8 of Provisional Measure No. 2,158- 35 of August 24, 2001						637,311		(4,864	)		-			632,447		638,235

(1) From a financial point of view, rather than recording the provision of R$ 38,878,709 (R$ 36,989,599 at 06/30/2016) and deferred tax assets of R$ 15,623,737 (R$ 14,296,728 at 06/30/2016), only the net provisions of the corresponding tax effects should be considered, which would reduce the total deferred tax assets from R$ 50,815,222 (R$ 52,362,564 at 06/30/2016) to R$ 35,191,485 (R$ 38,065,836 at 06/30/2016).

(2) Refers to the recognition of tax credits in the amount of R$ 180,738 resulting from the initial application of CMN Resolution No. 4512/16, recorded in retained earnings (accumulated losses), in equity.

(3) The accounting records of deferred tax assets on income tax losses and/or social contribution loss carryforwards, as well as those arising from temporary differences, are based on technical feasibility studies which consider the expected generation of future taxable income, considering the history of profitability for each subsidiary individually, and for the consolidated taken as a whole. For the subsidiaries, Itaú Unibanco S.A. and Banco Itaucard S.A., due to their specific tax status, a petition has been sent to Central Bank of Brazil, in compliance with paragraph 7 of article 1 of Resolution No. 4,441/15 and pursuant to Circular 3,776/15.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.54

II - Provision for Deferred Income Tax and Social Contribution balance and its changes are shown as follows:

	12/31/2016		Realization / Reversal			Increase		06/30/2017		06/30/2016
Reflected in income and expense accounts		12,446,087		(8,326,960	)		9,145,962		13,265,089		12,154,105
Depreciation in excess – leasing		935,600		(90,975	)		-		844,625		1,211,252
Restatement of escrow deposits and contingent liabilities		1,103,511		(48,878	)		85,198		1,139,831		1,116,468
Provision for pension plan benefits		126,312		-			38,183		164,495		309,280
Adjustment to market value of securities and derivative financial instruments		8,178,341		(8,178,342	)		8,263,978		8,263,977		7,944,419
Adjustments of operations carried out on the futures settlement market		1,210,342		-			379,053		1,589,395		571,965
Taxation of results abroad – capital gains		-		-			80		80		-
Other		891,981		(8,765	)		379,470		1,262,686		1,000,721
Reflected in stockholders’ equity accounts		332,515		(320,889	)		43		11,669		391,986
Adjustment to market value of available-for-sale securities		298,043		(295,368	)		43		2,718		4,380
Provision for pension plan benefits (*)		34,472		(25,521	)		-		8,951		387,606
Total		12,778,602		(8,647,849	)		9,146,005		13,276,758		12,546,091

(*) Reflected in stockholders' equity, pursuant to CVM Resolution n° 4.424/15 (Note 18).

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.55

III - The estimate of realization and present value of deferred tax assets and social contribution for offset, arising from Provisional Measure No. 2,158-35 of August 24, 2001 and from the Provision for Deferred Income Tax and Social Contribution existing at June 30, 2017, are:

	Deferred tax assets																				Provision for
	Temporary differences		%			Tax loss/social contribution loss carryforwards		%			Total		%			Social contribution for offset		%			deferred income tax and social contribution			%			Net deferred taxes			%
2017		17,561,462		40	%		253,512		4	%		17,814,974		35	%		27,463		4	%		(1,462,938	)		11	%		16,379,499			43	%
2018		12,497,366		28	%		1,424,760		21	%		13,922,126		28	%		61,898		10	%		(460,775	)		3	%		13,523,249			35	%
2019		4,753,155		11	%		435,513		7	%		5,188,668		10	%		101,926		16	%		(1,951,667	)		15	%		3,338,927			9	%
2020		1,933,913		4	%		611,634		9	%		2,545,547		5	%		55,314		9	%		(3,502,961	)		26	%		(902,100	)		-3	%
2021		1,111,855		3	%		1,075,059		16	%		2,186,914		4	%		58,031		9	%		(867,306	)		7	%		1,377,639			4	%
after 2021		6,243,469		14	%		2,913,524		43	%		9,156,993		18	%		327,815		52	%		(5,031,111	)		38	%		4,453,697			12	%
Total		44,101,220		100	%		6,714,002		100	%		50,815,222		100	%		632,447		100	%		(13,276,758	)		100	%		38,170,911			100	%
Present value (*)		40,949,564					5,672,704					46,622,268					533,665					(11,563,345	)					35,592,588

(*) The average funding rate, net of tax effects, was used to determine the present value.

The projections of future taxable income include estimates related to macroeconomic variables, exchange rates, interest rates, volume of financial operations and service fees and others, which can vary in relation to actual data and amounts.

Net income in the financial statements is not directly related to the taxable income for income tax and social contribution, due to differences between the accounting criteria and tax legislation, in addition to corporate aspects. Accordingly, we recommend that the trends for the realization of deferred tax assets arising from temporary differences, income tax and social contribution loss carry forwards are not used as an indication of future net income.

IV- Considering the temporary effects introduced by Law No. 13,169/15, which increased the social contribution rate to 20% through December 31, 2018, tax credits were recognized based on their likelihood of realization. As at 06/30/2017 and 06/30/2016, there are no unrecognized tax credits.

c) Tax and social security contributions

	06/30/2017		06/30/2016
Legal liabilities – tax and social security (Note 11b)		3,940,136		3,606,025
Provision for deferred income tax and social contribution (Note 13b II)		13,276,758		12,546,091
Taxes and contributions on income payable		1,468,996		1,291,376
Taxes and contributions payable		1,735,281		1,545,730
Total		20,421,171		18,989,222

d) Taxes paid or provided for and withheld from third parties

The amount of taxes paid or provided for mainly arises from those levied on income, revenue and payroll. In relation to the amounts withheld and collected from third parties, the company takes into consideration the interest on capital and on the provision of service, in addition to that levied on financial operation.

	06/30/2017		06/30/2016
Taxes paid or provided for		7,811,240		8,920,734
Taxes withheld and collected from third parties		8,314,942		7,497,381
Total		16,126,182		16,418,115

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.56

Note 14 – Permanent Assets

a) Investments

I) Composition of investments

	Number of shares held									06/30/2017							06/30/2016
	Common		Preferred		Quotas		% Participation at 06/30/2017			Stockholders’ equity		Net income			Investment (1)		Equity in earnings (1)			Investment (1)		Equity in earnings (1)
Domestic																19,569,372		1,645,660			14,121,861		(2,237,741	)
BSF Holding S.A (2a)		616,973,700		-		-		49.00	%		1,978,969		116,230			1,149,815		52,429			1,270,800		100,503
Cia Itaú Capitalização		318,709		-		-		47.50	%		784,633		195,260			372,702		92,723			253,875		78,461
Conectcar Soluções De Mobilidade Eletrônica S.A. (2b) (3)		169,860,500		-		-		50.00	%		114,590		(17,840	)		173,115		(8,920	)		-		-
Credicard Promotora de Vendas Ltda. (4)		-		-		-		-			-		-			-		-			-		36,829
Facilita Promotora Ltda. (4)		-		-		-		-			-		-			-		-			-		16,696
Intrag Part Administração e Participações Ltda. (4)		-		-		-		-			-		-			-		-			-		53,882
Investimentos Bemge S.A.		675,541		1,376,635		-		86.81	%		204,500		6,893			177,530		5,984			164,615		6,582
Itaú Administração Previdenciária Ltda.		-		-		538,571,667		100.00	%		161,204		14,005			161,138		14,113			126,093		15,122
Itaú BBA Participações S.A.		548,954		1,097,907		-		100.00	%		1,935,580		137,182			1,635,617		130,924			1,473,494		110,765
Itaú Participação Ltda.		-		-		90,000,000		100.00	%		272,983		9,196			272,983		9,196			258,889		2,999
Itaú Vida e Previdência S.A.		304,663,062		-		-		34.33	%		3,747,400		178,502			1,286,603		61,285			831,562		128,687
Itauseg Participações S.A.		5,071,251,017		-		-		100.00	%		7,668,561		730,414			7,664,229		731,342			5,256,523		941,492
Itauseg Saúde S.A.		1,593,873,200		-		-		53.72	%		859,693		89,008			461,826		47,815			402,822		(34,552	)
ITB Holding Brasil Participações Ltda.(5)		-		-		3,976,472,348		100.00	%		24,373,018		414,378			1,016,845		244,498			-		(3,860,014	)
Marcep Corretagem de Seguros S.A.		151,575,196		11,397,744		-		48.13	%		852,933		168,157			410,488		80,928			291,175		66,302
Provar Negócios de Varejo Ltda		-		-		304,624,820		100.00	%		2,240,213		72,669			2,240,156		72,667			660,504		(11,342	)
Recovery do Brasil Consultoria S.A.(2c)		23,394,027		-		-		96.00	%		88,270		3,345			699,428		3,211			723,237		2,249
Trishop Promoção e Serviços Ltda. (4)		-		-		-		-			-		-			-		-			-		12,415
Unibanco Negócios Imobiliários Ltda. (6)		-		-		-		-			-		-			-		-			794,986		19,836
Other (7)																1,846,897		107,465			1,613,286		75,347
Foreign																2,321,785		38,908			3,455,174		(392,017	)
BICSA Holdings Ltd. (8a)		-		-		330,860,746		100.00	%		1,724,588		(20,290	)		1,691,200		(18,403	)		1,656,538		(326,493	)
CorpBanca Corredora de Seguro S.A.		307,957,965		-		-		99.99	%		50,921		18,131			50,916		18,129			93,404		9,089
IPI - Itaúsa Portugal Investimentos, SGPS Lda. (8b) (9)		-		-		-		-			-		-			-		-			83,697		1,732
Itaú Asesorías Financeiras S.A.		30,000		-		-		100	%		22,689		6,502			22,686		6,501			84,866		5,764
Itaú Asia Securities LTD  (8c) (10)		161,116,484		-		-		99.99	%		69,681		(747	)		69,681		(1,295	)		-		-
Itaú Chile Administradora General de Fondos S.A.		9,999		-		-		99.99	%		25,817		11,671			25,814		11,670			186,597		15,502
Itaú Chile Corredora de Seguros Ltda.		-		-		99		99.90	%		38,627		23,030			38,587		23,007			274,384		26,533
Itaú Chile Holding, INC.  (11)		-		-		-		-			-		-			-		-			-		3,471
Itaú Europa Luxembourg S.A.		9,767		-		-		100.00	%		793,417		(6,200	)		134,581		(43,059	)		160,860		(6,814	)
Jasper International Investiment LLC		42,487,620		-		-		100.00	%		1,873		(48	)		1,873		(48	)		569,409		1,853
Unión Capital AFAP S.A.		148,966,409		-		-		100.00	%		89,390		26,077			89,390		26,077			74,610		22,248
Other																197,057		16,329			270,809		(144,902	)
Total																21,891,157		1,684,568			17,577,035		(2,629,758	)

(1) Investment amounts and net result of consolidated entities’ equity in earnings, in compliance with the provisions of BACEN Circular No. 3,701, of March 13, 2014.

(2) At 06/30/2017 includes goodwill in the amount of a) R$ 180,120 (R$ 259,391 at 06/30/2016); b) R$ 115,820 and c) R$ 614,688 ( R$ 647,016 at 06/30/2016);

(3) Companies was no longer consolidated as from that 01/31/2017, in compliance with the provisions of CVM Circular No. 4,517 of August 24, 2016.

(4) Companies merged on May 31, 2016.

(5) As a result of the inclusion of ITB Holding Ltd. in the Consolidated, the interest of ITB Holding Brasil Participações Ltda. at 06/30/2016 was indirectly eliminated as a whole.

(6) Companies merged on November 30, 2016.

(7) Includes equity in earnings not arising from net income.

(8) Includes foreign exchange variation of a) R$ (R$ 365,281) at 06/30/2016 b) R$ 1,436 at 06/30/2016 c) (R$ 248) at 30/06/2017; For the other companies abroad, as from January 2017, exchange variation became part of the shareholders’ equity, in compliance with Resolution No. 4.524 of September 29, 2016;

(9) Investment spun off on November 30, 2016 into ITB Holding Brasil Participações Ltda.;

(10) Companies was no longer consolidated as from that 05/31/2017

(11) Company liquidated on February 29, 2016.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.57

II) Other investments

	06/30/2017			06/30/2016
Other investments		674,629			645,891
Shares and quotas		53,281			53,284
Investments through tax incentives		142,803			142,759
Equity securities		12,369			11,809
Other		466,176			438,039
(Allowance for loan losses)		(149,517	)		(149,525	)
Total		525,112			496,366
Equity - Other investments		6,309			4,368

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.58

b) Fixed assets, goodwill and intangible assets

I) Fixed assets

				Real Estate in Use (2) (3)						Other Fixed Assets (2) (3)
Real estate in use (1)	Fixed assets under construction			Land			Buildings			Improvements			Installations			Furniture and equipment			EDP Systems			Other (communication, security and transportation)			Total
Annual depreciation rates								4	%		10	%		10 to 20	%		10 to 20	%		20 to 50	%		10 to 20	%
Cost
Balance at 12/31/2016		383,902			597,100			2,460,105			1,845,119			1,837,857			1,180,178			6,254,941			1,070,020			15,629,222
Acquisitions		108,498			350			304			43,140			8,962			42,259			121,953			44,975			370,441
Disposals		-			-			-			(17,627	)		(989	)		(6,066	)		(160,549	)		(11,858	)		(197,089	)
Exchange variation		34			354			5,415			3,800			26,745			(18,673	)		(226	)		2,209			19,658
Transfers		(293,574	)		-			194,732			69,592			-			-			29,234			-			(16	)
Other		-			(886	)		(3,496	)		8,119			(6,260	)		(38,954	)		(16,647	)		(1,526	)		(59,650	)
Balance at 06/30/2017		198,860			596,918			2,657,060			1,952,143			1,866,315			1,158,744			6,228,706			1,103,820			15,762,566
Depreciation
Balance at 12/31/2016		-			-			(1,326,771	)		(1,108,064	)		(945,061	)		(656,013	)		(4,671,537	)		(650,478	)		(9,357,924	)
Depreciation expenses		-			-			(31,297	)		(105,528	)		(75,159	)		(52,369	)		(329,079	)		(52,485	)		(645,917	)
Disposals		-			-			-			14,461			324			2,544			146,504			11,429			175,262
Exchange variation		-			-			(1,252	)		(3,744	)		(16,171	)		33,924			(15,835	)		(2,391	)		(5,469	)
Other		-			-			1,371			(4,583	)		1,731			11,647			37,338			2,324			49,828
Balance at 06/30/2017		-			-			(1,357,949	)		(1,207,458	)		(1,034,336	)		(660,267	)		(4,832,609	)		(691,601	)		(9,784,220	)
Impairment
Balance at 12/31/2016		-			-			-			-			-			-			-			-			-
Additions/ assumptions		-			-			-			-			-			-			-			-			-
Reversals		-			-			-			-			-			-			-			-			-
Balance at 06/30/2017		-			-			-			-			-			-			-			-			-
Book value
Balance at 06/30/2017		198,860			596,918			1,299,111			744,685			831,979			498,477			1,396,097			412,219			5,978,346
Balance at 06/30/2016		371,749			611,573			1,145,212			699,973			899,079			410,066			1,770,304			328,815			6,236,771

(1) The contractual commitments for the purchase of the fixed assets totaled R$ 246,966, achievable by 2017.

(2) Includes amounts pledged in guarantee of voluntary deposits (Note 11d).

(3) Includes the amount of R$ 3,548 (R$ 4,068 at 06/30/2016) related to attached real estate.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.59

II) Goodwill

				Changes
	Amortization period	Balance at 12/31/2016		Amortization expenses			Disposals (*)			Balance at 06/30/2017		Balance at 06/30/2016
Goodwill (Notes 2b and 4j)	10 years		1,042,185		(125,426	)		(121,916	)		794,843		567,916

(*) Goodwill related to Conectar has not been consolidated since January 2017, in compliance with Bacen Resolution N. 4517, of August 24, 2016.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.60

III) Intangible assets

				Other intangible assets
Intangible (1)	Rights for acquisition of payroll (2)			Association for the promotion and offer of financial products and services			Acquisition of (5) software			Development of software			Goodwill on Acquisition (Note 4k)			Other Intangible Assets			Total
Annual amortization rates		20	%		8	%		20	%		20	%		20	%		10% to 20%
Cost
Balance at 12/31/2016		1,045,323			1,746,405			3,776,949			3,515,539			18,812,714			1,004,086			29,901,016
Acquisitions		148,301			-			340,804			64,953			-			-			554,058
Disposals		(176,702	)		(8,246	)		-			(10	)		-			-			(184,958	)
Exchange variation		-			4,084			(4,188	)		-			165,214			11,678			176,788
Other		(12,760	)		1,828			(29,406	)		-			11,202			-			(29,136	)
Balance at 06/30/2017		1,004,162			1,744,071			4,084,159			3,580,482			18,989,130			1,015,764			30,417,768
Amortization
Balance at 12/31/2016		(554,770	)		(374,492	)		(1,691,573	)		(527,364	)		(8,391,550	)		(444,542	)		(11,984,291	)
Amortization expenses (3)		(111,993	)		(151,516	)		(221,368	)		(192,941	)		(1,338,693	)		(14,905	)		(2,031,416	)
Disposals		158,099			8,246			-			10			-			-			166,355
Exchange variation		-			105,342			(5,898	)		-			(23,415	)		(18,661	)		57,368
Other		-			(12,528	)		2,842			-			(840	)		-			(10,526	)
Balance at 06/30/2017		(508,664	)		(424,948	)		(1,915,997	)		(720,295	)		(9,754,498	)		(478,108	)		(13,802,510	)
Impairment (4)
Balance at 12/31/2016		(18,528	)		-			(53,179	)		(329,595	)		-			-			(401,302	)
Additions/ assumptions		-			-			-			(1,589	)		-			-			(1,589	)
Disposals		18,251			-			(47	)		-			-			-			18,204
Balance at 06/30/2017		(277	)		-			(53,226	)		(331,184	)		-			-			(384,687	)
Book value
Balance at 06/30/2017		495,221			1,319,123			2,114,936			2,529,003			9,234,632			537,656			16,230,571
Balance at 06/30/2016		423,032			1,443,750			1,768,972			3,047,952			11,487,386			592,352			18,763,444

(1) The contractual commitments for the purchase of the new intangible assets totaled R$ 123,513, achievable by 2017.

(2) Represents the recording of amounts paid for acquisition of rights to provide services of payment of salaries, proceeds, retirement and pension benefits and similar benefits.

(3) Amortization expenses of the rights for acquisition of payrolls and associations are disclosed in the expenses on financial operations.

(4) Pursuant to BACEN Resolution No. 3,566, of May 29, 2001 (Note 12i).

(5) Includes R$ (12,506) related to adjustment of the consolidation criteria.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.61

Note 15 – Stockholders' equity

a) Shares

The Extraordinary Stockholders’ Meeting held on September 14, 2016 approved the increase of subscribed and paid-up capital by R$ 12,000,000, by capitalizing of the amounts recorded in Revenue Reserve – Statutory Reserve, with a 10% bonus shares. Bonus shares started being traded on October 21, 2016 and the process was approved by the Central Bank on September 23, 2016. Accordingly, capital stock was increased by 598,391,594 shares.

The Extraordinary Stockholders` Meeting of April 27, 2016 approved the cancellation of 100,000,000 preferred shares held in treasury, without change to the capital stock, by capitalization amounts recorded in Revenue Reserves – Statutory Reserve. This process was approved by the Central Bank of Brazil on June 7, 2016.

Capital comprises 6,582,307,543 book-entry shares with no par value, of which 3,351,744,217 are common and 3,230,563,326 are preferred shares without voting rights, but with tag-along rights, in the event of the public offer of common shares, at a price equal to 80% of the amount paid per share with voting rights in the controlling stake, as well as a dividend at least equal to that of the common shares. Capital stock amounts to R$ 97,148,000 (R$ 85,148,000 at 06/30/2016), of which R$ 66,257,941 (R$ 57,507,585 at 06/30/2016) refers to stockholders domiciled in the country and R$ 30,890,059 (R$ 27,640,415 at 06/30/2016) refers to stockholders domiciled abroad.

The table below shows the change in shares of capital stock and treasury shares during the period:

	Number
	Common		Preferred			Total			Amount
Residents in Brazil at 12/31/2016		3,335,350,311		1,104,963,731			4,440,314,042
Residents abroad at 12/31/2016		16,393,906		2,125,599,595			2,141,993,501
Shares of capital stock at 12/31/2016		3,351,744,217		3,230,563,326			6,582,307,543
Shares of capital stock at 06/30/2017		3,351,744,217		3,230,563,326			6,582,307,543
Residents in Brazil at 06/30/2017		3,332,400,080		1,156,937,300			4,489,337,380
Residents abroad at 06/30/2017		19,344,137		2,073,626,026			2,092,970,163
Treasury shares at 12/31/2016 (1)		3,074		69,604,462			69,607,536			(1,882,353	)
Purchase of treasury shares		-		35,382,900			35,382,900			(1,282,092	)
Exercised – granting of stock options		-		(13,207,357	)		(13,207,357	)		173,817
Disposals – stock option plan		-		(8,118,685	)		(8,118,685	)		419,563
Treasury shares at 06/30/2017 (1)		3,074		83,661,320			83,664,394			(2,571,065	)
Outstanding shares at 06/30/2017		3,351,741,143		3,146,902,006			6,498,643,149
Outstanding shares at 06/30/2016 (2)		3,351,741,143		3,170,957,175			6,522,698,318

(1) Own shares, purchased based on authorization of the Board of Directors, to be held in Treasury for subsequent cancellation or replacement in the market.

(2) For better comparability, outstanding shares for the period ending on June 30, 2016 were adjusted to reflect the bonuses of September 23, 2016.

We detail below of the cost of shares purchased in the period, as well the average cost of treasury shares and their market price (in Brazilian reais per share) at 06/30/2017:

Cost / Market value	Common		Preferred
Minimum		-		33.48
Weighted average		-		36.23
Maximum		-		38.56
Treasury shares
Average cost		6.59		30.73
Market value		32.54		36.75

b) Dividends

Stockholders are entitled to a mandatory dividend of not less than 25% of annual net income, which is adjusted according to the rules set forth in the Brazilian Corporate Law. Both types of shares participate equally, after common shares have received dividends equal to the annual minimum priority dividend of R$ 0.022 per share (non-cumulative) to be paid to preferred shares.

The calculation of the monthly advance of mandatory minimum dividend is based on the share position on the last day of the prior month, taking into consideration that the payment is made on the first business day of the subsequent month, amounting to R$ 0.015 per share.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.62

I - Calculation

Net income - Itaú Unibanco Holding Individual (BRGAAP)	10,743,116
Adjustments:
(-) Legal reserve	(537,156	)
Dividend calculation basis	10,205,960
Mandatory dividend	2,551,490
Dividend – paid/provided for	4,937,601		48.4	%

II – Payments / provision of interest on capital and dividends

	Gross		WTS			Net
Paid / Prepaid		488,585		-			488,585
Dividends - 5 monthly installments of R$ 0.015 per share paid in February to June 2017		488,585		-			488,585
Declared (recorded in other liabilities – Social and Statutory)		2,409,726		(346,821	)		2,062,905
Dividends - 1 monthly installment of R$ 0.015 per share paid on 07/03/2017		97,584		-			97,584
Interest on capital - R$ 0.3558 per share, to be paid on 08/25/2017		2,312,142		(346,821	)		1,965,321
Recorded in Revenue Reserves in Stockholders' Equity		2,568,329		(182,218	)		2,386,111
Interest on capital - R$ 0.0432 per share, to be paid on 08/25/2017		280,588		(42,088	)		238,500
Interest on capital - R$ 0.1438 per share, to be declared		934,196		(140,130	)		794,066
Dividends - R$ 0.2083 per share, to be declared		1,353,545		-			1,353,545
Total from 01/01 to 06/30/2017 - R$ 0.7596 net per share		5,466,640		(529,039	)		4,937,601
Total from 01/01 to 06/30/2016 - R$ 0.4291 net per share		2,899,190		(354,895	)		2,544,295

c) Capital and revenue reserves

	06/30/2017		06/30/2016
Capital reserves		1,352,881		1,329,803
Premium on subscription of shares		283,512		283,512
Granted options recognized – Law No. 11,638, Share-based instruments and Share-based payment		1,068,264		1,045,186
Reserves from tax incentives and restatement of equity securities and other		1,105		1,105
Revenue reserves		27,405,084		30,613,893
Legal		8,381,642		7,327,721
Statutory:		16,455,114		22,790,344
Dividends equalization (1)		7,546,957		9,721,065
Working capital increase (2)		4,064,819		5,728,184
Increase in capital of investees (3)		4,843,338		7,341,095
Unrealized profits (4)		2,568,328		495,828

(1) Reserve for Dividends Equalization – its purpose is to guarantee funds for the payment of advances of dividends, including interest on capital, to maintain the flow of the stockholders’ compensation.

(2) Reserve for Working Capital Increase – its purpose is to guarantee funds for the company’s operations.

(3) Reserve for Increase in Capital of Investees – its purpose is to guarantee the preferred subscription right in the capital increases of investees.

(4) Refers to Interest on Capital declared after June 30 for each period, in compliance with BACEN Circular Letter nº 3,516, of July 21, 2011.

d) Conciliation of net income and stockholders’ equity (Note 2b)

	Net income				Stockholders’ equity
	01/01 to 06/30/2017		01/01 to 06/30/2016		06/30/2017			06/30/2016
ITAÚ UNIBANCO HOLDING		10,743,116		8,938,277		120,679,258			113,911,760
Amortization of goodwill		50,375		254,770		(149,562	)		(278,795	)
Hedge of net investments in foreign operations		291,145		-		-			-
ITAÚ UNIBANCO HOLDING PRUDENTIAL		11,084,636		9,193,047		120,529,696			113,632,965

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.63

e) Asset valuation adjustments

	06/30/2017			06/30/2016
Available-for-sale securities		(441,958	)		(979,851	)
Hedge cash flow		(1,593,130	)		(796,341	)
Remeasurements in liabilities of post-employment benefits		(890,989	)		(235,893	)
Foreign exchange variation on investments		120,873			-
Asset valuation adjustments		(2,805,204	)		(2,012,085	)

f) Non-controlling interests

	Stockholders’ equity				Net Income
	09/30/2017		09/30/2016		01/01 to 09/30/2017			01/01 to 09/30/2016
Itaú CorpBanca (Note 2c)		9,846,394		10,194,073		(33,562	)		(14,985	)
Itaú CorpBanca Colombia S.A. (Note 2c)		1,118,495		1,297,006		(21,637	)		(15,032	)
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento		453,957		489,750		(56,205	)		(56,485	)
Banco Itaú Consignado S.A. (Note 2c)		-		952,677		-			(36,719	)
Luizacred S.A. Soc. Cred. Financiamento Investimento		306,196		274,819		(37,361	)		(22,184	)
Banco Investcred Unibanco S.A.		20,709		19,864		(591	)		(659	)
Other		37		13,136		(1	)		631
Total		11,745,788		13,241,325		(149,357	)		(145,433	)

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.64

g) Share-based payment

ITAÚ UNIBANCO HOLDING and its subsidiaries have share-based payment programs aimed at involving its management members and employees in the medium and long term corporate development process.

These payments are only made in years where there are sufficient profits to enable the distribution of mandatory dividends, in order to limit the maximum dilutive effect to which stockholders are subject, and at a quantity that does not exceed the limit of 0.5% of the total shares held by the controlling and minority stockholders at the balance sheet date.

These programs are settled through the delivery of ITUB4 treasury shares to stockholders.

From 01/01 to 06/30/2017, the accounting effect of the share-based payment in income was R$ (253,910) (R$ (312,916) from 01/01 to 06/30/2016).

I – Stock Option Plan (Simple Options)

ITAÚ UNIBANCO HOLDING has a Stock Option Plan (“Simple Options”) aimed at involving management members and employees in the medium and long term corporate development program of ITAÚ UNIBANCO HOLDING and its subsidiaries, offering them the opportunity to benefit from the appreciation that their work and dedication bring to the shares.

In addition to the awards provided under the Plan, ITAÚ UNIBANCO HOLDING also maintains control over the rights and obligations in connection with the options granted under the plans approved at the Extraordinary Stockholders’ Meetings held on April 24, 2009 and April 19, 2013 related to the Unibanco –União de Bancos Brasileiros S.A., Unibanco Holdings S.A. and Redecard S.A. stock option plans, respectively. Accordingly, the exchange of shares for ITUB4 did not have a relevant financial impact.

Simple options have the following characteristics:

a) Exercise price: calculated based on the average prices of shares in the three months of the year prior to the grant date. The prices determined will be inflation-adjusted to the last business day of the month prior to the option exercise date based on IGP-M or, in its absence, on an index to be determined internally, and should be paid within the period in force for the settlement of operations on B3.

b) Vesting period: determined upon issue, from one to seven years, counted from the grant date. The vesting period is normally determined at five years.

c) Fair value and economic assumptions for cost recognition: the fair value of Simple Options is calculated on the grant date based on the Binominal model. Economic assumptions used are as follows:

(i) Exercise price: exercise price previously agreed upon the option issue, adjusted by the IGP-M variation;

(ii) Price of the underlying asset (ITUB4 shares): closing price on B3 on the calculation base date.

(iii) Expected dividends: the average annual return rate for the last three years of dividends paid plus interest on capital of the ITUB4 share;

(iv) Risk-free interest rate: IGP-M coupon rate at the expiration date of the Simple Option;

(v) Expected volatility: calculated based on the standard deviation from the history of the last 84 monthly returns of the ITUB4 share closing prices, disclosed by B3, adjusted by the IGP-M variation.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.65

	Simple options
				Weighted		Weighted
				average		average
	Quantity			Exercise price		Market value
Opening balance at 12/31/2016		38,033,506			36.94
Options exercisable at the end of the period		23,440,177			40.98
Options outstanding but not exercisable		14,593,329			30.45
Options:
Granted		-
Canceled / Forfeited (*)		(19,667	)		38.90
Exercised		(5,684,306	)		30.58		40.03
Closing balance at 06/30/2017		32,329,533			37.56
Options exercisable at the end of the period		32,329,533			37.56
Options outstanding but not exercisable
Range of exercise prices
Granting 2010-2011					21,71 - 41,09
Granting 2012					30.01
Weighted average of the remaining contractual life (in years)		1.48

(*) Refers to non-exercise based on the beneficiary’s decision.

	Simple options
				Weighted		Weighted
				average		average
	Quantity			Exercise price		Market value
Opening balance at 12/31/2015		50,543,148			31.89
Options exercisable at the end of the period		35,647,958			33.40
Options outstanding but not exercisable		14,895,190			28.29
Options:
Granted		-			-
Canceled / Forfeited (*)		(63,680	)		31.10
Exercised		(732,273	)		23.79		29.24
Closing balance at 06/30/2016		49,747,195			34.07
Options exercisable at the end of the period		35,149,321			35.66
Options outstanding but not exercisable		14,597,874			30.25
Range of exercise prices
Granting 2009-2010					25,49 - 41,41
Granting 2011-2012					21,71 - 40,45
Weighted average of the remaining contractual life (in years)		2.13

(*) Refers to non-exercise based on the beneficiary’s decision.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.66

ll – Partner Plan

The employees and management members of ITAÚ UNIBANCO HOLDING and its subsidiaries may be selected to participate in the program investing a percentage of their bonus to acquire ITUB4 shares and share-based instruments. Accordingly, the ownership of these shares should be held by the beneficiaries for a period from three to five years, counted from the initial investment, and are thus subject to market price variation. After complying with the suspensive conditions set forth in the program, beneficiaries will be entitled to receive ITUB4 as consideration, in accordance with the numbers of shares provided for in the program regulation.

The acquisition prices of own shares and Share-Based Instruments are established every six months and are equivalent to the average of the ITUB4 quotation in the 30 days prior to the determination of the acquisition price.

The fair value of the ITUB4 as consideration is the market price at the grant date, less expected dividends.

The weighted average of the fair value of the ITUB4 shares as consideration was estimated at R$ 32.33 per share at 06/30/2017 (R$ 19.45 per share at 06/30/2016).

Law No. 12,973/14, which adjusted the tax legislation to the international accounting standards and terminated the Transitional Tax Regime (RTT), set up a new legal framework for payments made in shares. We made changes to the Partner Plan, and adjusted its tax effects, with conform with this new legislation.

Changes in the Partner Program

	Quantity
Closing balance at 12/31/2016		35,462,379
New granted		7,041,957
Cancelled		(439,424	)
Exercised		(7,523,051	)
Balance at 06/30/2017		34,541,861
Weighted average of remaining contractual life (years)		2.86
		Quantity
Balance at 12/31/2015		33,666,355
New granted		12,389,821
Cancelled		(228,456	)
Exercised		(8,881,995	)
Balance at 06/30/2016		36,945,725
Weighted average of remaining contractual life (years)		3.04

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.67

III- Variable Compensation

The policy established in compliance with CMN Resolution No. 3,921/10 sets forth that fifty percent (50%) of the management’s variable compensation should be paid in cash and fifty percent (50%) should be paid in shares for a period of three years. Shares are delivered on a deferred basis, of which one-third (1/3) per year, will be contingent upon the executive’s remaining with the institution. The deferred unpaid portions may be reversed proportionally to the significant reduction of the recurring income realized or the negative income for the period.

The fair value of the ITUB4 share is the market price at its grant date.

The weighted average of the fair value of ITUB4 shares was estimated at R$ 38.25 per share at 06/30/2017 (R$ 21.96 per share at 06/30/2016).

Change in variable compensation in shares	2017
	Quantity
Balance at 12/31/2016		24,539,406
New		8,501,063
Delivered		(12,048,631	)
Cancelled		(139,157	)
Balance at 06/30/2017		20,852,681

Change in variable compensation in shares	2016
	Quantity
Balance at 12/31/2015		22,325,573
New		13,422,462
Delivered		(11,135,737	)
Cancelled		(66,180	)
Balance at 06/30/2016		24,546,118

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.68

Note 16 – Related parties

a) Transactions between related parties are disclosed in compliance with CVM Deliberation n° 642, of October 7, 2010, and CMN Resolution n° 3,750 of June 30, 2009. These transactions are carried out at amounts, terms and average rates in accordance with normal market practices during the period, as well as under reciprocal conditions.

Transactions between companies included in consolidation were eliminated from the consolidated financial statements and the lack of risk is taken into consideration.

The unconsolidated related parties are the following:

· Itaú Unibanco Participações S.A. (IUPAR), the Companhia E.Johnston de Participações S.A. (shareholder of IUPAR) and ITAÚSA, direct and indirect shareholders of ITAÚ UNIBANCO HOLDING PRUDENTIAL;

· The non-financial subsidiaries and associates of ITAÚSA, specially: Itautec S.A., Duratex S.A., Elekeiroz S.A., ITH Zux Cayman Company Ltd, Itaúsa Empreendimentos S.A. and OKI Brasil Indústria e Comércio de Produtos de Tecnologia e Automação S.A.;

· Fundação Itaú Unibanco - Previdência Complementar and FUNBEP – Fundo de Pensão Multipatrocinado, closed-end supplementary pension entities that administer retirement plans sponsored by ITAÚ UNIBANCO HOLDING and / or its subsidiaries;

· Fundação Itaú Social, Instituto Itaú Cultural, Instituto Unibanco, Instituto Assistencial Pedro Di Perna, Instituto Unibanco de Cinema, Associação Itaú Viver Mais and Associação Cubo Coworking Itaú, entities sponsored by ITAÚ UNIBANCO and subsidiaries to act in their respective areas of interest, as described in Notes 21e to 21j; and

· Domestic investments, specially: Itauseg Participações S.A., ITB Holding Brasil Participações, Intrag-Part Administração e Participações Ltda., Unibanco Negócios Imobiliários, Itaú Vida e Previdência, Cia. Itaú de Capitalização, BSF Holding S.A., Marcep Corretagem de Seguros S.A., Itaú Unibanco Servs. e Proc, de Inf. Comerciais Ltda. and Fináustria Ass., Adm., Serv. Crédito e Participações Ltda., and foreign investments ITB Holding Ltd., Jasper International Investment LLC and Itaú Chile Holding, INC.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.69

The transactions with these related parties are basically characterized by:

	ITAÚ UNIBANCO HOLDING PRUDENTIAL
	Assets / (liabilities)						Revenue / (expense)
							01/01 to			01/01 to
	06/30/2017			06/30/2016			06/30/2017			06/30/2016
Securities and derivative financial instruments - assets		-			-			118			2,352
Banco Itaú Chile		-			-			-			2,352
Afinco Madero		-			-			118			-
Foreign exchange portfolio - assets		612,793			584,088			9,207			1,295
Itaú Europa Luxembourg S.A.		612,793			-			9,207			1,120
Itaú BBA International PLC		-			584,088			-			-
Banco Itaú Chile		-			-			-			175
Deposits received under securities repurchase agreements		(2,497,256	)		(1,522,748	)		(117,458	)		(110,192	)
Itauseg Participações S.A.		(1,194,414	)		(20,992	)		(31,934	)		(13,603	)
ITB Holding Brasil Participações Ltda.		(5,088	)		(27,282	)		(514	)		(25,699	)
Itaú Unibanco Serviços e Processamento de Informações Comerciais		-			(112,815	)		-			(7,123	)
Duratex S.A.		(22,256	)		(17,892	)		(1,064	)		(2,310	)
Itaú Chile Corredora de Seguros Limitada		-			(259,677	)		-			(1,980	)
Itaú Rent Administração e Participações Ltda.		(213,233	)		(120,309	)		(11,297	)		(5,309	)
Marcep Corretagem de Seguros S.A.		(263,245	)		(106,721	)		(13,914	)		(4,666	)
Itaú-BBA Participações S.A.		(12,199	)		(114,279	)		(5,356	)		(6,601	)
Provar Negócios de Varejo Ltda.		(400,631	)		(122,780	)		(30,495	)		(6,505	)
Unibanco Negócios Imobiliários Ltda.		-			(121,629	)		-			(3,162	)
IGA Participações		(167,173	)		(152,257	)		(8,989	)		(10,581	)
Other (*)		(219,017	)		(346,115	)		(13,895	)		(22,653	)
Time deposits		(789,974	)		(765,804	)		(10,628	)		(12,488	)
Itauseg Participações S.A.		(28	)		-			-			-
Itaú Chile Compañia de Seguros de Vida S.A.		(82,310	)		(111,977	)		(1,708	)		(1,200	)
IPI - Itaúsa Portugal Investimentos, SGPS Lda.		-			(168,858	)		-			(682	)
Afinco Americas Madeira, SGPS, Soc. Unipessoal Ltda.		(256,346	)		(150,996	)		-			(795	)
Itaú Europa Luxembourg S.A.		(161,203	)		(148,163	)		(2,180	)		(962	)
Other		(290,087	)		(185,810	)		(6,740	)		(8,849	)
Derivative financial instruments - liabilities		-			-			-			(134	)
Banco Itaú Chile		-			-			-			(134	)
Foreign exchange portfolio - liabilities		(603,352	)		(588,730	)		-			(6,016	)
Itaú Europa Luxembourg S.A.		(603,352	)		(588,730	)		-			-
Other		-			-			-			(6,016	)
Amounts receivable from (payable to) related companies / Banking service fees (expenses)		(95,150	)		(127,107	)		219,082			322,467
Itaú Seguros S.A.		25,316			(10,967	)		246,930			294,466
Itaú USA. Inc.		-			13,270			-			-
Fundação Itaú Unibanco - Previdência Complementar		(115,607	)		(122,633	)		23,156			21,022
Itaú Unibanco Serviços e Processamento de Informações Comerciais		-			-			-			(25,859	)
Itaú Vida e Previdência S.A.		12,174			11,426			26,186			25,545
OKI Brasil Indústria e Comércio de Produtos de Tecnologia e Automação S.A		-			-			(84,800	)		-
Other		(17,033	)		(18,203	)		7,610			7,293
Rent revenues (expenses)		-			-			(150,127	)		(145,934	)
Itaú Rent Administração e Participações Ltda.		-			-			(68,928	)		(77,671	)
Fundação Itaú Unibanco - Previdência Complementar		-			-			(23,702	)		(21,735	)
Itaú Seguros S.A.		-			-			(19,601	)		(17,186	)
Other		-			-			(37,896	)		(29,342	)
Donation expenses		-			-			(40,477	)		(16,500	)
Instituto Itaú Cultural		-			-			(30,057	)		(16,500	)
Associação Itaú Viver Mais		-			-			(920	)		-
Associação Cubo Coworking Itaú		-			-			(9,500	)		-

(*) Corresponds to related parties with 22 directly-controlled subsidiaries, not included in Prudential Consolidated.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.70

b) Compensation of Management Key Personnel

The fees attributed in the period to ITAÚ UNIBANCO HOLDING PRUDENTIAL management members are as follows:

	01/01 to		01/01 to
	06/30/2017		06/30/2016
Compensation		207,855		168,645
Board of Directors		20,018		20,190
Management members		187,837		148,454
Profit sharing		94,893		88,509
Board of Directors		565		1,666
Management members		94,328		87,343
Contributions to pension plans		6,484		6,460
Board of Directors		114		116
Management members		6,370		6,344
Stock option plan – Management members		90,332		146,716
Total		399,564		410,330

Information related to the granting of the stock option plan, benefits to employees and post-employment benefits is detailed in Notes 15g II and 18, respectively. 

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.71

Note 17 - Market value

The financial statements are prepared in accordance with accounting principles which assume the normal continuity of the operations of ITAÚ UNIBANCO HOLDING PRUDENTIAL.

The book value of each financial instrument, whether included or not in the balance sheet (comprises investments in affiliates and other investments), when compared to the value that might be obtained in an active market, or in the absence of such market, using the net present value of future cash flows adjusted based on the current market interest, is approximately equal to the market value, or does not have a market quotation available, except for the instruments in the table below:

									Effects (1)
															Stockholders’
	Book value				Market				Results						equity
	06/30/2017		06/30/2016		06/30/2017		06/30/2016		06/30/2017			06/30/2016			06/30/2017			06/30/2016
Interbank deposits		28,713,141		25,358,643		28,775,867		25,367,473		62,726			8,830			62,726			8,830
Securities and derivative financial instruments		218,032,869		213,851,049		218,778,452		213,390,973		(107,698	)		(2,286,050	)		745,583			(460,076	)
Adjustment of available-for-sale securities										(391,628	)		(1,286,883	)		-			-
Adjustment of held-to-maturity securities										283,930			(999,167	)		745,583			(460,076	)
Loan, lease and other credit operations		442,457,681		459,483,891		449,450,431		464,314,416		6,992,750			4,830,525			6,992,750			4,830,525
Investments - B3		14,610		14,610		216,493		197,310		201,883			182,700			201,883			182,700
Funding and borrowing (2)		330,002,106		283,102,082		330,706,157		284,191,325		(704,051	)		(1,089,243	)		(704,051	)		(1,089,243	)
Subordinated debt (Note 10f)		52,104,210		60,282,082		53,144,832		60,966,964		(1,040,622	)		(684,882	)		(1,040,622	)		(684,882	)
Treasury shares		2,571,065		1,446,646		3,074,654		1,641,951		-			-			503,589			195,305

(1) This does not consider the corresponding tax effects.

(2) Funding is represented by interbank and time deposits, funds from acceptance and issuance of securities and borrowings.

Fair value is a measurement based, whenever possible, on information observable in the market. It is the price estimated at which a non-mandatory transaction to sell an asset or to transfer a liability would occur between market players, on the measurement date, under current market conditions. It does not represent unrealized results of ITAÚ UNIBANCO HOLDING PRUDENTIAL.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.72

To obtain the market values for these financial instruments, the following criteria were adopted:

· Interbank investments were determined based on their nominal amounts, monetarily restated as at their maturity dates and discounted to present value using future market interest rates and swap market rates for fixed-rate securities and using market interest rates for fixed-rate securities, achieved up to the closing of B3 at the balance sheet date, for floating-rate securities;

· Securities and derivative financial instruments, according to the rules established by Circulars No. 3,068 and 3,082 of November 8, 2001 and January 30, 2002, respectively, issued by BACEN, are recorded at their market values, except for those classified as Held to Maturity. Government securities allocated in this category have their market value calculated based on the rates obtained in the market, and validated through the comparison with information provided by the National Association of Financial Market Institutions (ANBIMA). Private securities included in this category have their market value calculated using a criterion similar to the one adopted for Investments in Interbank Deposits, as described above;

· Loans with maturities over 90 days, when available, were calculated based on the net present value of future cash flows discounted at market interest rates effective on the balance sheet date;

· Investments - in company B3 at the share value quoted on stock exchanges.

· Time and interbank deposits and funds from the acceptance and issuance of securities and foreign borrowing through securities, when available, were calculated based on their present value determined by future cash flows discounted at market rates obtained at the closing of B3 on the balance sheet date;

· Subordinated debt, based on the net present value of future fixed or floating cash flows in foreign currency, net of the market interest rates effective on the balance sheet date and considering the credit risk of the issuer. The floating cash flows are estimated from the interest curves of the indexation market places;

· Treasury shares are valued according to the average quotation available on the last trading day of the month or, if this is not available, according to the most recent quotation on prior trading days, published in the daily bulletin of each Stock Exchange.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.73

Note 18 – Post-Employments Benefits

We present the policies adopted by ITAÚ UNIBANCO HOLDING PRUDENTIAL regarding benefits to employees, as well as the accounting procedures adopted.

The total amounts recognized in Income for the Period and Stockholders’ Equity – Asset valuation adjustment were as follows:

Total amounts recognized in Income for the period

	Defined benefit						Defined contribution (*)						Other benefits						Total
	01/01 to			01/01 to			01/01 to			01/01 to			01/01 to			01/01 to			01/01 to			01/01 to
	06/30/2017			06/30/2016			06/30/2017			06/30/2016			06/30/2017			06/30/2016			06/30/2017			06/30/2016
Cost of current service		(34,472	)		(30,714	)		-			-			-			-			(34,472	)		(30,714	)
Net interest		(6,121	)		(5,520	)		37,937			119,569			(10,976	)		(9,751	)		20,840			104,298
Effects on asset ceiling		-			-			(42,431	)		(63,525	)		-			-			(42,431	)		(63,525	)
Benefits paid		-			-			-			-			7,701			6,514			7,701			6,514
Total Amounts Recognized		(40,593	)		(36,234	)		(4,494	)		56,044			(3,275	)		(3,237	)		(48,362	)		16,573

(*) In the period, contributions to the defined contributions plan, including PGBL, totaled R$ 157,736 (R$ 163,277 from 01/01 to 06/30/2016), of which R$ 42,431 (R$ 63,525 from 01/01 to 06/30/2016) arising from social security funds.

Total amounts recognized in Stockholders’ Equity – Asset valuation adjustment

	Defined benefit						Defined contribution						Other benefits						Total
	06/30/2017			06/30/2016			06/30/2017			06/30/2016			06/30/2017			06/30/2016			06/30/2017			06/30/2016
At the beginning of the period		(69,151	)		(44,638	)		(1,323,776	)		(315,662	)		(48,400	)		(12,570	)		(1,441,327	)		(372,870	)
Effects on asset ceiling		3,897			(13,613	)		(3,191	)		3,788			-			-			706			(9,825	)
Remeasurements		(15,302	)		14,125			(17,590	)		(1,531	)		-			-			(32,892	)		12,594
Total Amounts Recognized		(80,556	)		(44,126	)		(1,344,557	)		(313,405	)		(48,400	)		(12,570	)		(1,473,513	)		(370,101	)

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.74

a) Retirement plans

ITAÚ UNIBANCO HOLDING PRUDENTIAL and certain subsidiaries sponsor defined benefit and variable contribution plans, whose basic purpose is to grant benefits that, in general, provide a life annuity benefit, and may be converted into survivorship annuities, according to the plan's regulations. They also sponsor defined contribution plans, the benefit of which is calculated based on the accumulated balance at the eligibility date, according to the plan's regulations, which does not require actuarial calculation, except as described in Note 18c.

Employees hired prior to July 31, 2002, for those who came from Itaú, and prior to February 27, 2009 for those who came from Unibanco, are beneficiaries of the above-mentioned plans. As regards the employees hired after these dates, they have the option to voluntarily participate in a variable contribution plan (PGBL), managed by Itaú Vida e Previdência S.A.

Supplementary plans are managed by closed-end private pension entities with independent legal structures, as detailed below:

Entity	Benefit plan
Fundação Itaubanco - Previdência Complementar	Supplementary retirement plan – PAC (1)
	Franprev benefit plan - PBF (1)
	002 benefit plan - PB002 (1)
	Itaulam basic plan - PBI (1)
	Itaulam Supplementary Plan - PSI (2)
	Itaubanco Defined Contribution Plan (3)
	Itaubank Retirement Plan (3)
	Itaú Defined Benefit Plan (1)
	Itaú Defined Contribution Plan (2)
	Unibanco Pension Plan (3)
	Prebeg benefit plan (1)
	UBB PREV defined benefit plan (1)
	Benefit Plan II (1)
	Supplementary Retirement Plan – Flexible Premium Annuity (ACMV) (1)
	REDECARD Basic Retirement Plan (1)
	REDECARD Supplementary Retirement Plan (2)
	REDECARD Pension Plan (3)
	ITAUCARD Retirement Defined Benefit Plan (1)
	ITAUCARD Supplementary Retirement Plan (2)
Funbep Fundo de Pensão Multipatrocinado	Funbep I Benefit Plan (1)
	Funbep II Benefit Plan (2)

 (1) Defined benefit plan;

 (2) Variable contribution plan;

 (3) Defined contribution plan.

b) Governance

The closed-end private pension entities (EFPC) and benefit plans they manage are regulated in conformity with the related specific legislation. The EFPC are managed by the Executive Board, Advisory Council and Fiscal Council, with some members appointed by the sponsors and others appointed as representatives of active and other participants, pursuant to the respective Entity’s bylaws. The main purpose of the EFPC is to pay benefits to eligible participants, pursuant to the Plan Regulations, maintaining the plans assets invested separately and independently from ITAÚ UNIBANCO HOLDING PRUDENTIAL. 

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.75

c) Defined benefit plan

I - Main assumptions used in actuarial valuation of Retirement Plans

	06/30/2017	06/30/2016
Discount rate (1)	10.24% p.a.	11.28% p.a.
Mortality table (2)	AT-2000	AT-2000
Turnover (3)	Itaú Experience	Itaú Experience
	2008/2010	2008/2010
Future salary growth	5.04% to 7.12 % p.a.	5.04% to 7.12 % p.a.
Growth of the pension fund and social security benefits	4.00 % p.a.	4.00 % p.a.
Inflation	4.00 % p.a.	4.00 % p.a.
Actuarial method (4)	Projected Unit Credit	Projected Unit Credit

(1) The adoption of this assumption is based on interest rates obtained from the actual interest curve in IPCA, for medium term liabilities of retirement plans sponsored by ITAÚ UNIBANCO HOLDING CONSOLIDATED. At 12/31/2016 assumption were adopted consistently with the economic scenario at the balance sheet date rate, considering the volatility of the interest markets and the models adopted.

(2) The mortality tables adopted correspond to those disclosed by Society of Actuaries (SOA), the North-American Entity which corresponds to Brazilian Institute of Actuarial Science (IBA), which reflects a 10% increase in the probabilities of survival compared to the respective basic tables. The life expectancy in years per the AT-2000 mortality table for participants aged 55 years is 27 and 31 years for men and women, respectively.

(3) The turnover assumption is based on the effective experience of ITAÚ UNIBANCO HOLDING CONSOLIDATED, resulting in the average of 2.4% p.a. based on the 2008/2010 experience.

(4) Using the Projected Unit Credit, the mathematical reserve is determined based on the current projected benefit amount multiplied by the ratio between the length of service in the company at the assessment date and the length of service that will be reached at the date when the benefit is granted. The cost is determined taking into account the current projected benefit amount distributed over the years that each participant is employed.

In case of benefits sponsored by foreign subsidiaries, actuarial assumptions adequate to the group of participants and the country's economic scenario are adopted.

Biometric/demographic assumptions adopted are consistent with the group of participants of each benefit plan, pursuant to the studies carried out by an independent external actuarial consulting company.

The main differences between the assumptions above and those adopted upon determination of the actuarial liability of defined benefit plans, for the purposes of recording in the balance sheet of the closed-end private pension entities (EFPCs) that manage them, are the discount rate and the actuarial method. Regarding the discount rate assumption, EFPCs adopt a rate consistent with the flow of receipts/payments, in accordance with the study conducted by an independent external consulting company. Regarding the actuarial method, the aggregate method is adopted, by which the mathematical reserve is defined based on the difference between the present value of the projected benefit and the present value of future contributions, subject to the methodology defined in the respective actuarial technical note.

II- Risk Exposure

Due to its defined benefit plans, ITAÚ UNIBANCO HOLDING CONSOLIDATED is exposed to a number of risks, the most significant ones are:

- Volatility of assets

The actuarial liability is calculated by adopting a discount rate defined based on the income related to securities issued by the Brazilian treasury (government securities). If the actual income related to plan investments is lower than expected, this may give rise to a deficit. The plans have a significant percentage of fixed-income securities pegged to the plan commitments, aimed at minimizing volatility and short and medium term risk.

- Changes in investment income

A decrease in income related to public securities will imply a decrease in the discount rate and, therefore, will increase the plan’s actuarial liability. The effect will be partially offset by the recognition of these securities at market value.

- Inflation risk

Most of the plan benefits are pegged to the inflation rates, and a higher inflation will lead to higher obligations. The effect will also be partially offset because a significant portion of the plan assets is pegged to government securities restated at the inflation rate. 

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.76

- Life expectancy

Most of the plan obligations are to provide life benefits, and therefore an increase in life expectancy will result in increased plan liabilities.

III –Management of defined benefit plan assets

The general purpose of managing EFPC funds is to search for a long term balance between assets and obligations to pay of retirement benefits, by exceeding the actuarial targets (discount rate plus benefit adjustment index, established in the plan regulations).

Regarding the assets guaranteeing the actuarial liability reserves, management should ensure the payment capacity of retirement benefits in the long term by avoiding the risk of mismatching assets and liabilities in each pension plan.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.77

At June 30, 2017 and 2016, the allocation of plan assets and the allocation target for 2017, by type of asset, are as follows:

	Fair value				% Allocation
Types	06/30/2017		06/30/2016		06/30/2017			06/30/2016			2017 Target
Fixed income securities		15,960,720		12,676,141		94.65	%		90.78	%		53% to 100%
Variable income securities		199,754		589,410		1.18	%		4.21	%		0% to 20%
Structured investments		15,664		756		0.09	%		0.01	%		0% to 10%
Real estate		617,857		627,775		3.66	%		4.50	%		0% to 7%
Loans to participants		70,740		70,128		0.42	%		0.50	%		0% to 5%
Total		16,864,735		13,964,210		100.00	%		100.00	%

The defined benefit plan assets include shares of ITAÚ UNIBANCO HOLDING PRUDENTIAL, its main parent company (ITAÚSA) and of subsidiaries of the latter, with a fair value of R$ 192,800 (R$ 489,279 at 06/30/2016) and real estate rented to Group companies, with a fair value of R$ 592,484 (R$ 601,323 at 06/30/2016).

Fair value - The fair value of the plan assets is adjusted up to the report date, as follows:

Fixed-Income Securities and Structured Investments – accounted for at market value, considering the average trading price on the calculation date, net realizable value obtained upon the technical addition of pricing, considering, at least, the payment terms and maturity, credit risk and the indexing unit.

Variable income securities – accounted for at market value, taken to be understood the share average quotation at the last day of the month or at the closest date on the stock exchange on which the share has posted the highest liquidity rate.

Real Estate – stated at acquisition or construction cost, adjusted to market value based on reappraisals made in 2016, supported by technical appraisal reports. Depreciation is calculated under the straight line method, considering the useful life of the real estate.

Loans to participants – adjusted up to the report date, in compliance with the respective agreements.

Fund Allocation Target - the fund allocation target is based on Investment Policies that are currently revised and approved by the Advisory Council of each EFPC, considering a five-year period, which establishes guidelines for investing funds guaranteeing Actuarial Liability and for classifying securities.

IV- Net amount recognized in the balance sheet

Following is the calculation of the net amount recognized in the balance sheet, corresponding to the defined benefit plan:

	06/30/2017			06/30/2016
1 - Net assets of the plans		16,864,735			13,964,210
2 - Actuarial liabilities		(13,931,205	)		(11,974,712	)
3- Surplus (1-2)		2,933,530			1,989,498
4- Asset restriction (*)		(3,157,451	)		(2,268,267	)
5 - Net amount recognized in the balance sheet (3-4)		(223,921	)		(278,769	)
Amount recognized in Assets (Note 12a)		332,000			230,735
Amount recognized in Liabilities (Note 12c)		(555,921	)		(509,504	)

(*) Corresponds to the excess of the present value of the available economic benefit, in conformity with BACEN Resolution nº 4.424/15.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.78

V- Change in the net amount recognized in the balance sheet:

	06/30/2017
	Plan net assets			Actuarial liabilities			Surplus			Asset Ceiling			Recognized amount
Value at the beginning of the period		16,520,045			(13,722,558	)		2,797,487			(3,008,536	)		(211,049	)
Cost of current service		-			(34,472	)		(34,472	)		-			(34,472	)
Net interest (1)		819,366			(671,771	)		147,595			(153,716	)		(6,121	)
Benefits paid		(516,003	)		516,003			-			-			-
Contributions of sponsor		35,106			-			35,106			-			35,106
Contributions of participants		6,438			-			6,438			-			6,438
Effects on asset ceiling		-			-			-			3,897			3,897
Exchange variation		634			3,387			4,021			-			4,021
Remeasurements (2) (3)		(851	)		(21,794	)		(22,645	)		904			(21,741	)
Value at end of the period		16,864,735			(13,931,205	)		2,933,530			(3,157,451	)		(223,921	)

	06/30/2016
	Plan net assets			Actuarial liabilities			Surplus			Asset Ceiling			Recognized amount
Value at the beginning of the period		13,633,401			(11,587,180	)		2,046,221			(2,133,856	)		(87,635	)
Cost of current service		-			(30,714	)		(30,714	)		-			(30,714	)
Net interest (1)		741,575			(626,297	)		115,278			(120,798	)		(5,520	)
Benefits paid		(438,002	)		438,002			-			-			-
Contributions of sponsor		31,684			-			31,684			-			31,684
Contributions of participants		6,766			-			6,766			-			6,766
Effects on asset ceiling		-			-			-			(13,613	)		(13,613	)
Balance arising from the merger with CorpBanca (note 2c)		-			(205,164	)		(205,164	)		-			(205,164	)
Exchange variation		(11,214	)		29,282			18,068			-			18,068
Remeasurements (2) (3)		-			7,359			7,359			-			7,359
Value at end of the period		13,964,210			(11,974,712	)		1,989,498			(2,268,267	)		(278,769	)

 (1) Corresponds to the amount calculated on 01/01/2017 based on the beginning amount (Net Assets, Actuarial Liabilities and Restriction of Assets), taking into account the estimated amount of payments/ receipts of benefits/ contributions, multiplied by the discount rate of 10.24% p.a.(On 01/01/2016 the rate used was 11.28% p.a.).

(2) Remeasurements recorded in net assets and asset ceiling correspond to the income earned above/below the expected return rate.

(3) The actual return on assets amounted to R$ 818,515 (R$ 741,575 at 06/30/2016).

During the period, contributions made totaled R$ 35,106 (R$ 31,684 from 01/01 to June 30, 2016) . The contribution rate increases based on the beneficiary’s salary.

In 2017, the expected contribution to retirement plans sponsored by ITAÚ UNIBANCO HOLDING PRUDENTIAL is R$ 71,376.

The estimate for payment of benefits for the next 10 years is as follows:

	Estimated payment
2017		1,070,944
2018		1,111,645
2019		1,160,234
2020		1,212,160
2021		1,265,789
2022 to 2026		7,097,737

VI- Sensitivity of defined benefit obligation

The impact, due to the change in the assumption – discount rate by 0.5%, which would be recognized in Actuarial liabilities of the plans, as well as in Stockholders’ Equity – Asset valuation adjustment of the sponsor (before taxes) would amount to:

	Effect in actuarial liabilities of the plans						Effect in actuarial liabilities of the plans (*)
				Percentage of
				actuarial
Change in Assumption	Value			liabilities			Value
- Decrease by 0.5%		703,507			5.13	%		(271,217	)
- Increase by 0.5%		(644,114	)		(4.70	)%		234,589

 (*) Net of effects of asset ceiling

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.79

d) Defined contribution plans

The defined contribution plans have pension funds set up by the portion of sponsors’ contributions not included in the participant’s accounts balance and by the loss of eligibility to a plan benefit, as well as by resources from the migration from the defined benefit plans. The fund will be used for future contributions to the individual participants' accounts, according to the rules of the respective benefit plan regulation.

I - Change in the net amount recognized in the balance sheet:

	06/30/2017									06/30/2016
	Pension Plan Fund			Asset Ceiling			Recognized Amount			Pension Plan Fund			Asset Ceiling			Recognized Amount
Amount - beginning of the period		1,285,334			(490,932	)		794,402			2,226,880			(269,828	)		1,957,052
Net interest		62,996			(25,059	)		37,937			134,787			(15,218	)		119,569
Contribution		(42,431	)		-			(42,431	)		(63,525	)		-			(63,525	)
Receivables allocation of funds (*)		(12,826	)		-			(12,826	)		-			-			-
Effects on asset ceiling		(14,980	)		11,789			(3,191	)		-			3,788			3,788
Remeasurements		(17,590	)		-			(17,590	)		(1,531	)		-			(1,531	)
Amount - end of the period (Note 12a)		1,260,503			(504,202	)		756,301			2,296,611			(281,258	)		2,015,353

(*) Refers to the allocation of the surplus of Plano Itaubanco CD’s social security fund.

e) Other post-employment benefits

ITAÚ UNIBANCO HOLDING PRUDENTIAL do not offer other post-employment benefits, except in those cases arising from obligations under acquisition agreements signed by ITAÚ UNIBANCO HOLDING PRUDENTIAL as well as in relation to the benefits granted due to a judicial sentence, in accordance with the terms and conditions established, in which health plans are totally or partially sponsored for specific groups of former workers and beneficiaries.

Based on the reported prepared by an independent actuary, the changes in obligations for these other projected benefits and the amounts recognized in the balance sheet, under liabilities, of ITAÚ UNIBANCO HOLDING PRUDENTIAL are as follows:

I - Change in the net amount recognized in the balance sheet:

	06/30/2017			06/30/2016
At the beginning of the period		(221,125	)		(178,811	)
Cost of interest		(10,976	)		(9,751	)
Benefits paid		7,701			6,514
At the end of the period (Note 12c)		(224,400	)		(182,048	)

The estimate for payment of benefits for the next 10 years is as follows:

Period	Estimated payment
2017		13,487
2018		14,443
2019		15,398
2020		16,333
2021		17,347
2022 to 2026		102,520

II - Sensitivity Analyses - Cost of Healthcare

For calculation of benefits obligations projected beyond the assumptions used for the defined benefit plans (Note 18c l), the 8.16% p.a. increase in medical costs assumption is adopted.

Assumptions for rates related to medical assistance costs have a significant impact on the amounts recognized in income. A change of one percentage point in the medical assistance cost rates would have the effects as follows:

	Recognition	1% increase		1% decrease
Service cost and cost of interest	Income		2,708		(2,268	)
Present value of obligation	Asset valuation adjustment		26,448		(22,150	)

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.80

Note 19 – Information on foreign subsidiaries

	Foreign consolidated (*)
	06/30/2017			06/30/2016
Assets
Current assets and long-term receivables
Cash and cash equivalents		13,885,105			14,821,783
Interbank investments		23,419,671			20,311,365
Securities		108,662,306			106,815,222
Loan, lease and other credit operations		210,405,690			221,775,451
Foreign exchange portfolio		59,284,063			52,314,323
Other assets		12,626,879			19,309,312
Permanent assets		8,703,746			9,776,953
Total		436,987,460			445,124,409
Liabilities
Current and long-term liabilities
Deposits		138,488,851			143,645,238
Deposits received under securities repurchase agreements		20,268,873			19,273,725
Funds from acceptance and issuance of securities		38,552,385			31,522,306
Borrowing		40,035,310			49,842,406
Derivative financial instruments		8,349,978			14,991,789
Foreign exchange portfolio		59,375,754			52,334,548
Other liabilities		47,227,342			52,282,923
Deferred income		368,580			175,691
Non-controlling interests		1,118,531			1,310,143
Stockholders’ equity		83,201,856			79,745,640
Total		436,987,460			445,124,409
Statement of Income
Income from financial operations		9,080,425			10,796,491
Expenses of financial operations		(4,218,673	)		(6,661,218	)
Result of loan losses		(1,204,136	)		(1,359,730	)
Gross income from financial operations		3,657,616			2,775,543
Other operating revenues (expenses)		(1,907,173	)		(1,715,580	)
Operating income		1,750,443			1,059,963
Non-operating income		(14,289	)		3,891
Income before taxes on income and profit sharing		1,736,154			1,063,854
Income tax		(57,655	)		(239,124	)
Statutory participation in income		(17,851	)		(18,152	)
Non-controlling interests		(21,639	)		(14,400	)
Net income (loss)		1,639,009			792,178

(*) Basically composed of subsidiaries Itaú Unibanco S.A. - Agencies Grand Cayman, New York, Nassau Branch, Itaú Unibanco Holding S.A - Agencie Grand Cayman, Itau Bank, Ltd., ITB Holding Ltd., Banco Itaú Argentina S.A., Banco Itaú Uruguay S.A., Banco CorpBanca Colômbia S.A., Itaú CorpBanca and Banco Itaú Paraguay S.A.; only at 06/30/2016, Banco Itaú Chile.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.81

Note 20 – Risk and capital management

Assuming and managing risks is one of the activities carried out by ITAÚ UNIBANCO HOLDING CONSOLIDATED and, accordingly, the institution should have established objectives for risk management. Accordingly, the risk appetite defines the nature and level of risks acceptable for the institution and the risk culture guides the attitudes required to manage them. ITAÚ UNIBANCO HOLDING CONSOLIDATED seeks robust process for risk management, which permeate the whole institution and that are the basis for strategic decisions to assure the sustainability of business

These processes are aligned with the guidelines of the Board of Directors and Executives that, through corporate bodies, define the global objectives that are measured as goals and limits to the risk management units. Control and capital management units, in turn, support the ITAÚ UNIBANCO HOLDING CONSOLIDATED’s management by monitoring and analyzing risk and capital.

The principles providing the foundations for management of risk, risk appetite and guidelines on how ITAÚ UNIBANCO HOLDING CONSOLIDATED’s employees should behave on the day-to-day for decision-making purposes are as follows:

· Sustainability and Client Satisfaction: ITAÚ UNIBANCO HOLDING CONSOLIDATED’s vision is to be the leading bank in sustainable performance and client satisfaction and, therefore, it is committed to creating shared value to employees, clients, stockholders, and society, ensuring the continuity of business. ITAÚ UNIBANCO HOLDING CONSOLIDATED is committed to do business that is good both for the client and the institution itself.

· Risk Culture: The institution’s risk culture goes beyond policies, procedures or processes, as it strengthens the individual and collective responsibility of all employees so they do the right thing at the right moment and on the proper way, by respecting the ethical way of doing business. The Risk Culture is described below.

· Risk Pricing: ITAÚ UNIBANCO HOLDING CONSOLIDATED acts and assumes risks in business it knows and understands, avoiding risks that are unknown to the institution or that do not have a competitive edge, therefore carefully assessing the risk-return ratio.

· Diversification: the institution’s appetite is low with respect to volatility in results and, therefore, it operates with a diversified base of clients, products and business, seeking to diversify risks and giving priority to lower risk business.

· Operational Excellence: It is the wish of ITAÚ UNIBANCO HOLDING CONSOLIDATED to be an agile bank, with a robust and stable infrastructure to offer top services.

· Ethics and Respect for Regulation: for ITAÚ UNIBANCO HOLDING CONSOLIDATED, ethics is non-negotiable; therefore, the institute promotes an institutional environment that has integrity, guiding employees to cultivate ethics in relationships and business, and the respect for rules, as it cultivates the care for the institution’s reputation.

Aiming to strengthen these values and align ITAÚ UNIBANCO HOLDING CONSOLIDATED’s employees’ behavior with its risk management guidelines, the institution adopts a number of initiatives to disseminate the risk culture. ITAÚ UNIBANCO HOLDING CONSOLIDATED’s risk culture is based on four basic principles: conscious risk-taking, discussion of the risks the institution faces, the corresponding action taken, and the responsibility of everyone to manage risks.

These principles lay down the basis for ITAÚ UNIBANCO HOLDING CONSOLIDATED’s guidelines by helping employees to consciously understand, identify, measure, manage and mitigate risks. In addition to policies, procedures and processes, the risk culture strengthens the individual and collective responsibility of employees in the management of risks inherent in the activities performed individually, respecting the ethical way of managing business.

ITAÚ UNIBANCO HOLDING CONSOLIDATED promotes the risk culture, stressing behaviors that will help people at every level of the organization to consciously assume and manage risks. With these principles disseminated throughout the institution, there is an incentive for risk to be understood and openly debated, to be kept within the levels indicated by the risk appetite, and to be taken as the individual responsibility of each employee of ITAÚ UNIBANCO HOLDING CONSOLIDATED, irrespective of their position, area or function.

ITAÚ UNIBANCO HOLDING CONSOLIDATED also provides channels for reporting operational failures, internal or external frauds, and conflicts in the work environment or situations that might cause disruptions and/or losses to the institution or adversely affect clients. Every employee and third party is responsible for reporting any issues on a promptly basis, as soon as they become aware of the fact.

Taking a prospective stance in relation to capital management, ITAÚ UNIBANCO HOLDING CONSOLIDATED implemented a capital risk structure and its ICAAP, therefore complying with National Monetary Council (CMN) Resolution No. 3,988, BACEN Circular No. 3,547, and BACEN Circular Letter No. 3.774.

The risk management organizational structure of ITAÚ UNIBANCO HOLDING CONSOLIDATED is in compliance with the regulations in force in Brazilin and abroad, and in line with the best practices of the market. The responsibilities for risk management at ITAÚ UNIBANCO HOLDING CONSOLIDATED are structured in accordance with three defense lines, to wit:

· in the first defense line, business areas and back-office corporate areas manage risks originated by them, through their identification, assessment, control and report thereof;

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.82

· in the second defense line, an independent unit controls risks on a centralized basis, aiming at assuring that the risks of ITAÚ UNIBANCO HOLDING CONSOLIDATED are managed in accordance with the appetite for risk, and the policies and procedures established. Thus, the centralized control provides the Board of Directors and the executives with a global vision of exposures of ITAÚ UNIBANCO HOLDING CONSOLIDATED so as to optimize and expedite corporate decisions;

· in the third defense line, internal audit performs the independent assessment of the activities carried out in the institution, enabling top management to measure the adequacy of controls, effectiveness of risk management and compliance with internal rules and regulatory requirements

ITAÚ UNIBANCO HOLDING CONSOLIDATED uses automated and robust systems to fully meet capital regulations and to measure risks following regulatory requirements and models in effect.

It also coordinates actions to check for adherence to qualitative and quantitative requirements established by the regulatory bodies for compliance with the minimum mandatory capital requirement and risk monitoring.

Further details on risk management can be found on the website www.itau.com.br/investor-relations, under section Corporate Governance / Risk Management and Capital – Pillar 3.

I – Market risk

Market risk is the possibility of incurring financial losses arising from the changes in the market value of positions held by a financial institution, including the risks of transactions subject to foreign exchange variation, interest rates, share prices, price indexes and commodity prices, among other indices related to risk factors.

Market risk management is the process through which the ITAÚ UNIBANCO HOLDING CONSOLIDATED monitors and controls the risks of variations in financial instruments market values due to market changes, aimed at optimizing the risk-return ratio, by using an appropriate structure, alerts, models and adequate tools for management limits.

ITAÚ UNIBANCO HOLDING CONSOLIDATED’s Market Risk Management Policy is in line with the principles of Resolution No. 3,464, issued by the National Monetary Council (CMN) and posterior amendments, being a set of principles that drive the ITAÚ UNIBANCO HOLDING CONSOLIDATED strategy towards control and management of market risk of all business units and legal entities.

The document Public Access Report – Market Risk, that details the guidelines set out by the corporate guidelines on market risk control, which is not part of the financial statements, can be read on the website www.itau.com.br/investor-relations, in the section Corporate Governance, Rules and Policies.

ITAÚ UNIBANCO HOLDING CONSOLIDATED’s market risk management strategy is aimed at balancing corporate business goals, taking into account, among other things:

· Political, economic and market conditions;

· Portfolio profile of ITAÚ UNIBANCO HOLDING CONSOLIDATED;

· Expertise within the group to support operations in specific markets.

The process for managing the market risk of ITAÚ UNIBANCO HOLDING CONSOLIDATED is conducted within the governance and hierarchy of corporate bodies and a framework of limits and warnings approved specifically for this purpose, covering different levels and classes of market risk (such as interest rate, and exchange variation risk, among others). This framework of limits and warnings ranges from the monitoring of risk aggregate indicators (portfolio level) to granular limits (individual desk level). The framework of market risk covers from the risk factor level, with specific limits aiming at improving the risk monitoring and understanding process, and at avoiding risk concentration. These limits are quantified by assessing the forecasted results of the balance sheet, size of stockholders’ equity, liquidity, markets complexity and volatility as well as the institution’s appetite for risk. Limits are monitored daily and excesses and potential violations are reported and discussed for each established limit:

· Within one business day, for management of business units in charge and executives of the risk control area and business areas; and

· Within one month, for proper corporate bodies.

Daily risk reports, used by the business and control departments, are issued for senior management. Additionally, the risk control and management process is submitted to periodic reviews for the purpose of keeping it in line with the best market practices and adherent to the ongoing improvement processes at ITAÚ UNIBANCO HOLDING CONSOLIDATED.

The structure of limits and alerts follows the Board of Directors' guidelines and is approved by corporate bodies. The process to definite limit levels and violation reports follow the governance to approve the internal policies of ITAÚ UNIBANCO HOLDING CONSOLIDATED. The information flow established aims at disseminating information to the several levels of executives of the institution, including the members of the Executive Board, by means of the Committees in charge of risk management. This limit and warning framework increases effectiveness and the control coverage is reviewed at least on an annual basis.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.83

The purpose of market risk control of ITAÚ UNIBANCO HOLDING CONSOLIDATED structure is:

· Providing visibility and assurance to all executive levels that the assumption of market risks is in line with ITAÚ UNIBANCO HOLDING CONSOLIDATED and the risk-return objective;

· Promoting a disciplined and informed discussion on the global risk profile and its evolution over time;

· Increasing transparency on the way the business seeks to optimize results;

· Providing early warning mechanisms in order to make the effective risk management easier, without jeopardizing the business purposes; and

· Monitoring and avoiding risk concentration.

The market risk is controlled by an area independent from the business areas, which is responsible for the daily activities of: (i) risk measurement and assessment, (ii) monitoring of stress scenarios, limits and warnings, (iii) application, analysis and tests of stress scenarios, (iv) risk reporting for individuals responsible within the business areas, in compliance with governance of ITAÚ UNIBANCO HOLDING CONSOLIDATED, (v) monitoring of actions required for adjustment of positions and/or risk levels to make them feasible, and (vi) support to the launch of new financial products with security. For that purpose, ITAÚ UNIBANCO HOLDING CONSOLIDATED has a structured reporting and information process and an information flow that provides input for the follow-up by corporate bodies and complies with the requirements of Brazilian and foreign regulatory agencies.

ITAÚ UNIBANCO HOLDING CONSOLIDATED hedges transactions with clients and proprietary positions, including its foreign investments, in order to mitigate risk arising from fluctuations in relevant market risk factors and maintaining the classification the transactions into the current exposure limits. Derivatives are commonly used for these hedging activities. When these transactions are classified as hedges for accounting purposes, specific supporting documentation is provided, including ongoing follow-up of hedge effectiveness (retrospective and prospective) and other changes in the accounting process. The accounting and managerial hedging procedures are governed by the institutional polices of ITAÚ UNIBANCO HOLDING CONSOLIDATED.

For a detailed vision of the accounting hedge topic, see Note 7 – Securities and Derivative Financial Instruments.

The market risk structure categorizes transactions as part of either the banking portfolio or the trading portfolio, in accordance with general criteria established by CMN Resolution No. 3,464 and BACEN Circular No. 3,354.

The trading portfolio consists of all transactions involving financial instruments and goods, including derivatives, which are carried out with the intention of trading.

The banking portfolio is basically characterized by transactions from the banking business, and transactions related to the management of the balance sheet of the institution. It has the no-intention of resale and medium and long term time horizons as general guidelines.

Exposures to market risks inherent in the many different financial instruments, including derivatives, are broken down into a number of risk factors, primary market components for pricing. The main risk factors measured by ITAÚ UNIBANCO HOLDING CONSOLIDATED are as follows:

· Interest rates: the risk of losses from transactions subject to interest rate variations, foreign-currency coupons and price-index coupons;

· Currencies: the risk of losses from transactions subject to foreign exchange rate variation;

· Shares: the risk of losses from transactions subject to share price variations;

· Commodities: the risk of losses from transactions subject to commodity price variations.

The National Monetary Council (CMN) has regulations that establish the segregation of exposure to market risk at least in the following categories: interest rate, exchange rate, shares and commodities. Brazilian inflation indexes are treated as a group of risk indicators and receive the same treatment given to other risk indicators, such as interest rates and foreign exchange rates, and follow the governance and risk limits framework adopted by ITAÚ UNIBANCO HOLDING CONSOLIDATED for market risk management.

The market risk analyses are conducted based on the following metrics:

· Value at risk (VaR): statistical measure that estimates the expected maximum potential economic loss under normal market conditions, considering a certain time horizon and confidence level;

· Losses in stress scenarios: simulation technique to assess the behavior of assets, liabilities and derivatives of a portfolio when several risk factors are taken to extreme market situations (based on prospective and historical scenarios);

· Stop loss: metrics which purpose is to review positions, should losses accumulated in a certain period reach a certain amount;

· Concentration: cumulative exposure of a certain financial instrument or risk factor, calculated at market value (“MtM – Mark to Market”); and

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.84

· Stressed VaR: statistical metric arising from VaR calculation, which purpose is to capture higher risk in simulations for the current portfolio, considering returns that can be seen in historical scenarios of extreme volatility.

In addition to the aforementioned risk measures, sensitivity and loss control measures are also analyzed. They comprise:

· Mismatching analysis (GAPS): accumulated exposure by risk factor of cash flows expressed at market value, allocated at the maturity dates;

· Sensitivity (DV01- Delta Variation): impact on the market value of cash flows, when submitted to an one annual basis point increase in the current interest rates or index rate;

· Sensitivity to several risk factors (Greeks): partial derivatives of an option portfolio in relation to the prices of underlying assets, implied volatilities, interest rates and time.

ITAÚ UNIBANCO HOLDING CONSOLIDATED uses proprietary systems to measure the consolidated market risk. The processing of these systems occurs in an access-controlled environment, being highly available, which has data safekeeping and recovery processes, and counts on such an infrastructure to ensure the continuity of business in contingency (disaster recovery) situations.

At June 30, 2017, ITAÚ UNIBANCO HOLDING CONSOLIDATED posted a Total VaR of R$ 460.8 million (231.2 million at June 30, 2016). The growth in Total VaR Total noted as compared to the prior year was mainly due to the increase in the market volatility levels.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.85

II – Credit risk

ITAÚ UNIBANCO HOLDING CONSOLIDATED understands credit risk as the possibility of losses arising from the breach by the borrower, issuer or counterparty of the respective agreed-upon financial obligations, the devaluation of loan agreement due to downgrading of the borrower’s, the issuer’s, the counterparty’s risk rating, the reduction in gains or compensation, the advantages given upon posterior renegotiation and the recovery costs.

There is a credit risk control and management structure, centralized and independent from the business units, that establishes limits and mechanisms to mitigate risks, in addition to determining processes and instruments to measure, monitor and control the credit risk inherent in all products, portfolio concentrations and impacts of potential changes in the economic environment.

ITAÚ UNIBANCO HOLDING CONSOLIDATED establishes its credit policy based on internal factors, such as client rating criteria, performance of and changes in portfolio, default levels, return rates, and allocated economic capital, among others, also considering external factors, such as interest rates, market default indicators, inflation, changes in consumption, among others.

To protect the institution against losses arising from loan operations, ITAÚ UNIBANCO HOLDING CONSOLIDATED considers all aspects that determine the client’s credit risk to define a provision level that is adequate with the risk incurred in each operation. For each operation, the assessment and rating of the client or economic group, the operation rating, and the possible existence of past-due amounts are taken into account and the volume of the regulatory provision is determined.

In compliance with CMN Resolution 3,721, the document “Public Access Report – Credit Risk“, which includes the guidelines established by the institutional credit risk control policy can be viewed at www.itau.com.br/investor-relations, under Corporate Governance, Regulations and Policies.

III – Operational risk

For ITAÚ UNIBANCO HOLDING CONSOLIDATED operational risk is defined as the possibility of losses from failure of, insufficient or inadequate internal processes, people and systems, or from external events impacting the realization of strategic, tactical or operational objectives. It includes the legal risk, associated with the inadequacy or deficiency in agreements signed by the institution, as well as sanctions for failing to meet legal provisions and compensation for damages to third parties arising from activities performed by the institution.

The purpose of the operational risk management is to support the institution in the decision-making process, always seeking to identify and assess risks correctly, create value for stockholders and to protect ITAÚ UNIBANCO HOLDING CONSOLIDATED’s assets and image. Accordingly, managers of the executive areas use corporate methods prepared and made available by the internal controls, compliance and operational risk area, so as to ensure the control environment quality and comply with internal guidelines and regulations in force.

Within the governance of the risk management process where periodically there are consolidated reports on risk monitoring, controls, action plans and operational losses presented to the executives of the business areas.

The document entitled “Public Access Report – Integrated Management of Operational Risk/ Internal Controls/ Compliance“, a summarized version of the institutional operational risk management policy, which is not an integral part of the financial statements, may be accessed on the website www.itau.com.br/investor-relations, section “Corporate Governance”, Rules and Policies.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.86

IV – Liquidity risk

Liquidity risk is defined as the institution’s possibility of not being able to efficiently meet its expected and unexpected obligations, both current and future, including those arising from the pledged guarantees, without affecting its daily operations and without incurring significant losses.

Liquidity risk control is carried out by an area independent from the business areas, and which is responsible for defining the constitution of a reserve, proposing assumptions for behavior of cash flow, identifying, assessing, monitoring, controlling and reporting, on a daily basis, the exposure to liquidity risks in different time horizons, proposing limits for liquidity risk and monitoring the established limits consistent with the risk appetite of the institution, informing on possible noncompliance, considering the liquidity risks individually in countries where ITAÚ UNIBANCO HOLDING CONSOLIDATED operates, simulating the behavior of cash flow under stress conditions, assessing and reporting risks inherent in new products and transactions and reporting information required by regulatory bodies. Every activity is subject to analysis by independent areas of validation, internal controls and audit.

The measurement of liquidity risk covers all financial transactions of ITAÚ UNIBANCO HOLDING CONSOLIDATED companies, as well as possible contingent or unexpected exposures, such as those arising from settlement services, provision of collaterals and guarantees, and credit facilities contracted and not used. This process is conducted by means of corporate systems and proprietary applications developed and managed in-house.

ITAÚ UNIBANCO HOLDING CONSOLIDATED daily manages and controls liquidity risk through governance approved in superior committees, which establishes, among other activities, the adoption of minimum liquidity limits, sufficient to absorb possible cash losses in stress scenarios, measured by internal methodologies and regulatory methodology.

In compliance with Circular Letter n° 3.775 of BACEN, bank holding total assets over R$ 100 billion are required to report a standardized Liquidity Coverage Ratio (LCR) to the Central Bank of Brazil on a monthly basis as of october 2015. This ratio is calculated based on a methodology defined by the Central Bank of Brazil itself, and is in line with international guidelines of Basel.

The summarized index calculation is presented in the table below. In 2017, the index minimum requirement is 80%. Further details on the LCR for the period may be accessed at www.itau.com.br/investor-relations, section Corporate Governance/ Capital and Risk Management - Pillar 3.

Information on the Liquidity Coverage Ratio (LCR)	Second quarter of 2017
	Total Adjusted Amount(1)
Total high-quality liquid assets (2)		185,287,400
Total potential cash outflows (3)		91,879,229
Liquidity Coverage Ratio (%)		201.7	%

 (1) Corresponds to the amount calculated after the application of weighting factors and limits established by BACEN Circular No. 3,749.  

(2) HQLA - High quality liquid assets: balance in the stock, which in certain cases weighted by a discount factor, of assets that remain liquid in the markets during a stress period, which can be easily converted into cash and that pose low risk.  

(3) Potential cash outflows calculated in standardized stress, determined by Circular No. 3.749 (outflows), subtracted from (i) potential cash inflows calculated under standardized stress, set forth by Circular No. 3,749 and (ii) 75% x Outflows, whichever is lower.

The document Public Access Report - Liquidity Risk, that expresses the guidelines set forth by the internal policy on liquidity risk, that is not part of the financial statements, may be viewed on the website www.itau.com.br/investor-relations, in the section Corporate Governance, Rules and Policies.

V - Insurance, Pension Plan and Capitalization Risks

The products that make up the portfolios of ITAÚ UNIBANCO HOLDING CONSOLIDATED’s insurance companies are related to the life insurance and elementary, pension plan and premium bonds. Therefore, ITAÚ UNIBANCO HOLDING CONSOLIDATED understands that the major risks inherent in these products are as follows:

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.87

· Underwriting risk: possibility of losses arising from insurance, pension plan and capitalization operations contrary to the institution’s expectations, directly or indirectly associated with technical and actuarial bases adopted to calculate premiums, contributions and provisions;

· Market risk;

· Credit risk;

· Operational risk;

· Liquidity risk in insurance operations.

The management process of insurance, pension plan and premium bonds risks is based on responsibilities defined and communicated between the control and business areas, assuring independence between them and focusing on the particularities of each risk, in accordance with the guidelines established by ITAÚ UNIBANCO HOLDING CONSOLIDATED.

VI- Social and Environmental Risk

ITAÚ UNIBANCO HOLDING CONSOLIDATED understands social and environmental risk as the risk of potential losses due to exposure to social and environmental damages arising from the performance of its activities.

Mitigation actions concerning the social and environmental risk are carried out by mapping processes, risks and controls, monitoring new regulations on the subject, and recording any occurrences in internal databases. In addition to risk identification, giving priority, responding to, monitoring and reporting assessed risks serve to supplement ITAÚ UNIBANCO HOLDING CONSOLIDATED’s social and environmental risk management.

The social and environmental risk management is carried out by the first line of defense in its daily operations, supplemented by the technical support of the legal and risk control area, which has teams specialized in the social and environmental risk management. Business units also have governance for approval of new products, which includes the assessment of the social and environmental risk, therefore ensuring compliance with this requirement for all new products approved by the institution. Governance still has the Social and Environmental Risk Committee, which main duty is to guide the institutional understanding related to exposure to social and environmental risk for the institution’s activities and operations.

ITAÚ UNIBANCO HOLDING CONSOLIDATED consistently seeks to evolve in the social and environmental risk governance, always attentive to any challenges to keep pace with the changes in and demands of society. Therefore, among other actions, Itaú Unibanco has assumed and incorporated into its internal processes a number of national and international voluntary commitments and pacts aimed at integrating social, environmental and governance aspects into business. Highlights go to the Principles for Responsible Investment (PRI), the Charter for Human Rights – Ethos, the Equator Principles (EP), the Global Compact, the Carbon Disclosure Project (CDP), the Brazilian GHG Protocol Program, and the Brazilian Pact for Eradicating Slave Labor, among others. ITAÚ UNIBANCO HOLDING CONSOLIDATED’s efforts to spread knowledge on the assessment of social and environmental criteria have been recognized in Brazil and overseas, as shown by our recurring presence in top sustainability indexes, both abroad, with the Dow Jones Sustainability Index, and more recently, with the Sustainability Index Euronext Vigeo – Emerging 70, and in Brazil, with the Corporate Sustainability Index, in addition to other numerous prizes with which Itaú Unibanco has been awarded.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.88

Note 21 –Supplementary information

a) Insurance policy - ITAÚ UNIBANCO HOLDING PRUDENTIAL despite the low risk exposure due to a physical non-concentration of their assets, have the policy to guarantee their valuables and assets at amounts considered sufficient to cover possible claims.

b) Foreign currency – The balances in Reais linked to the foreign currencies were:

	06/30/2017			06/30/2016
Permanent foreign investments		51,789,387			49,638,171
Net amount of other assets and liabilities indexed to foreign currency, including derivatives		(132,767,057	)		(119,220,003	)
Net foreign exchange position		(80,977,670	)		(69,581,832	)

The net foreign exchange position, considering the tax effects on the net balance of other assets and liabilities indexed to foreign currencies, reflects the low exposure to exchange variations.

c) Investment fund and managed portfolios - ITAÚ UNIBANCO HOLDING CONSOLIDATED PRUDENTIAL, through its subsidiaries, manages the following types of funds privatization, fixed income, shares, open portfolio shares investment clubs, customer portfolios and group portfolios, domestic and foreign, classified in memorandum accounts, distributed as follows:

	Amount				Amount (*)				Number of funds
	06/30/2017		06/30/2016		06/30/2017		06/30/2016		06/30/2017		06/30/2016
Investment funds		744,126,220		628,197,809		744,126,220		628,197,809		5,457		2,295
Fixed income		697,800,209		588,013,049		697,800,209		588,013,049		5,092		1,925
Shares		46,326,011		40,184,760		46,326,011		40,184,760		365		370
Managed portfolios		348,723,629		289,518,597		254,034,099		206,996,263		17,932		16,874
Customers		189,748,713		162,782,951		135,361,058		115,817,066		17,850		16,810
Itaú Group		158,974,916		126,735,646		118,673,041		91,179,197		82		64
Total		1,092,849,849		917,716,406		998,160,319		835,194,072		23,389		19,169

 (*) Refers to the total amounts after elimination of double counting related to investments in investment fund portfolios.

d) Consortia funds

	06/30/2017		06/30/2016
Monthly estimate of installments receivable from participants		170,205		161,155
Group liabilities by installments		10,926,164		11,111,381
Participants – assets to be delivered		9,194,682		9,587,002
Funds available for participants		1,695,177		1,587,614
(In units)
Number of managed groups		576		680
Number of current participants		384,808		401,934
Number of assets to be delivered to participants		137,993		162,846

e) Fundação Itaú Social - ITAÚ UNIBANCO HOLDING CONSOLIDATED PRUDENTIAL, through its subsidiaries, is the main sponsor of Fundação Itaú Social, the objectives of which are managing the “Itaú Social Program”, which aims at coordinating the organization’s role in projects of interest to the community by supporting or developing social, scientific and cultural projects, mainly in the elementary education and health areas and supporting projects or initiatives in progress, supported or sponsored by entities qualified to work in the ”Programa Itaú Social” (Itaú Social Program).

During the period from 01/01 to 06/30/2017 and 01/01 to 06/30/2016, the subsidiaries did not make donations and the foundation´s net assets totaled R$ 3,334,814 (R$ 2,675,977 at 06/30/2016). The funds to finance the objectives of the foundation and maintain its operating and administrative structure derive from donations and proceeds generated by its assets.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.89

f) Instituto Itaú Cultural – ITAÚ UNIBANCO HOLDING CONSOLIDATED PRUDENTIAL, through its subsidiaries, is the main sponsor of Instituto Itaú Cultural, an entity set up to promote and disseminate Brazilian culture across the country and abroad.

During the period from 01/01 to 06/30/2017 and 01/01 to 06/30/2016, the subsidiaries made donations in the amount of R$ 30,057 (R$ 16,500 from 01/01 to 06/30/2016) and the institute’s net assets totaled R$ 30,649 (R$ 30,271 at 06/30/2016). The funds to finance the objectives of the institute and maintain its operating and administrative structure derive from donations and proceeds generated by its assets.

g) Instituto Unibanco - ITAÚ UNIBANCO HOLDING CONSOLIDATED PRUDENTIAL sponsors Instituto Unibanco, an entity whose objective is to support projects on social assistance, particularly education, culture, promotion of integration to labor market, and environmental protection, directly and/or supplementary, through the civil society’s institutions.

During the period from 01/01 to 06/30/2017 and 01/01 to 06/30/2016, the subsidiaries did not make donations and the institute’s net assets totaled R$ 1,655,380 (R$ 1,376,070 at 06/30/2016). The funds to finance the objectives of the institute and maintain its operating and administrative structure derive from donations and proceeds generated by its assets.

h) Instituto Unibanco de Cinema - ITAÚ UNIBANCO HOLDING CONSOLIDATED PRUDENTIAL, through its subsidiaries, is the main sponsors Instituto Unibanco de Cinema, an entity whose objectives are the fostering of culture in general, and providing the low-income population with access to cinematography, videography and similar productions, for which it shall own and manage movie theaters, and theaters to screen films, videos, video-laser discs and other related activities, as well as to screen and divulge films of importance, especially those produced in Brazil.

During the period from 01/01 to 06/30/2017 and 01/01 to 06/30/2016, the subsidiaries did not make donations and the institute’s net assets totaled R$ 21,058 (R$ 18,746 at 06/30/2016). The funds to finance the objectives of the institute and maintain its operating and administrative structure derive from donations and proceeds generated by its assets.

i) Associação Itaú Viver Mais - ITAÚ UNIBANCO HOLDING CONSOLIDATED PRUDENTIAL, through its subsidiaries, is the main sponsor Associação Itaú Viver Mais, an entity whose objective is the provision of social services for the welfare of beneficiaries, in the way and conditions established by its Internal Rules, and according to the funds available. These services may include, among others, the promotion of cultural, educational, sports, entertainment and healthcare activities.

During the period from 01/01 to 06/30/2017 and 01/01 to 06/30/2016, the subsidiaries made donations in the amount of R$ 920 and the association’s net assets totaled R$ 586 (R$ 861 at 06/30/2016). The funds to finance the objectives of the association and maintain its operating and administrative structure derive from donations and proceeds generated by its assets.

j) Associação Cubo Coworking - ITAÚ UNIBANCO HOLDING CONSOLIDATED PRUDENTIAL, through its subsidiaries, is the main sponsor of Associação Cubo Coworking, an entity set up to encourage and promote: discussions, the development of alternative and innovative technologies, business models and solutions; the production and dissemination of the resulting technical and scientific knowledge; the attraction and gathering of new information technology talents that may be characterized as startups; research, development and establishment of ecosystems for entrepreneurship and startups.

During the period from 01/01 to 06/30/2017 and 01/01 to 06/30/2016, the subsidiaries made donations in the amount of R$ 9,500 (R$ 4,500 from 01/01 to 06/30/2016) and the association’s net assets totaled R$ 1,236 (R$ 1,856 at 06/30/2016). The funds to finance the objectives of the association and maintain its operating and administrative structure derive from donations and proceeds generated by its assets.

k) Agreements for offset and settlement of liabilities in the scope of the National Financial System – Offset agreements were entered into in the scope of derivative contracts, as well as agreements for offset and settlement of receivables and payables pursuant to CMN Resolution No. 3.263, of February 24, 2005, which purpose is to enable the offsetting of credits and debits maintained with the same counterparty, and in which the maturity dates of receivables and payables can be advanced to the date an event of default by one of the parties occurs or in case of the bankruptcy of the debtor.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.90

l) Citibank’s Retail Operations

On October 08, 2016, ITAÚ UNIBANCO HOLDING PRUDENTIAL entered, by means of its subsidiaries Itaú Unibanco S.A. and Itaú Corretora de Valores S.A., into a share purchase and sale agreement with Banco Citibank S.A. and with other companies of its conglomerate (Citibank) for the acquisition of the retail activities carried out by Citibank in Brazil, including loans, deposits, credit cards, branches, assets under management and insurance brokerage, as well as the equity investments held by Citibank in TECBAN – Tecnologia Bancária S.A. (representing 5.64% of its capital) and in Cibrasec – Companhia Brasileira de Securitização (representing 3.60% of its capital), for R$ 710 million.

This operation will involve the corporate restructuring of some companies of the Citibank conglomerate so that the retail business in Brazil is spun off and transferred to the companies that will be the subject matter of the acquisition.

The effective acquisitions and financial settlements will occur after compliance with certain contractual conditions and obtainment of required regulatory authorizations.

This acquisition will not have accounting effects on the results of ITAÚ UNIBANCO HOLDING PRUDENTIAL.

m) Acquisition of minority interest in XP Investimentos S.A.

On May 11, 2017, ITAÚ UNIBANCO HOLDING PRUDENTIAL, through its subsidiary Itaú Unibanco S.A. (Itaú Unibanco), entered into an agreement for the purchase and sale of shares with XP Controle Participações S.A. (XP Controle), G.A. Brasil IV Fundo de Investimento em Participações, Dyna III Fundo de Investimento em Participações, among other parties (Sellers), for acquisition of 49.9% of total capital (30.1% of common shares) of XP Investimentos S.A. (XP Holding), by means of capital contribution of R$ 600 million and acquisition of shares issued by XP Holding and held by the Sellers in the amount of R$ 5,700 million. Such amounts are subject to contractual adjustments (First Acquisition).

In addition to the First Acquisition, Itaú Unibanco undertook to acquire (i) in 2020, and additional percentage of 12.5%, that will ensure it 62.4% of total capital of XP Holding (40.0% of common shares), based on a multiple (19 times) applied to XP Holding’s earnings, and (ii) in 2022, the additional percentage of 12.5%, which will ensure it 74.9% of total capital of XP Holding (49.9% of common shares), based on the fair market value of XP Holding at that time, being clear that the control of XP Group, including XP Investimentos, will continue with the shareholders of XP Controle, that will hold the majority of voting shares.

ITAÚ UNIBANCO HOLDING PRUDENTIAL will act as a minority partner and will not influence commercial and operating policies of XP Investimentos or of any other company belonging to XP Group.

The effective acquisitions and financial settlements will occur after compliance with certain contractual conditions and obtainment of required regulatory authorizations.

This acquisition will not have accounting effects on the results of ITAÚ UNIBANCO HOLDING PRUDENTIAL.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 4.91

Independent auditor's report on the consolidated financial statements of the Prudential Conglomerate

To the Board of Directors and Stockholders 

Itaú Unibanco Holding S.A.

Opinion

We have audited the accompanying consolidated financial statements of the Prudential Conglomerate of Itaú Unibanco Holding S.A. (the "Bank"), which comprise the consolidated balance sheet as at Jun 30, 2017 and the consolidated statements of income, changes in equity and cash flows for the six-month period then ended, and notes to the financial statements, including a summary of significant accounting policies. These special purpose consolidated financial statements were prepared in accordance with specified procedures as established in Resolution 4,280, from October 31, 2013, issued by National Monetary Council (CMN), and supplementary regulations of the Brazilian Central Bank (BACEN), described in Note 2 - "Presentation and consolidation of the financial statements".

In our opinion, the consolidated financial statements of the Prudential Conglomerate referred to above present fairly, in all material respects, the financial position of Itaú Unibanco Holding S.A. as at Jun 30, 2017, and the consolidated financial performance and cash flows, for the six-month period then ended, in accordance with the provisions for the preparation of consolidated financial statements of prudential conglomerates established by Resolution 4,280 of the CMN and supplementary regulations of BACEN, for the preparation of these special purpose consolidated financial statements, as described in the Notes 2 - "Presentation and consolidation of the financial statements" and 4 - "Summary of the main accounting practices" to the consolidated financial statements.

Basis for opinion

We conducted our audit in accordance with Brazilian and International Standards on Auditing. Our responsibilities under those standards are further described in the "Auditor's responsibilities for the audit of the consolidated financial statements”. We are independent of the Bank and of its subsidiaries in accordance with the ethical requirements established in the Accountant’s Code of Professional Ethics and Professional Standards issued by the Brazilian Federal Accounting Council, and we have fulfilled other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of matter - basis of preparation of the consolidated financial statements of the Prudential Conglomerate

Without modifying our opinion, we draw attention to the Note 2 - "Presentation and consolidation of the financial statements", which discloses the following information:

The consolidated financial statements of the Prudential Conglomerate were prepared by management to comply with the requirements of Resolution 4,280 of the CMN, and supplementary regulations of BACEN. Consequently, our report on these consolidated financial statements was prepared exclusively for the compliance with these specific requirements and, accordingly, may not be suitable for another purpose.

Others matters

Itaú Unibanco Holding S.A. prepared a set of parent company and consolidated financial statements for general purposes referring to the six-month period ended in Jun 30, 2017, in accordance with accounting practices adopted in Brazil, applicable to institutions authorized to operate by the Brazilian Central Bank (BACEN). Our independent auditor's report on those statements, dated July 31, 2017, was unmodified.

Other information accompanying the consolidated financial statements and the auditor's report

The Bank’s management is responsible for the other information, which comprise the Management Report.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 5.1

Our opinion on the consolidated financial statements does not cover the Management report, and we do not express any form of audit conclusion thereon.

In connection with the audit of the consolidated financial statements, our responsibility is to read the Management Report and, in doing so, consider whether this report is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appear to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement in the Management Report, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements of the Prudential Conglomerate of Itaú Unibanco Holding S.A. Conglomerate in accordance with Resolution 4,280 of the National Monetary Council (CMN), and supplementary regulations of the Brazilian Central Bank (BACEN), whose main criteria and accounting policies are disclosed in the Notes 2 - "Presentation and consolidation of the financial statements" and 4 - "Summary of the main accounting practices", and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Bank's ability to continue as going concerns, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

Those charged with governance in the Bank and its subsidiaries are responsible for overseeing the financial reporting process.

Auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements of the Prudential Conglomerate, prepared in accordance with Resolution 4,280 of the National Monetary Council (CMN), and supplementary regulations of the Brazilian Central Bank (BACEN), as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that the audit conducted in accordance with the Brazilian and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Brazilian and International Standards on Auditing, whereas the NBC TA 800 (Special Conditions – Audit Financial Statements in accordance with special purpose accounting conceptual structures), we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Bank and its subsidiaries.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 5.2

Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank's ability to continue as going concerns. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Bank and its subsidiaries to cease to continue as going concerns.

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Consolidated to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

São Paulo, August 24, 2017

PricewaterhouseCoopers

Auditores Independentes

CRC 2SP000160/O-5

Washington Luiz Pereira Cavalcanti

Contador CRC 1SP172940/O-6

Itaú Unibanco Holding S.A. – Demonstrações Contábeis Prudencial – 30 de Junho de 2017 5.3