Exhibit 99.1

MANAGEMENT REPORT – December 31, 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 December 31, 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$ 21,996 million for the year and net earnings per share were R$ 3.38. Consolidated stockholders' equity totaled R$ 128,405 million and the book value per share reached R$ 19.86.

Assets and funds raised

Assets totaled R$ 1,326,329 million and were substantially composed of R$ 524,653 million of Interbank Investments, Securities and Derivative Financial Instruments, and R$ 545,855 million of Loan, Lease and Other Credit Operations and the Foreign Exchange Portfolio. The raised and Managed Funds totaled R$ 2,090,032 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$ 32,1 billion, corresponding to only 12,4% 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, February 23, 2018.

Executive Board

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 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
Members	Paulo Sergio Miron
Antonio Francisco de Lima Neto
Diego Fresco Gutierrez
Geraldo Travaglia Filho	Officers
Maria Helena dos Santos Fernandes de Santana
Rogério Paulo Calderón Peres	Adriano Cabral Volpini
	Álvaro Felipe Rizzi Rodrigues
FISCAL COUNCIL	Andre Balestrin Cestare
Chairman	Eduardo Hiroyuki Miyaki
José Caruso Cruz Henriques	Emerson Macedo Bortoloto
	Gilberto Frussa
Members	José Virgilio Vita Neto
Alkimar Ribeiro Moura	Matias Granata
Carlos Roberto de Albuquerque Sá	Renato Barbosa do Nascimento
	Rodrigo Luis Rosa Couto
	Sergio Mychkis Goldstein
	Tatiana Grecco
	Tom Gouvêa Gerth
	(*) Group Executive Finance Director and Investor Relations Officer

Accountant

Arnaldo Alves dos Santos

CRC - 1SP - 210.058/O-3

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  2.1

ITAÚ UNIBANCO HOLDING S.A.

Prudential Consolidated Balance Sheet (Note 2a)

(In thousands of Reais)

Assets	Note	12/31/2017			12/31/2016
Current assets			905,040,675			843,497,624
Cash and cash equivalents			18,668,746			18,394,765
Interbank investments	4b and 6		263,948,625			278,699,929
Money market			235,913,038			257,198,996
Interbank deposits			28,035,587			21,500,933
Securities and derivative financial instruments	4c, 4d and 7		158,140,863			114,682,193
Own portfolio			95,184,743			67,119,595
Subject to repurchase commitments			33,401,902			18,608,226
Pledged in guarantee			11,297,748			7,531,953
Deposited with the Central Bank			3,386,777			-
Securities under resale agreements with free movement			1,745,202			7,419,769
Derivative financial instruments			13,124,491			14,002,650
Interbank accounts			132,523,704			113,326,416
Pending settlement			33,103,755			27,451,574
Central Bank deposits			98,836,941			85,700,462
National Housing System (SFH)			8,491			6,412
Correspondents			34,779			32,111
Interbank Onlending			539,738			135,857
Interbranch accounts			123,946			7,497
Loan, lease and other credit operations	8		245,050,747			241,350,016
Operations with credit granting characteristics	4e		261,105,909			260,066,539
(Allowance for loan losses)	4f		(16,055,162	)		(18,716,523	)
Other receivables			84,069,805			74,831,675
Foreign exchange portfolio	9		35,688,856			30,468,177
Income receivable			2,870,776			2,807,976
Negotiation and intermediation of securities			5,822,698			6,763,206
Deferred tax assets	13b I		26,751,158			23,006,859
Escrow deposits	11b and 11d		1,458,068			2,045,420
Sundry	12a		11,478,249			9,740,037
Other assets	4g		2,514,239			2,205,133
Assets held for sale			1,230,146			785,679
(Valuation allowance)			(512,698	)		(166,896	)
Prepaid expenses	4g and 12b		1,796,791			1,586,350
Long-term receivables			373,528,568			385,411,083
Interbank investments - Interbank deposits	4b and 6		1,208,747			1,225,850
Money market			195,861			36,441
Interbank deposits			1,012,886			1,189,409
Securities and derivative financial instruments	4c, 4d and 7		101,354,690			105,091,367
Own portfolio			54,181,305			60,040,367
Subject to repurchase commitments			17,208,562			12,433,937
Pledged in guarantee			6,565,801			5,145,248
Deposited with the Central Bank			698,010			4,454,448
Securities under resale agreements with free movement			13,169,009			12,863,925
Derivative financial instruments			9,532,003			10,153,442
Interbank accounts - National Housing System (SFH)			104,723			234,295
Loan, lease and other credit operations	8		213,187,027			210,993,172
Operations with credit granting characteristics	4e		232,491,686			231,153,196
(Allowance for loan losses)	4f		(19,304,659	)		(20,160,024	)
Other receivables			57,198,170			67,248,008
Foreign exchange portfolio	9		16,568,458			21,742,524
Deferred tax assets	13b I		22,315,854			28,394,316
Escrow deposits	11b and 11d		11,025,297			10,228,646
Sundry	12a		7,288,561			6,882,522
Other assets - Prepaid expenses	4g and 12b		475,211			618,391
Permanent assets			47,759,850			46,290,824
Investments	4h and 14a I		24,447,576			21,461,918
Investments in affiliates and jointly controlled entities			24,143,884			20,950,588
Other investments			453,204			660,851
(Allowance for losses)			(149,512	)		(149,521	)
Real estate in use	4i and 14b		5,849,480			6,271,298
Real estate in use			3,280,754			3,255,003
Other fixed assets			12,906,455			12,374,219
(Accumulated depreciation)			(10,337,729	)		(9,357,924	)
Goodwill	4j and 14b		669,521			1,042,185
Intangible assets	4k and 14b		16,793,273			17,515,423
Acquisition of rights to credit payroll			1,059,890			1,045,006
Other intangible assets			31,954,050			28,482,446
(Accumulated amortization)			(16,220,667	)		(12,012,029	)
Total assets			1,326,329,093			1,275,199,531

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

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  3.1

ITAÚ UNIBANCO HOLDING S.A.

Prudential Consolidated Balance Sheet (Note 2a)

(In thousands of Reais)

Liabilities	Note	12/31/2017			12/31/2016
Current liabilities			797,187,379			748,822,447
Deposits	4b and 10b		275,272,402			251,147,275
Demand deposits			69,366,205			62,711,299
Savings deposits			120,004,481			108,275,266
Interbank deposits			1,664,631			3,718,435
Time deposits			84,234,494			76,442,275
Other deposits			2,591			-
Deposits received under securities repurchase agreements	4b and 10c		253,593,450			253,202,125
Own portfolio			83,713,143			91,137,092
Third-party portfolio			158,000,043			140,973,618
Free portfolio			11,880,264			21,091,415
Funds from acceptances and issuance of securities	4b and 10d		48,437,013			36,283,912
Real estate, mortgage, credit and similar notes			34,842,544			27,965,728
Foreign Borrowing through securities			11,831,551			6,267,882
Structured Operations Certificates			1,762,918			2,050,302
Interbank accounts			34,116,644			26,469,416
Pending settlement			33,761,289			26,284,854
Correspondents			355,355			184,562
Interbranch accounts			4,973,303			5,894,541
Third-party funds in transit			4,951,760			5,426,530
Internal transfer of funds			21,543			468,011
Borrowing and onlending	4b and 10e		38,709,225			47,480,287
Borrowing			30,718,358			38,275,648
Onlending			7,990,867			9,204,639
Derivative financial instruments	4d and 7g		13,102,103			10,786,722
Other liabilities			128,983,239			117,558,169
Collection and payment of taxes and contributions			298,274			270,365
Foreign exchange portfolio	9		35,902,858			31,055,794
Social and statutory	15b II		4,951,307			5,497,067
Tax and social security contributions	4m, 4n and 13c		6,002,839			4,743,557
Negotiation and intermediation of securities			4,589,262			10,361,151
Subordinated debt	10f		12,498,741			11,055,748
Provisions for contingent liabilities			4,653,491			4,260,865
Sundry	12c		60,086,467			50,313,622
Long-term liabilities			386,422,376			394,432,221
Deposits	4b and 10b		130,586,561			80,410,787
Interbank deposits			517,143			38,271
Time deposits			130,069,418			80,372,516
Deposits received under securities repurchase agreements	4b and 10c		72,205,449			115,367,344
Own portfolio			27,557,492			74,166,780
Free portfolio			44,647,957			41,200,564
Funds from acceptances and issuance of securities	4b and 10d		59,144,011			57,432,754
Real estate, mortgage, credit and similar notes			26,474,085			26,221,530
Foreign Borrowing through securities			30,045,568			28,024,772
Structured Operations Certificates			2,624,358			3,186,452
Borrowing and onlending	4b and 10e		24,731,795			28,133,622
Borrowing			8,541,383			7,510,440
Onlending			16,190,412			20,623,182
Derivative financial instruments	4d and 7g		13,350,513			13,924,604
Other liabilities			86,404,047			99,163,110
Foreign exchange portfolio	9		16,541,385			21,776,177
Tax and social security contributions	4m, 4n and 13c		16,608,867			15,631,244
Subordinated debt	10f		36,048,767			46,364,327
Provisions for contingent liabilities	11b		9,986,486			11,575,815
Debt instruments eligible as capital			4,148,367			-
Sundry	12c		3,070,175			3,815,547
Deferred income	4o		2,371,348			2,009,926
Non-controlling interests	15f		11,942,502			11,568,390
Stockholders' equity	15		128,405,488			118,366,547
Capital			97,148,000			97,148,000
Capital reserves			1,733,611			1,589,343
Revenue reserves			34,494,495			24,487,354
Asset valuation adjustment	4c, 4d and 7d		(2,227,851	)		(2,975,797	)
(Treasury shares)			(2,742,767	)		(1,882,353	)
Total liabilities and stockholders' equity			1,326,329,093			1,275,199,531

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

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  3.2

ITAÚ UNIBANCO HOLDING S.A.

Prudential Consolidated Statement of Income (Note 2a)

(In thousands of Reais)

		2nd Half of			01/01 to			01/01 to
	Note	2017			12/31/2017			12/31/2016
Income from financial operations			60,728,112			130,995,148			145,818,078
Loan, lease and other credit operations			36,673,005			74,720,440			78,456,415
Securities and derivative financial instruments			20,553,710			48,391,356			57,737,331
Foreign exchange operations			179,494			732,521			2,707,827
Compulsory deposits			3,321,903			7,150,831			6,916,505
Expenses of financial operations			(29,842,318	)		(68,282,558	)		(68,795,749	)
Money market			(27,468,523	)		(62,970,574	)		(72,867,154	)
Borrowing and onlending	10e		(2,373,795	)		(5,311,984	)		4,071,405
Income from financial operations before loan and losses			30,885,794			62,712,590			77,022,329
Result of allowance for loan losses	8d I		(6,466,596	)		(15,048,252	)		(21,581,103	)
Expenses for allowance for loan losses			(8,263,909	)		(18,749,556	)		(25,323,771	)
Income from recovery of credits written off as loss			1,797,313			3,701,304			3,742,668
Gross income from financial operations			24,419,198			47,664,338			55,441,226
Other operating revenues (expenses)			(10,484,373	)		(18,650,982	)		(22,623,021	)
Banking service fees	12d		12,083,847			23,500,673			22,540,355
Income from bank charges	12e		6,168,108			11,913,079			10,621,244
Personnel expenses	12f		(10,919,622	)		(21,118,708	)		(20,097,608	)
Other administrative expenses	12g		(9,577,828	)		(18,535,961	)		(18,154,885	)
Tax expenses	4n and 13a II		(3,348,223	)		(6,593,896	)		(7,712,772	)
Equity in earnings of affiliates, jointly controlled entities and other investments	14a ll		1,912,376			3,603,253			(762,923	)
Other operating revenues	12h		538,888			1,010,989			770,638
Other operating expenses	12i		(7,341,919	)		(12,430,411	)		(9,827,070	)
Operating income			13,934,825			29,013,356			32,818,205
Non-operating income			(54,111	)		(236,011	)		92,820
Income before taxes on income and profit sharing			13,880,714			28,777,345			32,911,025
Income tax and social contribution	4n and 13a I		(3,186,971	)		(6,754,716	)		(13,595,576	)
Due on operations for the period			(833,912	)		(3,017,603	)		(3,566,874	)
Related to temporary differences			(2,353,059	)		(3,737,113	)		(10,028,702	)
Profit sharing – Management Members - Statutory			(142,757	)		(237,650	)		(233,891	)
Non-controlling interests	15f		360,853			211,496			105,265
Net income			10,911,839			21,996,475			19,186,823
Weighted average of the number of outstanding shares	15a					6,503,910,030			6,522,956,804
Net income per share – R$						3.38			2.94
Book value per share - R$ (outstanding at 12/31)						19.86			18.17

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

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  3.3

ITAÚ UNIBANCO HOLDING S.A.

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

(In thousands of Reais)

									Asset
									valuation
			Capital			Revenue			adjustment			Retained			(Treasury
	Capital		reserves			reserves			(Note 7d)			earnings			shares)			Total
Balance at 07/01/2017		97,148,000		1,352,881			27,405,084			(2,805,204	)		-			(2,571,065	)		120,529,696
Reserve Capitalization - Meeting of the Board of Directors at December 15, 2017		-		-			(1,178,252	)		-			-			1,178,252			-
Purchase of treasury shares		-		-			-			-			-			(1,807,372	)		(1,807,372	)
Granting of stock options		-		87,228			-			-			-			457,418			544,646
Granting of options recognized		-		142,765			-			-			-			-			142,765
Share-based payment – variable compensation		-		150,737			-			-			-			-			150,737
Asset valuation adjustments:
Change in adjustment to market value		-		-			-			580,819			-			-			580,819
Remeasurements in liabilities of post-employment benefits		-		-			-			55,625			-			-			55,625
Foreign exchange variation on investments abroad		-		-			-			(59,091	)		-			-			(59,091	)
Net income		-		-			-			-			10,911,839			-			10,911,839
Appropriations:
Legal reserve		-		-			545,592			-			(545,592	)		-			-
Statutory reserves		-		-			(3,367,586	)		-			3,367,586			-			-
Dividends and interest on capital		-		-			11,089,657			-			(13,733,833	)		-			(2,644,176	)
Balance at 12/31/2017		97,148,000		1,733,611			34,494,495			(2,227,851	)		-			(2,742,767	)		128,405,488
Changes in the period		-		380,730			7,089,411			577,353			-			(171,702	)		7,875,792
Balance at 01/01/2016		85,148,000		1,537,219			29,189,479			(1,375,886	)		-			(4,353,380	)		110,145,432
Reserve Capitalization - ESM 09/14/2016		12,000,000		-			(12,000,000	)		-			-			-			-
Purchase of treasury shares		-		-			-			-			-			(947,409	)		(947,409	)
Cancellation of shares - ESM April 27, 2016 – Approved on June 7, 2016		-		-			(2,670,000	)		-			-			2,670,000			-
Granting of stock options		-		(16,717	)		-			-			-			748,436			731,719
Granting of options recognized		-		55,657			-			-			-			-			55,657
Share-based payment – variable compensation		-		13,184			-			-			-			-			13,184
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		-		-			-			(999,975	)		-			-			(999,975	)
Remeasurements in liabilities of post-employment benefits		-		-			-			(599,936	)		-			-			(599,936	)
Unrealized result of unconsolidated company		-		-			1,844			-			-			-			1,844
Net income		-		-			-			-			19,186,823			-			19,186,823
Appropriations:
Legal reserve		-		-			959,341			-			(959,341	)		-			-
Statutory reserves		-		-			6,653,859			-			(6,653,859	)		-			-
Dividends and interest on capital		-		-			5,049,947			-			(11,573,623	)		-			(6,523,676	)
Balance at 12/31/2016		97,148,000		1,589,343			24,487,354			(2,975,797	)		-			(1,882,353	)		118,366,547
Changes in the period		12,000,000		52,124			(4,702,125	)		(1,599,911	)		-			2,471,027			8,221,115
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		-		-			-			-			-			(3,089,464	)		(3,089,464	)
Cancellation of shares - Meeting of the Board of Directors at December 15, 2017		-		-			(1,178,252	)		-			-			1,178,252			-
Granting of stock options		-		63,593			-			-			-			1,050,798			1,114,391
Granting of options recognized		-		96,509			-			-			-			-			96,509
Share-based payment – variable compensation		-		(15,834	)		-			-			-			-			(15,834	)
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		-		-			-			697,395			-			-			697,395
Remeasurements in liabilities of post-employment benefits		-		-			-			(11,231	)		-			-			(11,231	)
Foreign exchange variation on investments abroad		-		-			-			61,782			-			-			61,782
Net income		-		-			-			-			21,996,475			-			21,996,475
Appropriations:
Legal reserve		-		-			1,099,824			-			(1,099,824	)		-			-
Statutory reserves		-		-			1,475,276			-			(1,475,276	)		-			-
Dividends and interest on capital		-		-			13,657,985			-			(19,200,473	)		-			(5,542,488	)
Balance at 12/31/2017		97,148,000		1,733,611			34,494,495			(2,227,851	)		-			(2,742,767	)		128,405,488
Changes in the period		-		144,268			10,007,141			747,946			-			(860,414	)		10,038,941

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

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  3.4

ITAÚ UNIBANCO HOLDING S.A.

Prudential Consolidated Statement of Cash Flows

(In thousands of Reais)

		2nd Half of			01/01 to			01/01 to
	Note	2017			12/31/2017			12/31/2016
Adjusted net income			29,119,960			37,178,457			80,233,829
Net income			10,911,839			21,996,475			19,186,823
Adjustments to net income:			18,208,121			15,181,982			61,047,006
Granted options recognized and share-based payment – variable compensation			293,502			80,675			68,841
Adjustment to market value of securities and derivative financial instruments (assets/liabilities)	7h		(1,013,626	)		1,653,869			(1,755,356	)
Effects of changes in exchange rates on cash and cash equivalents			6,042,272			(13,961,228	)		23,934,862
Allowance for loan losses	8c		8,263,909			18,749,556			25,323,771
Interest and foreign exchange expense related to operations with subordinated debt			2,015,927			4,713,628			942,033
Depreciation and amortization	14b		2,867,069			5,669,828			5,262,467
Interest expense from provision for contingent and legal liabilities	11b		529,687			1,255,779			1,518,377
Provision for contingent and legal liabilities	11b		2,073,032			3,791,646			4,221,963
Interest income from escrow deposits	11b		(235,629	)		(327,439	)		(380,426	)
Deferred taxes (excluding hedge tax effects)			2,828,839			5,434,532			3,488,273
Equity in earnings of affiliates, jointly controlled entities and other investments	14a I		(1,912,376	)		(3,603,253	)		762,923
Interest and foreign exchange income from available-for-sale securities			(4,077,176	)		(8,473,522	)		(1,371,248	)
Interest and foreign exchange income from held-to-maturity securities			1,253,904			635,125			445,217
(Gain) loss from sale of available-for-sale financial assets	7i		(177,363	)		(389,584	)		218,185
(Gain) loss from sale of investments			730			2,178			(12,317	)
(Gain) loss from sale of foreclosed assets			170,162			407,755			123,421
(Gain) loss from sale of fixed assets			4,939			10,143			5,325
Non-controlling interests			(360,853	)		(211,496	)		(105,265	)
Other			(358,828	)		(256,210	)		(1,644,040	)
Change in assets and liabilities			(8,142,145	)		(55,245,843	)		(30,224,049	)
(Increase) decrease in assets			(26,835,372	)		(82,506,096	)		24,514,720
Interbank investments			24,755,853			(10,549,962	)		8,420,910
Securities and derivative financial instruments (assets/liabilities)			(25,528,539	)		(32,966,852	)		(4,334,034	)
Compulsory deposits with the Central Bank of Brazil			(10,229,896	)		(13,136,479	)		(19,144,463	)
Interbank and interbranch accounts (assets/liabilities)			1,827,321			456,332			2,994,731
Loan, lease and other credit operations			(19,534,251	)		(20,900,779	)		31,765,222
Other receivables and other assets			3,349,504			(142,634	)		3,550,262
Foreign exchange portfolio and negotiation and intermediation of securities (assets/liabilities)			(1,475,364	)		(5,265,722	)		1,262,092
(Decrease) increase in liabilities			18,693,227			27,260,253			(54,738,769	)
Deposits			46,301,257			69,323,835			(35,107,931	)
Deposits received under securities repurchase agreements			(15,759,358	)		(42,770,570	)		10,830,612
Funds for issuance of securities			(1,351,881	)		13,013,635			5,959,332
Borrowing and onlending			(6,154,265	)		(12,238,196	)		(35,385,940	)
Collection and payment of taxes and contributions			(3,673,552	)		27,909			41,180
Other liabilities			253,009			2,731,860			3,069,576
Deferred income			227,821			361,422			42,956
Payment of income tax and social contribution			(1,149,804	)		(3,189,642	)		(4,188,554	)
Net cash provided by (used in) operating activities			20,977,815			(18,067,386	)		50,009,780
Interest on capital / dividends received from affiliated companies			262,326			1,007,938			5,139,054
Funds received from sale of available-for-sale securities			7,001,954			14,676,541			17,796,983
Funds received from redemption of held-to-maturity securities			1,518,966			3,566,408			3,146,087
Disposal of assets not for own use			(71,611	)		(140,226	)		234,433
Disposal of investments			217,021			215,618			13,674
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	)
Purchase of Non-controlling interests	2c		(244,557	)		(244,557	)		-
Sale of fixed assets			81,423			98,046			85,557
Termination of intangible asset agreements			2,414			20,743			6,427
Purchase of available-for-sale securities			(13,819,090	)		(15,104,040	)		(14,892,308	)
Purchase of held-to-maturity securities			(309,925	)		(405,504	)		(1,580,240	)
Purchase of investments			(572,290	)		(778,614	)		(8,329,312	)
Purchase of fixed assets	14b		(475,279	)		(845,720	)		(1,078,297	)
Disposal (Purchase) of intangible assets	14b		(1,363,677	)		(1,795,819	)		(1,488,322	)
Net cash provided by (used in) invesment activities			(7,772,325	)		270,814			4,208,982
Increase in subordinated debt			4,135,000			4,135,000			-
Decrease in subordinated debt			(5,559,262	)		(13,572,828	)		(14,170,289	)
Non-controlling interests	15f		751,531			922,800			(352,348	)
Granting of stock options			544,646			1,114,391			731,719
Purchase of treasury shares			(1,807,372	)		(3,089,464	)		(947,409	)
Dividends and interest on capital paid to Non-controlling interests			(193,964	)		(337,192	)		(75,674	)
Dividends and interest on capital paid			(2,814,584	)		(10,381,751	)		(7,672,530	)
Net cash provided by (used in) financing activities			(4,944,005	)		(21,209,044	)		(22,486,531	)
Net increase (decrease) in cash and cash equivalents			8,261,485			(39,005,616	)		31,732,231
Cash and cash equivalents at the beginning of the period			66,250,858			93,514,459			85,717,090
Effects of changes in exchange rates on cash and cash equivalents			(6,042,272	)		13,961,228			(23,934,862	)
Cash and cash equivalents at the end of the period	4a and 5		68,470,071			68,470,071			93,514,459

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

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  3.5

ITAÚ UNIBANCO HOLDING S.A.

Notes to the Prudential Consolidated Financial Statements

Exercise from January 1 to December 31, 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. – Prudencial Financial Statements – December 31, 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. – Prudencial Financial Statements – December 31, 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	12/31/2017			12/31/2016			12/31/2017			12/31/2016
Domestic
Banco Itaú BBA S.A.			Brazil	Financial Institution		100.00	%		100.00	%		100.00	%		100.00	%
Banco Itaú Consignado S.A.			Brazil	Financial Institution		100.00	%		100.00	%		100.00	%		100.00	%
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			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. Sociedade de Crédito, Financiamento e Investimento			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		23.90	%		23.67	%		23.90	%		23.67	%
Banco Itaú (Suisse) SA		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		36.06	%		35.71	%		36.06	%		35.71	%

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  4.3

c) Business development

Citibank’s Retail Operations

On October 08, 2016, ITAÚ UNIBANCO HOLDING PRUDENTIAL entered, by means of its subsidiaries Itaú Unibanco S.A. (ITAÚ UNIBANCO) 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 banking 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$ 627,795.

The operation was structured in three phases:

i. Acquisition of retail operations, cards and insurance brokerage on October 31, 2017;

ii. Acquisition of securities brokerage on December 1^st, 2017;

iii. Acquisition of ownership interest in TECBAN and CIBRASEC on December 26, 2017.

The difference between the amount paid and net assets acquired resulted in the recognition of goodwill due to expected future profitability on the acquisition date of R$ 630,629.

Gestora de Inteligência de Crédito

On January 21, 2016, ITAÚ UNIBANCO HOLDING PRUDENTIAL, through its subsidiary 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.

Gestora de Inteligência de Crédito S.A., 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 conditions precedent 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, 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 conditions precedent 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.

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.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  4.4

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

Recovery do Brasil Consultoria S.A.

At December 31, 2015, ITAÚ UNIBANCO HOLDING PRUDENTIAL, through its subsidiary ITAÚ UNIBANCO, 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.

Established in 2000 in Argentina and present in Brazil since 2006, RECOVERY is a 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 conditions precedent and approval by regulatory authorities, the transaction was closed on March 31, 2016.

On July 7, 2016, ITAÚ UNIBANCO HOLDING PRUDENTIAL, through its subsidiary ITAÚ UNIBANCO, 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 (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. – Prudencial Financial Statements – December 31, 2017  4.5

The ITAÚ CORPBANCA is controlled as of April 1^st, 2016 by ITAÚ UNIBANCO HOLDING PRUDENTIAL. On the same date, ITAÚ 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.

ITAÚ UNIBANCO HOLDING PRUDENTIAL, through its subsidiary ITB Holding Brasil Participações Ltda., indirectly acquired the following additional interests in the ITAÚ CORPBANCA’s capital:

• On October 26, 2016 – 10,908,002,836 shares (2.13%) for the amount of R$ 288,108, then holding 35.71%; and

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  4.6

• On September 15, 2017 – 1,800,000,000 shares (0.35%) for the amount of R$ 55,624, then holding 36.06%.

The possibility of these acquisitions were set forth in ITAÚ CORPBANCA shareholders agreement, entered into between ITAÚ UNIBANCO HOLDING PRUDENTIAL and CORP GROUP and affiliated companies on April 1^st, 2016.

MaxiPago Serviços de Internet Ltda.

On September 3, 2014, ITAÚ UNIBANCO HOLDING PRUDENTIAL, through its subsidiary REDE entered into a share and purchase agreement with the controlling shareholders of MaxiPago Serviços de Internet Ltda. (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 conditions 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. – Prudencial Financial Statements – December 31, 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 CONSOLIDATED’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 CONSOLIDATED 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 30,371, 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. – Prudencial Financial Statements – December 31, 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 CONSOLIDATED’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 CONSOLIDATED’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	12/31/2017			12/31/2016
Stockholders’ equity of Itaú Unibanco Holding S.A. (Consolidated)		126,923,600			115,590,426
Non-controlling interests		11,942,502			11,568,390
Changes in Subsidiaries´ Interests in Capital Transactions		1,481,888			2,776,121
Consolidated stockholders’ equity (BACEN)		140,347,990			129,934,937
Common Equity Tier I prudential adjustments		(17,951,725	)		(14,526,992	)
Common Equity Tier I		122,396,265			115,407,945
Additional Tier I Prudential Adjustments		57,062			532,392
Additional Tier I Capital		57,062			532,392
Tier I (Common Equity Tier I + Additional Tier I Capital)		122,453,327			115,940,337
Instruments Eligible to Comprise Tier II		19,722,563			23,488,432
Tier II prudential adjustments		76,083			48,507
Tier II		19,798,646			23,536,939
Reference Equity (Tier I + Tier II)		142,251,973			139,477,276

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 80% 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. – Prudencial Financial Statements – December 31, 2017  4.9

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

	12/31/2017		12/31/2016
Risk exposures
Exposure Weighted by Credit Risk (RWACPAD)		660,516,354		669,284,247
a) Per Weighting Factor (FPR):
FPR at 2%		92,010		105,577
FPR at 20%		7,673,779		8,011,339
FPR at 35%		15,900,495		12,056,104
FPR at 50%		42,896,233		44,250,940
FPR at 75%		145,376,381		142,193,646
FPR at 85%		75,672,552		82,494,126
FPR at 100%		320,975,708		325,889,852
FPR at 250%		34,052,500		33,213,428
FPR at 300%		3,906,261		7,356,695
FPR up to 1250%(*)		2,095,611		1,607,958
Derivatives - Changes in the Counterparty Credit Quality		6,417,363		6,167,814
Derivatives – Future potential gain		5,457,462		5,936,767
b) Per Type:		660,516,354		669,284,247
Securities		45,629,423		45,740,665
Loan operations – Retail		114,141,186		114,481,468
Loan operations – Non-retail		240,814,547		247,910,726
Joint Liabilities - Retail		172,251		205,149
Joint Liabilities - Non-Retail		45,405,251		47,107,743
Loan commitments – Retail		31,057,682		27,504,191
Loan commitments – Non-retail		9,017,086		10,234,492
Other exposures		174,278,929		176,099,813

(*) 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)

	12/31/2017(1)		12/31/2016(2)
Market Risk Weighted Assets - Standard Aproach (RWAMPAD)		32,892,766		26,811,072
Operations subject to interest rate variation		31,076,008		24,918,995
Fixed rate denominated in reais		6,118,736		4,952,015
Foreign exchange coupons		17,153,167		15,496,581
Price index coupon		7,804,105		4,470,396
Interest rate coupon		1		3
Operations subject to commodity price variation		361,109		353,313
Operations subject to stock price variation		239,091		400,755
Operations subject to risk exposures in gold, foreign currency and foreign		1,216,558		1,138,009
Minimum Market Risk Weighted Assets - Standard Aproach (RWAMPAD) (1) (2) (a)		26,314,213		24,129,965
Market Risk Weighted Assets calculated based on internal methodology (b)		32,914,851		19,798,552
Reduction of Market Risk Weighted Assets due to Internal Models Aproach (IMA)		-		(2,681,107	)
Market Risk Weighted Assets (RWAMINT) - maximum of (a) and (b)		32,914,851		24,129,965

(1) Market risk weighted-assets calculated based on internal models, with maximum saving possibility of 20% of the standard model.

(2) Market risk weighted-assets calculated based on internal models, with maximum saving possibility of 10% of the standard model.

At December 31, 2017, RWA_MINT totaled R$ 32,914,851, which corresponds to capital calculated at internal models, higher than the 80% of RWA_MPAD, which totaled R$ 26,314,213.

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

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  4.10

	12/31/2017		12/31/2016
Operational Risk-Weighted Assets (RWAOPAD)		63,276,519		37,826,292
Retail		11,870,427		10,886,992
Commercial		24,857,050		24,166,481
Corporate finance		2,663,324		2,788,550
Negotiation and sales		7,433,500		(11,025,674	)
Payments and settlements		7,532,335		3,417,572
Financial agent services		3,892,102		3,471,283
Asset management		5,009,943		4,109,048
Retail brokerage		17,838		12,038

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.

Composition of Referential Equity (PR)	12/31/2017		12/31/2016
Tier I		122,453,327		115,940,337
Common Equity Tier I		122,396,265		115,407,945
Additional Tier I Capital		57,062		532,392
Tier II		19,798,646		23,536,939
Deductions		-		-
Reference Equity		142,251,973		139,477,276
Minimum Referential Equity Required		69,995,465		72,210,000
Surplus Capital in relation to the Minimum Referential Equity Required		72,256,508		67,267,276
Additional Common Equity Tier I Required (ACPRequired)		11,350,616		4,570,253
Reference equity calculated for covering the interest rate risk of operations not classified in the trading portfolio (RBAN)		2,469,835		2,264,123

The table below shows the Basel and Fixed Asset Ratios:

	12/31/2017			12/31/2016
Basel Ratio		18.8	%		19.1	%
Tier I		16.2	%		15.9	%
Common Equity Tier I		16.2	%		15.8	%
Additional Tier I Capital		0.0	%		0.1	%
Tier II		2.6	%		3.2	%
Fixed Asset Ratio		23.9	%		25.4	%
Surplus Capital in Relation to Fixed Assets		37,101,323			34,297,512

f) Capital for insurance activity

In December 2017, the National Council of Private Insurance (CNSP) issued CNSP Resolution nº. 360, 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. – Prudencial Financial Statements – December 31, 2017  4.11

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. – Prudencial Financial Statements – December 31, 2017  4.12

· 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 basis until the 60th day overdue in financial companies, according to the estimates 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. Funds corresponding to these amounts to be paid to the accrediting organization are in liabilities, in the heading Interbank Accounts – Receipts and Payments Pending Settlement.

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^st, 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. – Prudencial Financial Statements – December 31, 2017  4.13

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. – Prudencial Financial Statements – December 31, 2017 4.14

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.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.15

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.

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. – Prudencial Financial Statements – December 31, 2017 4.16

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:

	12/31/2017		12/31/2016
Cash and cash equivalents		18,668,746		18,394,765
Interbank deposits		15,325,985		13,358,010
Securities purchased under agreements to resell – Funded position		34,475,340		61,761,684
Total		68,470,071		93,514,459

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.17

Note 6 - Interbank investments

	12/31/2017												12/31/2016
	0 - 30		31 - 180		181 - 365		Over 365		Total		%		Total		%
Money market		35,790,061		200,122,977		-		195,861		236,108,899		89.0		257,235,437		91.9
Funded position (1)		4,618,479		34,843,040		-		195,861		39,657,380		14.9		79,165,469		28.3
Financed position		29,050,600		129,853,208		-		-		158,903,808		59.9		140,302,847		50.1
With free movement		28,024,796		29,150,330		-		-		57,175,126		21.6		24,710,346		8.8
Without free movement		1,025,804		100,702,878		-		-		101,728,682		38.3		115,592,501		41.3
Short position		2,120,982		35,426,729		-		-		37,547,711		14.2		37,767,121		13.5
Interbank deposits (2)		21,643,843		3,509,303		2,882,441		1,012,886		29,048,473		11.0		22,690,342		8.1
Total		57,433,904		203,632,280		2,882,441		1,208,747		265,157,372				279,925,779
% per maturity term		21.7		76.7		1.1		0.5
Total at 12/31/2016		207,304,049		67,855,254		3,540,626		1,225,850		279,925,779
% per maturity term		74.1		24.2		1.3		0.4

(1) Includes R$ 3,663,907 (R$ 4,328,865 at 12/31/2016) related to money market with free movement, in which securities are restricted to guarantee transactions at the B3 S.A. - Brasil, Bolsa, Balcão (B3) and the Central Bank of Brazil (BACEN);

(2) Includes R$ 6,689,341 related to Compulsory Deposits with Central Banks of other countries.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.18

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

	12/31/2017																																12/31/2016
				Adjustment to market value
				reflected in:
							Stockholders’
	Cost			Results			equity			Market value			%		0 - 30			31 - 90			91 - 180			181 - 365			366 - 720			Over 720 days			Market value
Government securities - domestic		150,084,903			516,522			999,990			151,601,415			58.3		13,578,052			2,945,160			3,430,271			15,211,905			14,045,543			102,390,484			117,723,037
Financial treasury bills		40,872,110			6,696			(113	)		40,878,693			15.8		-			2,922,722			-			1,163,524			948,935			35,843,512			30,284,352
National treasury bills		45,199,853			59,346			265,757			45,524,956			17.4		10,920,710			-			2,207,817			6,304,532			7,739,851			18,352,046			18,159,198
National treasury notes		37,445,197			312,430			402,165			38,159,792			14.7		2,644,870			16,910			19,273			7,726,723			2,424,801			25,327,215			36,426,251
National treasury/securitization		197,416			(220	)		22,457			219,653			0.1		-			89			13			161			227			219,163			229,284
Brazilian external debt bonds		26,370,327			138,270			309,724			26,818,321			10.3		12,472			5,439			1,203,168			16,965			2,931,729			22,648,548			32,623,952
Government securities - abroad		28,729,916			32,349			(117,440	)		28,644,825			11.0		2,901,386			1,599,993			2,611,354			6,777,268			4,108,237			10,646,587			18,514,333
Argentina		1,445,600			20,188			-			1,465,788			0.6		1,119,420			106,750			41,574			137,607			4,639			55,798			653,038
Chile		9,646,460			6			(3,936	)		9,642,530			3.7		87,902			425,835			-			1,152,002			90,222			7,886,569			5,851,866
Colombia		5,844,198			12,285			30,355			5,886,838			2.3		99,434			-			528,156			1,270,852			2,009,584			1,978,812			4,351,179
Korea		1,943,924			-			-			1,943,924			0.7		-			-			500,191			1,443,733			-			-			2,672,676
Denmark		1,950,784			-			-			1,950,784			0.8		955,547			-			502,719			492,518			-			-			818,891
Spain		2,937,143			-			1			2,937,144			1.1		245,489			162,418			-			1,534,944			994,293			-			922,918
United States		1,684,046			(5	)		(17,960	)		1,666,081			0.6		-			296,461			257,001			263,958			462,892			385,769			1,505,429
Netherlands		-			-			-			-			0.0		-			-			-			-			-			-			101,402
Mexico		564,375			(31	)		(15,108	)		549,236			0.2		-			163,396			380,564			-			-			5,276			5,257
Paraguay		1,917,533			(9	)		(114,854	)		1,802,670			0.7		206,763			284,412			176,101			417,612			532,069			185,713			1,199,665
Uruguay		793,928			(108	)		4,070			797,890			0.3		186,831			160,721			225,048			64,042			14,509			146,739			424,269
Other		1,925			23			(8	)		1,940			0.0		-			-			-			-			29			1,911			7,743
Corporate securities		57,407,905			(129,152	)		(685,934	)		56,592,819			22.0		6,592,460			3,131,746			2,319,293			2,943,403			6,523,580			35,082,337			59,380,098
Shares		3,036,071			(205,775	)		286,582			3,116,878			1.2		3,116,878			-			-			-			-			-			2,399,416
Rural product note		2,858,205			-			(29,785	)		2,828,420			1.1		15,621			47,948			182,130			393,014			236,227			1,953,480			1,424,946
Bank deposit certificates		689,027			16			(42	)		689,001			0.3		266,877			136,020			203,363			66,887			13,536			2,318			2,479,581
Securitized real estate loans		14,650,806			(1,045	)		18,673			14,668,434			5.7		-			4,910			50,013			121,009			517,942			13,974,560			16,582,079
Fund quotas		2,752,345			(553	)		10			2,751,802			1.1		2,751,802			-			-			-			-			-			512,767
Credit rights		196,944			-			-			196,944			0.1		196,944			-			-			-			-			-			88
Fixed income		838,907			1,092			10			840,009			0.3		840,009			-			-			-			-			-			353,065
Variable income		1,716,494			(1,645	)		-			1,714,849			0.7		1,714,849			-			-			-			-			-			159,614
Debentures		22,592,727			77,114			(990,628	)		21,679,213			8.4		99,986			303,180			473,240			503,895			3,768,923			16,529,989			21,519,497
Eurobonds and others		5,984,602			1,347			25,055			6,011,004			2.3		141,164			454,759			889,164			1,033,459			1,296,095			2,196,363			8,380,361
Financial bills		648,434			(117	)		222			648,539			0.2		-			31,818			13,941			463,035			139,745			-			2,815,918
Promissory notes		3,246,331			-			(2,398	)		3,243,933			1.3		-			2,088,965			398,601			162,780			549,579			44,008			2,173,593
Other		949,357			(139	)		6,377			955,595			0.4		200,132			64,146			108,841			199,324			1,533			381,619			1,091,940
Subtotal - securities		236,222,724			419,719			196,616			236,839,059			91.3		23,071,898			7,676,899			8,360,918			24,932,576			24,677,360			148,119,408			195,617,468
Trading securities		110,297,987			419,719			-			110,717,706			42.7		10,556,951			2,737,605			4,009,846			12,439,223			10,457,978			70,516,103			76,163,831
Available-for-sale securities		93,867,043			-			196,616			94,063,659			36.2		3,058,267			4,901,165			4,054,486			11,988,771			12,739,638			57,321,332			83,599,912
Held-to-maturity securities (*)		32,057,694			-			-			32,057,694			12.4		9,456,680			38,129			296,586			504,582			1,479,744			20,281,973			35,853,725
Derivative financial instruments		15,990,903			6,665,591			-			22,656,494			8.7		7,799,326			1,614,997			1,353,763			2,356,405			2,770,116			6,761,887			24,156,092
Total securities and derivative financial instruments (assets)		252,213,627			7,085,310			196,616			259,495,553			100.0		30,871,224			9,291,896			9,714,681			27,288,981			27,447,476			154,881,295			219,773,560
Derivative financial instruments (liabilities)		(20,523,308	)		(5,929,308	)		-			(26,452,616	)		100.0		(7,286,502	)		(1,114,011	)		(1,374,000	)		(3,327,590	)		(4,889,109	)		(8,461,404	)		(24,711,326	)

(*) Unrecorded adjustment to market value in the amount of R$ 596,043 (R$ (181,260) at 12/31/2016) according to Note 7e.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.19

b) Summary by portfolio

	12/31/2017
			Restricted to
	Own portfolio		Repurchase agreements		Free portfolio		Pledged guarantees (*)		Central Bank		Derivative financial instruments		Total
Government securities - domestic		80,129,568		44,008,854		14,373,903		9,004,303		4,084,787		-		151,601,415
Financial treasury bills		30,668,470		2,927,274		-		6,419,720		863,229		-		40,878,693
National treasury bills		24,971,278		20,553,678		-		-		-		-		45,524,956
National treasury notes		12,301,820		20,527,902		-		2,108,512		3,221,558		-		38,159,792
National treasury/securitization		219,653		-		-		-		-		-		219,653
Brazilian external debt bonds		11,968,347		-		14,373,903		476,071		-		-		26,818,321
Government securities - abroad		23,341,255		214,974		33,928		5,054,668		-		-		28,644,825
Argentina		1,279,578		165,683		-		20,527		-		-		1,465,788
Chile		9,620,171		12,337		-		10,022		-		-		9,642,530
Colombia		3,754,621		-		33,928		2,098,289		-		-		5,886,838
Korea		939,083		-		-		1,004,841		-		-		1,943,924
Denmark		1,254,119		-		-		696,665		-		-		1,950,784
Spain		1,991,934		-		-		945,210		-		-		2,937,144
United States		1,392,804		-		-		273,277		-		-		1,666,081
Mexico		549,236		-		-		-		-		-		549,236
Paraguay		1,761,099		36,954		-		4,617		-		-		1,802,670
Uruguay		796,670		-		-		1,220		-		-		797,890
Other		1,940		-		-		-		-		-		1,940
Corporate securities		45,895,225		6,386,636		506,380		3,804,578		-		-		56,592,819
Shares		3,116,800		-		-		78		-		-		3,116,878
Rural product note		2,828,420		-		-		-		-		-		2,828,420
Bank deposit certificates		688,981		-		-		20		-		-		689,001
Securitized real estate loans		14,668,434		-		-		-		-		-		14,668,434
Fund quotas		2,690,740		-		-		61,062		-		-		2,751,802
Credit rights		196,944		-		-		-		-		-		196,944
Fixed income		778,947		-		-		61,062		-		-		840,009
Variable income		1,714,849		-		-		-		-		-		1,714,849
Debentures		11,556,129		6,386,636		-		3,736,448		-		-		21,679,213
Eurobonds and other		5,497,654		-		506,380		6,970		-		-		6,011,004
Financial bills		648,539		-		-		-		-		-		648,539
Promissory notes		3,243,933		-		-		-		-		-		3,243,933
Other		955,595		-		-		-		-		-		955,595
Subtotal - securities		149,366,048		50,610,464		14,914,211		17,863,549		4,084,787		-		236,839,059
Trading securities		68,324,941		29,310,267		1,569,697		8,126,024		3,386,777		-		110,717,706
Available-for-sale securities		49,957,604		21,300,197		12,370,328		9,737,520		698,010		-		94,063,659
Held-to-maturity securities		31,083,503		-		974,186		5		-		-		32,057,694
Derivative financial instruments		-		-		-		-		-		22,656,494		22,656,494
Total securities and derivative financial instruments (assets)		149,366,048		50,610,464		14,914,211		17,863,549		4,084,787		22,656,494		259,495,553
Total securities and derivative financial instruments (assets) – 12/31/2016		127,159,962		31,042,163		20,283,694		12,677,201		4,454,448		24,156,092		219,773,560

(*) 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. – Prudencial Financial Statements – December 31, 2017 4.20

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.

	12/31/2017																					12/31/2016
	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		99,680,664		516,522			100,197,186		90.6		4,420,943		2,596,891		3,430,231		11,682,991		9,059,055		69,007,075		68,734,140
Financial treasury bills		40,317,106		6,696			40,323,802		36.5		-		2,574,453		-		1,163,524		948,935		35,636,890		29,227,822
National treasury bills		26,764,626		59,346			26,823,972		24.2		1,763,601		-		2,207,817		3,185,729		4,890,977		14,775,848		6,097,007
National treasury notes		27,779,900		312,430			28,092,330		25.4		2,644,870		16,910		19,233		7,316,612		2,174,378		15,920,327		26,891,643
National treasury/securitization		872		(220	)		652		0.0		-		89		13		161		227		162		1,154
Brazilian external debt bonds		4,818,160		138,270			4,956,430		4.5		12,472		5,439		1,203,168		16,965		1,044,538		2,673,848		6,516,514
Government securities - abroad		3,869,230		32,349			3,901,579		3.5		1,204,125		139,780		446,845		703,438		1,063,169		344,222		3,612,949
Argentina		1,445,600		20,188			1,465,788		1.3		1,119,420		106,750		41,574		137,607		4,639		55,798		652,825
Chile		41,356		6			41,362		0.0		-		-		-		-		4,223		37,139		117,482
Colombia		2,080,408		12,285			2,092,693		1.9		-		-		353,509		544,242		954,755		240,187		2,669,494
United States		99,528		(5	)		99,523		0.1		-		-		-		-		99,523		-		78,409
Mexico		5,307		(31	)		5,276		0.0		-		-		-		-		-		5,276		5,257
Paraguay		2,600		(9	)		2,591		0.0		-		-		-		-		-		2,591		87,910
Uruguay		192,717		(108	)		192,609		0.2		84,705		33,030		51,762		21,589		-		1,523		750
Other		1,714		23			1,737		0.0		-		-		-		-		29		1,708		822
Corporate securities		6,748,093		(129,152	)		6,618,941		5.9		4,931,883		934		132,770		52,794		335,754		1,164,806		3,816,742
Shares		2,643,354		(205,775	)		2,437,579		2.2		2,437,579		-		-		-		-		-		1,947,656
Bank deposit certificates		1,331		16			1,347		0.0		-		16		1,331		-		-		-		76,482
Securitized real estate loans		66,218		(1,045	)		65,173		0.1		-		-		-		-		-		65,173		-
Fund quotas		2,476,307		(553	)		2,475,754		2.2		2,475,754		-		-		-		-		-		484,762
Credit rights		196,944		-			196,944		0.2		196,944		-		-		-		-		-		87
Fixed income		562,869		1,092			563,961		0.5		563,961		-		-		-		-		-		325,300
Variable income		1,716,494		(1,645	)		1,714,849		1.5		1,714,849		-		-		-		-		-		159,375
Debentures		856,949		77,114			934,063		0.8		-		-		86,890		13,454		225,663		608,056		349,519
Eurobonds and other		626,955		1,347			628,302		0.6		18,550		661		30,608		28,611		104,277		445,595		662,376
Financial bills		29,180		(117	)		29,063		0.0		-		257		13,941		10,584		4,281		-		-
Other		47,799		(139	)		47,660		0.0		-		-		-		145		1,533		45,982		295,947
Total		110,297,987		419,719			110,717,706		100.0		10,556,951		2,737,605		4,009,846		12,439,223		10,457,978		70,516,103		76,163,831
% per maturity term											9.5		2.5		3.6		11.2		9.4		63.8
Total – 12/31/2016		75,696,231		467,600			76,163,831		100.0		3,821,964		1,900,265		4,387,604		3,866,577		6,214,756		55,972,665
% per maturity term											5.0		2.5		5.8		5.1		8.2		73.5

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.21

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.

	12/31/2017																					12/31/2016
	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		32,174,260		999,990			33,174,250		35.2		-		348,269		40		3,528,914		4,024,686		25,272,341		28,638,906
Financial treasury bills		555,004		(113	)		554,891		0.6		-		348,269		-		-		-		206,622		1,056,530
National treasury bills		9,278,118		265,757			9,543,875		10.1		-		-		-		3,118,803		2,848,874		3,576,198		3,754,465
National treasury notes		9,665,297		402,165			10,067,462		10.7		-		-		40		410,111		250,423		9,406,888		9,534,608
National treasury/securitization		196,544		22,457			219,001		0.2		-		-		-		-		-		219,001		228,130
Brazilian external debt bonds		12,479,297		309,724			12,789,021		13.6		-		-		-		-		925,389		11,863,632		14,065,173
Government securities - abroad		24,400,295		(117,440	)		24,282,855		25.9		1,597,827		1,460,213		2,000,734		5,889,436		3,045,068		10,289,577		14,362,732
Argentina		-		-			-		0.0		-		-		-		-		-		-		213
Chile		9,605,104		(3,936	)		9,601,168		10.2		87,902		425,835		-		1,152,002		85,999		7,849,430		5,734,384
Colombia		3,316,187		30,355			3,346,542		3.6		-		-		10,872		542,216		1,054,829		1,738,625		1,155,564
Korea		1,943,924		-			1,943,924		2.1		-		-		500,191		1,443,733		-		-		2,672,676
Denmark		1,950,784		-			1,950,784		2.1		955,547		-		502,719		492,518		-		-		818,891
Spain		2,937,143		1			2,937,144		3.1		245,489		162,418		-		1,534,944		994,293		-		922,918
United States		1,584,518		(17,960	)		1,566,558		1.7		-		296,461		257,001		263,958		363,369		385,769		1,427,020
Netherlands		-		-			-		0.0		-		-		-		-		-		-		101,402
Mexico		559,068		(15,108	)		543,960		0.6		-		163,396		380,564		-		-		-		-
Paraguay		1,914,933		(114,854	)		1,800,079		1.9		206,763		284,412		176,101		417,612		532,069		183,122		1,111,755
Uruguay		588,448		4,070			592,518		0.6		102,126		127,691		173,286		42,453		14,509		132,453		411,011
Other		186		(8	)		178		0.0		-		-		-		-		-		178		6,898
Corporate securities		37,292,488		(685,934	)		36,606,554		38.9		1,460,440		3,092,683		2,053,712		2,570,421		5,669,884		21,759,414		40,598,274
Shares		392,717		286,582			679,299		0.7		679,299		-		-		-		-		-		451,760
Rural product note		2,858,205		(29,785	)		2,828,420		3.0		15,621		47,948		182,130		393,014		236,227		1,953,480		1,424,946
Bank deposit certificate		687,691		(42	)		687,649		0.7		266,872		136,004		202,032		66,887		13,536		2,318		2,403,095
Securitized real estate loans		1,742,777		18,673			1,761,450		1.9		-		-		-		-		-		1,761,450		2,094,890
Fund quotas		276,038		10			276,048		0.3		276,048		-		-		-		-		-		28,005
Fixed income		276,038		10			276,048		0.3		276,048		-		-		-		-		-		27,765
Variable income		-		-			-		0.0		-		-		-		-		-		-		239
Debentures		21,735,778		(990,628	)		20,745,150		22.1		99,986		303,180		386,350		490,441		3,543,260		15,921,933		21,169,978
Eurobonds and other		5,348,669		25,055			5,373,724		5.7		122,614		454,098		858,556		1,004,848		1,191,818		1,741,790		7,699,914
Financial bills		619,254		222			619,476		0.7		-		31,561		-		452,451		135,464		-		2,815,918
Promissory notes		3,246,331		(2,398	)		3,243,933		3.4		-		2,088,965		398,601		162,780		549,579		44,008		2,173,593
Other		385,028		6,377			391,405		0.4		-		30,927		26,043		-		-		334,435		336,175
Total		93,867,043		196,616			94,063,659		100.0		3,058,267		4,901,165		4,054,486		11,988,771		12,739,638		57,321,332		83,599,912
% per maturity term											3.3		5.2		4.3		12.7		13.5		61.0
Total – 12/31/2016		84,449,902		(849,990	)		83,599,912		100.0		4,848,718		5,346,973		4,949,140		7,001,308		10,700,333		50,753,440
% per maturity term											5.8		6.4		5.9		8.4		12.8		60.7

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.22

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 December 31, 2017, not considered in results, is an impairment loss of R$ 399,407 (R$ 499,606 at 12/31/2016).

	12/31/2017																		12/31/2016
	Carrying value		%		0 - 30		31 - 90		91 - 180		181 - 365		366 - 720		Over 720 days		Market value		Carrying value		Market value
Government securities - domestic		18,229,979		56.9		9,157,109		-		-		-		961,802		8,111,068		18,540,285		20,349,991		20,254,803
National treasury bills		9,157,109		28.6		9,157,109		-		-		-		-		-		9,157,562		8,307,726		8,368,521
Brazilian external debt bonds		9,072,870		28.3		-		-		-		-		961,802		8,111,068		9,382,723		12,042,265		11,886,282
Government securities - abroad		460,391		1.4		99,434		-		163,775		184,394		-		12,788		459,242		538,652		538,524
Colombia		447,603		1.4		99,434		-		163,775		184,394		-		-		439,664		526,121		526,009
Uruguay		12,763		0.0		-		-		-		-		-		12,763		19,577		12,508		12,508
Other		25		0.0		-		-		-		-		-		25		1		23		7
Corporate securities		13,367,324		41.7		200,137		38,129		132,811		320,188		517,942		12,158,117		13,654,210		14,965,082		14,879,138
Bank deposit certificate		5		0.0		5		-		-		-		-		-		5		4		4
Securitized real estate loans		12,841,811		40.1		-		4,910		50,013		121,009		517,942		12,147,937		13,128,697		14,487,189		14,401,319
Eurobonds and other		8,978		0.0		-		-		-		-		-		8,978		8,978		18,071		17,998
Other		516,530		1.6		200,132		33,219		82,798		199,179		-		1,202		516,530		459,818		459,817
Total		32,057,694		100.0		9,456,680		38,129		296,586		504,582		1,479,744		20,281,973		32,653,737		35,853,725		35,672,465
% per maturity term						29.5		0.1		0.9		1.6		4.6		63.3
Total – 12/31/2016		35,853,725		100.0		1,369,798		65,224		463,433		471,118		8,615,792		24,868,360		35,672,465
% per maturity term						3.8		0.2		1.3		1.3		24.0		69.4

f) Reclassification of securities

No reclassification was made in the period.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.23

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 or at the CETIP S.A. OTC Clearing House (CETIP). 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 12/31/2017, 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$ 13,385,336 (R$ 8,120,890 at 12/31/2016) and was basically composed of government securities.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.24

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
	12/31/2017		12/31/2016		12/31/2017			12/31/2017			12/31/2017			12/31/2016
Futures contracts		607,500,661		665,516,610		8,631			149,083			157,714			127,321
Purchase commitments		322,997,408		200,241,114		(3,129	)		136,147			133,018			(150,191	)
Commodities		186,955		146,587		80			-			80			(76	)
Indexes		109,396,465		46,784,830		(33,557	)		(16,362	)		(49,919	)		(209,133	)
Interbank market		166,832,716		109,648,661		30,108			(5	)		30,103			598
Foreign currency		28,514,305		31,140,699		246			152,514			152,760			58,438
Securities		18,066,967		12,520,337		(6	)		-			(6	)		(18	)
Commitments to sell		284,503,253		465,275,496		11,760			12,936			24,696			277,512
Commodities		167,727		283,761		62			-			62			116
Indexes		127,772,265		169,030,181		66,741			10,579			77,320			304,980
Interbank market		118,185,736		213,990,955		(55,801	)		(55	)		(55,856	)		(10,346	)
Foreign currency		26,645,554		70,719,481		547			360			907			(18,916	)
Fixed rates		505,462		941,228		-			2,052			2,052			1,618
Securities		11,218,348		10,274,881		216			-			216			46
Other		8,161		35,009		(5	)		-			(5	)		14
Swap contracts						(4,770,070	)		267,588			(4,502,482	)		(2,682,041	)
Asset position		585,570,412		471,217,226		3,626,838			5,558,926			9,185,764			10,538,412
Commodities		-		4,876		-			-			-			-
Indexes		228,406,427		196,504,724		(1,131,827	)		2,594,448			1,462,621			1,249,598
Interbank market		48,748,551		47,207,693		666,845			(72,413	)		594,432			1,902,270
Foreign currency		10,144,646		13,582,212		692,650			244,730			937,380			1,134,349
Floating rate		44,399,804		38,261,711		(47,887	)		1,135,187			1,087,300			1,449,630
Fixed rates		253,853,606		175,608,268		3,446,995			1,656,107			5,103,102			4,801,875
Securities		3,907		11,692		(16	)		840			824			67
Other		13,471		36,050		78			27			105			623
Liability position		590,340,482		475,665,372		(8,396,908	)		(5,291,338	)		(13,688,246	)		(13,220,453	)
Commodities		-		130,997		-			-			-			(665	)
Indexes		197,593,422		147,559,241		(428,430	)		(4,140,548	)		(4,568,978	)		(4,843,674	)
Interbank market		38,398,031		36,553,953		(292,695	)		14,852			(277,843	)		(395,928	)
Foreign currency		19,289,089		21,156,496		(596,149	)		(11,508	)		(607,657	)		(897,289	)
Floating rate		42,689,590		36,436,802		(36,162	)		(1,208,414	)		(1,244,576	)		(1,343,520	)
Fixed rates		292,333,203		233,779,126		(7,042,989	)		54,222			(6,988,767	)		(5,730,430	)
Securities		-		20,439		-			-			-			(8,947	)
Other		37,147		28,318		(483	)		58			(425	)		-
Option contracts		1,847,573,186		583,508,084		448,010			98,661			546,671			233,930
Purchase commitments - long position		245,495,975		163,049,195		1,253,362			394,663			1,648,025			858,304
Commodities		366,995		403,770		11,124			18,174			29,298			17,478
Indexes		178,840,030		99,977,560		294,996			(25,963	)		269,033			102,657
Interbank market		26,483,535		1,247,053		37,293			11,403			48,696			21,266
Foreign currency		31,818,481		45,106,313		647,366			(200,509	)		446,857			369,495
Fixed rates		19,762		10,853		-			44			44			33
Securities		7,883,243		16,235,000		253,595			571,901			825,496			330,917
Other		83,929		68,646		8,988			19,613			28,601			16,458
Commitments to sell - long position		736,619,261		142,235,215		1,455,833			233,539			1,689,372			3,928,887
Commodities		269,075		162,059		4,154			(563	)		3,591			9,512
Indexes		691,934,493		92,088,848		495,191			241,268			736,459			97,628
Interbank market		11,622,576		7,532,801		20,543			95,887			116,430			4,347
Foreign currency		23,895,915		33,078,333		677,944			(149,423	)		528,521			3,449,330
Fixed rates		129,376		145,388		6,071			(4,597	)		1,474			3,388
Securities		8,753,337		9,210,578		251,621			51,223			302,844			364,344
Other		14,489		17,208		309			(256	)		53			338
Purchase commitments - short position		88,688,150		129,390,585		(1,007,058	)		(227,013	)		(1,234,071	)		(954,200	)
Commodities		278,051		238,865		(6,414	)		(13,683	)		(20,097	)		(11,131	)
Indexes		30,554,463		83,282,920		(167,956	)		21,647			(146,309	)		(132,156	)
Interbank market		23,573,956		94,534		(31,351	)		31,226			(125	)		(84	)
Foreign currency		27,773,537		39,899,641		(719,248	)		247,077			(472,171	)		(570,227	)
Fixed rates		77,441		94,221		-			(163	)		(163	)		(238	)
Securities		6,346,773		5,598,811		(73,101	)		(493,504	)		(566,605	)		(222,684	)
Other		83,929		181,593		(8,988	)		(19,613	)		(28,601	)		(17,680	)
Commitments to sell - short position		776,769,800		148,833,089		(1,254,127	)		(302,528	)		(1,556,655	)		(3,599,061	)
Commodities		222,029		268,426		(8,125	)		3,765			(4,360	)		(20,030	)
Indexes		737,941,726		104,268,293		(505,450	)		(248,794	)		(754,244	)		(85,866	)
Interbank market		8,721,647		3,437,552		(18,397	)		(85,672	)		(104,069	)		(7,702	)
Foreign currency		23,832,732		34,132,406		(548,914	)		103,907			(445,007	)		(3,141,940	)
Fixed rates		40,768		28,452		(1,022	)		585			(437	)		(649	)
Securities		5,997,732		6,680,752		(171,910	)		(76,575	)		(248,485	)		(342,536	)
Other		13,166		17,208		(309	)		256			(53	)		(338	)
Forward contracts		9,929,081		13,188,656		729,393			117			729,510			1,177,674
Purchases receivable		1,628,929		946,070		1,644,259			49			1,644,308			951,996
Floating rate		499,214		546,396		499,010			322			499,332			546,510
Fixed rates		1,129,691		395,052		1,145,225			(274	)		1,144,951			400,863
Securities		24		4,622		24			1			25			4,623
Purchases payable		-		-		(1,644,259	)		-			(1,644,259	)		(951,669	)
Floating rate		-		-		(499,010	)		-			(499,010	)		(545,956	)
Fixed rates		-		-		(1,145,225	)		-			(1,145,225	)		(401,092	)
Securities		-		-		(24	)		-			(24	)		(4,621	)
Sales receivable		737,424		8,138,165		5,049,345			964			5,050,309			3,735,407
Indexes		30,770		85		30,633			17			30,650			82
Interbank market		53		4,394,743		54			(1	)		53			7,593
Floating rate		-		300,362		1,872,932			-			1,872,932			300,055
Fixed rates		403		2,250,232		2,447,365			1			2,447,366			2,256,573
Securities		706,198		1,192,743		698,361			947			699,308			1,171,104
Sales deliverable		7,562,728		4,104,421		(4,319,952	)		(896	)		(4,320,848	)		(2,558,060	)
Interbank market		3,260,813		4,104,421		-			(259	)		(259	)		(1,608	)
Floating rate		1,873,851		-		(1,872,932	)		(964	)		(1,873,896	)		(300,245	)
Fixed rates		2,428,014		-		(2,446,970	)		326			(2,446,644	)		(2,256,207	)
Securities		50		-		(50	)		1			(49	)		-

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.25

	Memorandum account / Notional amount				Balance sheet account receivable / (received) (payable) / paid			Adjustments to market value (in results / stockholders' equity)			Market value
	12/31/2017		12/31/2016		12/31/2017			12/31/2017			12/31/2017			12/31/2016
Credit derivatives		10,110,254		12,099,966		(30,386	)		109,926			79,540			33,394
Asset position		5,831,392		5,307,193		37,416			100,237			137,653			179,658
Indexes		6,616		-		801			(8	)		793			-
Foreign currency		3,587,691		3,876,374		14,948			28,358			43,306			131,542
Fixed rate		89,316		114,069		140			1,884			2,024			1,327
Securities		1,743,841		1,161,288		19,892			59,096			78,988			42,211
Other		403,928		155,462		1,635			10,907			12,542			4,578
Liability position		4,278,862		6,792,773		(67,802	)		9,689			(58,113	)		(146,264	)
Indexes		760,840		-		(7,148	)		(1,415	)		(8,563	)		-
Foreign currency		2,581,894		5,486,694		(39,555	)		8,815			(30,740	)		(119,341	)
Fixed rate		-		32,591		-			-			-			(107	)
Securities		765,320		973,745		(20,454	)		4,362			(16,092	)		(21,245	)
Other		170,808		299,743		(645	)		(2,073	)		(2,718	)		(5,571	)
Forwards operations		252,627,585		250,775,431		(947,904	)		152,816			(795,088	)		634,371
Asset position		119,312,353		134,049,497		2,781,079			168,592			2,949,671			3,458,155
Commodities		80,956		206,097		5,663			545			6,208			18,563
Indexes		922		148,006		23			-			23			9,129
Foreign currency		119,230,338		133,693,023		2,775,389			168,047			2,943,436			3,430,346
Securities		137		2,371		4			-			4			117
Liability position		133,315,232		116,725,934		(3,728,983	)		(15,776	)		(3,744,759	)		(2,823,784	)
Commodities		174,534		244,376		(13,634	)		(121	)		(13,755	)		(24,700	)
Indexes		248,926		26,594		(6,307	)		-			(6,307	)		(195	)
Foreign currency		132,879,817		116,437,293		(3,708,390	)		(15,655	)		(3,724,045	)		(2,798,566	)
Securities		11,955		17,671		(652	)		-			(652	)		(323	)
Target flow of swap		954,781		1,493,459		(72,182	)		18,435			(53,747	)		(264,606	)
Asset position - Foreign currency		513,781		923,459		448			67,683			68,131			88,246
Liability position - Interbank market		441,000		570,000		(72,630	)		(49,248	)		(121,878	)		(352,852	)
Other derivative financial instruments		4,675,373		4,933,728		102,103			(60,343	)		41,760			184,723
Asset position		2,693,915		3,079,734		133,692			(8,145	)		125,547			289,706
Foreign currency		126,260		147,536		408			2,405			2,813			5,442
Fixed rate		1,792,066		1,174,500		99,143			(17,973	)		81,170			42,860
Securities		617,186		1,450,688		34,172			4,858			39,030			235,606
Other		158,403		307,010		(31	)		2,565			2,534			5,798
Liability position		1,981,458		1,853,994		(31,589	)		(52,198	)		(83,787	)		(104,983	)
Commodities		-		1,630		-			-			-			(18	)
Foreign currency		34,734		83,924		(7,230	)		5,517			(1,713	)		(31,719	)
Fixed rate		82,700		81,478		(1,411	)		(1,615	)		(3,026	)		(1,115	)
Securities		1,506,408		1,523,125		(22,599	)		(46,785	)		(69,384	)		(67,778	)
Other		357,616		163,837		(349	)		(9,315	)		(9,664	)		(4,353	)
				Assets		15,990,903			6,665,591			22,656,494			24,156,092
				Liabilities		(20,523,308	)		(5,929,308	)		(26,452,616	)		(24,711,326	)
				Total		(4,532,405	)		736,283			(3,796,122	)		(555,234	)

Derivative contracts mature as follows (in days):
Memorandum account/notional amount	0 - 30		31 - 180		181 - 365		Over 365		12/31/2017		12/31/2016
Futures		187,290,832		152,660,465		87,819,268		179,730,096		607,500,661		665,516,610
Swaps		29,733,759		96,849,196		86,921,535		368,439,084		581,943,574		464,618,873
Options		418,440,997		290,491,480		457,164,437		681,476,272		1,847,573,186		583,508,084
Forwards (onshore)		6,996,008		1,911,194		1,021,448		431		9,929,081		13,188,656
Credit derivatives		-		510,408		1,230,153		8,369,693		10,110,254		12,099,966
Forwards (offshore)		63,445,881		136,650,433		39,108,715		13,422,556		252,627,585		250,775,431
Target flow of swap		-		292,781		-		662,000		954,781		1,493,459
Other derivative financial instruments		11,808		494,614		868,650		3,300,301		4,675,373		4,933,728

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.26

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.

	12/31/2017																										12/31/2016
	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		8,631		149,083			157,714			0.7		153,318		11,297			(2,404	)		(3,035	)		38,082		(39,544	)		127,321
B3		8,631		149,635			158,266			0.7		153,318		11,463			(2,262	)		(2,791	)		38,082		(39,544	)		128,344
Companies		-		(543	)		(543	)		0.0		-		(157	)		(142	)		(244	)		-		-			(173	)
Financial institutions		-		(9	)		(9	)		0.0		-		(9	)		-			-			-		-			(850	)
Swaps - adjustment receivable		3,626,838		5,558,926			9,185,764			40.6		188,829		186,631			324,312			743,377			1,660,319		6,082,296			10,538,412
B3		708,632		451,317			1,159,949			5.1		63,122		25,549			39,160			108,965			94,591		828,562			1,416,239
Companies		1,041,246		1,789,878			2,831,124			12.5		65,670		39,906			92,327			244,994			399,746		1,988,481			4,582,811
Financial institutions		1,677,734		2,968,425			4,646,159			20.5		59,054		120,772			191,865			236,722			1,009,943		3,027,803			4,255,876
Individuals		199,226		349,306			548,532			2.5		983		404			960			152,696			156,039		237,450			283,486
Option premiums		2,709,195		628,202			3,337,397			14.7		428,715		439,957			352,161			954,306			864,793		297,465			4,787,191
B3		1,464,182		251,653			1,715,835			7.6		374,312		274,318			95,705			515,398			395,660		60,442			1,678,892
Companies		431,365		141,426			572,791			2.5		25,511		44,912			62,914			116,587			210,365		112,502			501,621
Financial institutions		810,288		235,598			1,045,886			4.6		28,880		120,700			192,378			320,639			258,768		124,521			2,603,251
Individuals		3,360		(475	)		2,885			0.0		12		27			1,164			1,682			-		-			3,427
Forwards (onshore)		6,693,604		1,013			6,694,617			29.5		6,349,476		259,732			45,705			39,334			175		195			4,687,403
B3		729,393		965			730,358			3.2		385,217		259,732			45,705			39,334			175		195			1,183,403
Financial institutions		-		-			-			0.0		-		-			-			-			-		-			769,730
Companies		5,964,211		48			5,964,259			26.3		5,964,259		-			-			-			-		-			2,734,270
Credit derivatives - Financial institutions		37,416		100,237			137,653			0.6		-		395			1,526			7,970			20,989		106,773			179,658
Forwards (offshore)		2,781,079		168,592			2,949,671			13.0		677,482		716,784			623,107			610,356			165,925		156,017			3,458,155
B3		644,526		-			644,526			2.8		195,430		166,311			194,021			88,764			-		-			304,398
Companies		736,478		82,003			818,481			3.6		183,605		237,526			164,520			120,493			67,868		44,469			1,243,812
Financial institutions		1,398,143		86,320			1,484,463			6.6		298,346		312,726			263,586			400,282			97,975		111,548			1,907,060
Individuals		1,932		269			2,201			0.0		101		221			980			817			82		-			2,885
Target flow of swap - Companies		448		67,683			68,131			0.3		-		-			6,100			-			-		62,031			88,246
Other derivative financial instruments		133,692		(8,145	)		125,547			0.6		1,506		201			3,256			4,097			19,833		96,654			289,706
Companies		34,548		9,827			44,375			0.2		1,506		201			3,181			3,237			18,115		18,135			246,846
Financial institutions		99,144		(17,974	)		81,170			0.4		-		-			75			858			1,718		78,519			42,860
Individuals		-		2			2			0.0		-		-			-			2			-		-			-
Total		15,990,903		6,665,591			22,656,494			100.0		7,799,326		1,614,997			1,353,763			2,356,405			2,770,116		6,761,887			24,156,092
% per maturity term												34.4		7.1			6.0			10.4			12.2		29.9
Total – 12/31/2016		19,248,379		4,907,713			24,156,092			100.0		5,764,447		3,297,798			2,098,040			2,842,365			3,166,225		6,987,217
% per maturity term												23.8		13.7			8.7			11.8			13.1		28.9

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.27

	12/31/2017																													12/31/2016
	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		(8,396,908	)		(5,291,338	)		(13,688,246	)		51.7		(64,817	)		(202,114	)		(447,073	)		(1,711,000	)		(3,746,900	)		(7,516,342	)		(13,220,453	)
B3		(730,547	)		(785,413	)		(1,515,960	)		5.7		(3,451	)		(16,955	)		(29,393	)		(128,374	)		(211,011	)		(1,126,776	)		(1,614,280	)
Companies		(1,353,089	)		(894,597	)		(2,247,686	)		8.5		(23,885	)		(77,339	)		(220,635	)		(346,755	)		(496,801	)		(1,082,271	)		(2,530,200	)
Financial institutions		(2,098,098	)		(3,485,557	)		(5,583,655	)		21.1		(29,651	)		(97,105	)		(182,868	)		(203,347	)		(1,269,773	)		(3,800,911	)		(4,106,040	)
Individuals		(4,215,174	)		(125,771	)		(4,340,945	)		16.4		(7,830	)		(10,715	)		(14,177	)		(1,032,524	)		(1,769,315	)		(1,506,384	)		(4,969,933	)
Option premiums		(2,261,185	)		(529,541	)		(2,790,726	)		10.6		(329,974	)		(174,223	)		(303,913	)		(820,496	)		(889,123	)		(272,997	)		(4,553,261	)
B3		(1,091,033	)		(195,128	)		(1,286,161	)		4.9		(278,898	)		(48,567	)		(102,394	)		(412,167	)		(428,691	)		(15,444	)		(1,441,165	)
Companies		(309,209	)		(360,170	)		(669,379	)		2.6		(22,619	)		(44,328	)		(98,939	)		(139,893	)		(246,979	)		(116,621	)		(628,635	)
Financial institutions		(855,797	)		27,032			(828,765	)		3.1		(28,440	)		(81,010	)		(100,960	)		(267,469	)		(210,155	)		(140,731	)		(2,463,000	)
Individuals		(5,146	)		(1,275	)		(6,421	)		0.0		(17	)		(318	)		(1,620	)		(967	)		(3,298	)		(201	)		(20,461	)
Forwards (onshore)		(5,964,211	)		(896	)		(5,965,107	)		22.6		(5,964,874	)		-			(144	)		(89	)		-			-			(3,509,729	)
B3		-			(259	)		(259	)		0.0		(26	)		-			(144	)		(89	)		-			-			(6,229	)
Companies		(5,964,211	)		(637	)		(5,964,848	)		22.6		(5,964,848	)		-			-			-			-			-			(2,733,839	)
Financial institutions		-			-			-			0.0		-			-			-			-			-			-			(769,661	)
Credit derivatives - Financial institutions		(67,802	)		9,689			(58,113	)		0.2		-			(205	)		(900	)		(2,571	)		(6,754	)		(47,683	)		(146,264	)
Forwards (offshore)		(3,728,983	)		(15,776	)		(3,744,759	)		14.1		(926,782	)		(735,313	)		(546,427	)		(785,574	)		(224,864	)		(525,799	)		(2,823,784	)
B3		(638,196	)		(1	)		(638,197	)		2.4		(289,082	)		(133,648	)		(155,442	)		(60,025	)		-			-			(259,677	)
Companies		(736,775	)		(12,600	)		(749,375	)		2.8		(144,749	)		(266,051	)		(127,846	)		(131,003	)		(49,598	)		(30,128	)		(647,626	)
Financial institutions		(2,353,251	)		(3,024	)		(2,356,275	)		8.9		(492,905	)		(335,514	)		(262,544	)		(594,380	)		(175,266	)		(495,666	)		(1,913,895	)
Individuals		(761	)		(151	)		(912	)		0.0		(46	)		(100	)		(595	)		(166	)		-			(5	)		(2,586	)
Target flow of swap - Companies		(72,630	)		(49,248	)		(121,878	)		0.5		-			-			(73,052	)		-			-			(48,826	)		(352,852	)
Other derivative financial instruments		(31,589	)		(52,198	)		(83,787	)		0.3		(55	)		(2,156	)		(2,491	)		(7,860	)		(21,468	)		(49,757	)		(104,983	)
Companies		(31,589	)		(52,198	)		(83,787	)		0.3		(55	)		(2,156	)		(2,491	)		(7,860	)		(21,468	)		(49,757	)		(104,983	)
Total		(20,523,308	)		(5,929,308	)		(26,452,616	)		100.0		(7,286,502	)		(1,114,011	)		(1,374,000	)		(3,327,590	)		(4,889,109	)		(8,461,404	)		(24,711,326	)
% per maturity term													27.5			4.2			5.2			12.6			18.5			32.0
Total – 12/31/2016		(22,145,884	)		(2,565,442	)		(24,711,326	)		100.0		(5,271,967	)		(1,769,516	)		(1,784,323	)		(1,960,916	)		(3,726,985	)		(10,197,619	)
% per maturity term													21.3			7.2			7.2			7.9			15.1			41.3

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.28

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.

	12/31/2017
	Futures		Swaps		Options		Forwards (onshore)		Credit derivatives		Forwards (offshore)		Target flow of swap		Other derivative financial instruments
B3		475,550,877		31,176,874		1,746,490,597		3,998,238		-		76,837,568		-		-
Overt-the-counter market		131,949,784		550,766,700		101,082,589		5,930,843		10,110,254		175,790,017		954,781		4,675,373
Financial institutions		131,525,855		333,481,699		69,460,402		-		10,110,254		118,742,849		-		1,792,066
Companies		423,929		152,893,351		31,321,748		5,930,843		-		56,904,895		954,781		2,883,307
Individuals		-		64,391,650		300,439		-		-		142,273		-		-
Total		607,500,661		581,943,574		1,847,573,186		9,929,081		10,110,254		252,627,585		954,781		4,675,373
Total – 12/31/2016		665,516,610		464,618,873		583,508,084		13,188,656		12,099,966		250,775,431		1,493,459		4,933,728

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.

	12/31/2017								12/31/2016
	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		(6,416,313	)		3,693,941		(2,722,372	)		(8,094,075	)		4,005,891		(4,088,184	)
Total		(6,416,313	)		3,693,941		(2,722,372	)		(8,094,075	)		4,005,891		(4,088,184	)

The effect on the referential equity (Note 3) was R$ 46,396 (R$ 277,987 at 12/31/2016).

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

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.29

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).

	12/31/2017							12/31/2016
	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		69,253,139		(3,595,979	)		70,663,298		93,804,279		(2,479,977	)		95,302,890
Hedge of syndicated loan		-		-			-		6,844,110		(45,592	)		6,844,110
Hedge of Highly Probable Expected Transaction		232,167		(4,718	)		218,879		-		-			-
Hedge of assets transactions		23,919,178		429,349			23,489,527		24,167,833		311,932			26,495,381
Hedge of Asset-backed Securities under Repurchase Agreements		31,855,096		672,321			31,099,006		2,546,108		24,062			2,523,771
Hedge of UF - denominated assets		15,227,170		(28,191	)		15,227,170		13,146,704		(20,310	)		13,146,704
Hedge of funding		6,444,407		(16,344	)		6,444,407		4,272,794		(21,687	)		4,272,794
Hedge of loan operations		1,123,646		13,693			1,123,646		1,120,580		14,787			1,120,580
Total				(2,529,869	)						(2,216,785	)

(*) 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$ (1,907,845) (R$ 184,943 at 12/31/2016).

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.

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.

	12/31/2017										12/31/2016
	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		5,976,642		51,950			5,976,642		(49,695	)		2,691,782		(91,314	)		2,691,782		91,042
Hedge of available-for-sale securities		482,415		34,418			482,415		(32,734	)		472,410		(14,450	)		472,410		19,121
Hedge of syndicated loan		794,221		435			794,221		(336	)		-		-			-		-
Hedge of funding		12,156,582		(113,877	)		12,156,582		107,591			8,659,014		9,075			8,659,014		(19,686	)
Total				(27,074	)				24,826					(96,689	)				90,477

(*) 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 2018 and 2035.

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

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.30

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.

	12/31/2017							12/31/2016
	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 (*)		22,700,549		(1,375,790	)		13,074,449		-		-		-
Total				(1,375,790	)						-

(*) 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:

	12/31/2017
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		35,973,635		12,229,910		6,985,466		12,403,273		-		1,660,855		-		69,253,139
Hedge of Highly Probable Expected Transaction		162,309		69,858		-		-		-		-		-		232,167
Hedge of assets transactions		16,725,587		5,940,862		-		1,252,729		-		-		-		23,919,178
Hedge of assets denominated in UF		12,352,296		2,822,005		-		52,869		-		-		-		15,227,170
Hedge of funding (Cash flow)		1,645,816		748,636		1,026,886		884,262		525,283		1,613,524		-		6,444,407
Hedge of loan operations (Cash flow)		-		-		26,910		156,078		75,348		865,310		-		1,123,646
Hedge of loan operations (Market risk)		268,321		143,027		628,188		1,501,716		1,334,664		642,213		1,458,513		5,976,642
Hedge of syndicated loan (Market risck)		794,221		-		-		-		-		-		-		794,221
Hedge of funding (Market risk)		2,399,309		3,669,286		799,462		217,004		347,472		2,099,107		2,624,942		12,156,582
Hedge of available-for-sale securities		-		-		222,909		-		-		259,506		-		482,415
Asset-backed securities under repurchase agreements		250,600		25,208,848		3,956,763		1,349,092		-		1,089,793		-		31,855,096
Hedge of net investment in foreign operations (*)		22,700,549		-		-		-		-		-		-		22,700,549
Total		93,272,643		50,832,432		13,646,584		17,817,023		2,282,767		8,230,308		4,083,455		190,165,212

(*) Classified as current, since instruments are frequently renewed.

	12/31/2016
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		34,975,681		32,329,613		11,701,155		6,961,916		7,400,399		435,515		-		93,804,279
Hedge of syndicated loan		6,844,110		-		-		-		-		-		-		6,844,110
Hedge of assets transactions		4,627,346		13,718,433		4,889,852		-		932,202		-		-		24,167,833
Hedge of assets denominated in UF		8,939,633		2,597,842		1,558,290		-		50,939		-		-		13,146,704
Hedge of funding (Cash flow)		121,400		1,484,965		72,840		536,102		773,561		1,283,926		-		4,272,794
Hedge of loan operations (Cash flow)		123,421		-		-		24,280		140,824		832,055		-		1,120,580
Hedge of loan operations (Market risk)		189,091		421,513		62,845		28,655		92,827		335,341		1,561,510		2,691,782
Hedge of funding (Market risk)		1,265,828		2,459,701		3,434,397		700,826		71,700		487,587		238,975		8,659,014
Hedge of available-for-sale securities		-		-		-		218,286		-		254,124		-		472,410
Asset-backed securities under repurchase agreements		-		-		1,465,380		917,839		162,889		-		-		2,546,108
Total		57,086,510		53,012,067		23,184,759		9,387,904		9,625,341		3,628,548		1,800,485		157,725,614

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.31

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

	01/01 to			01/01 to
	12/31/2017			12/31/2016
Opening balance		(256,904	)		(5,710,497	)
Adjustments with impact on:
Results		(1,653,869	)		1,755,356
Trading securities		(47,881	)		1,577,141
Derivative financial instruments		(1,605,988	)		178,215
Stockholders’ equity		(642,268	)		3,698,237
Available-for-sale		1,046,606			3,232,778
Accounting hedge – derivative financial instruments - Futures		(1,688,874	)		465,459
Closing balance		(2,553,041	)		(256,904	)
Adjustment to market value		(2,553,041	)		(256,904	)
Trading securities		419,719			467,600
Available-for-sale securities		196,616			(849,990	)
Derivative financial instruments		(3,169,376	)		125,486
Trading securities (**)		736,283			2,342,271
Accounting hedge		(3,905,659	)		(2,216,785	)
Futures		(3,905,659	)		(2,216,785	)

(*) The term unrealized in the context of Circular nº. 3,068 of 11/08/2001, of the Central Bank means not converted into cash.

(**) Changes were made in balances at December 31, 2016 for comparison purposes

i) Realized gain of securities portfolio and derivatives financial instruments

	01/01 to		01/01 to
	12/31/2017		12/31/2016
Gain (loss) – trading securities		1,936,634		1,133,031
Gain (loss) – available-for-sale securities		389,584		(218,185	)
Gain (loss) – derivatives		8,511,349		11,182,452
Gain (loss) – foreign exchange variation on investments abroad		741,110		(8,246,841	)
Total		11,578,677		3,850,457

(*) The results of all financial instruments linked to the hedge of exchange variation of Investments are not included.

During the period ended 12/31/2017, ITAÚ UNIBANCO HOLDING PRUDENTIAL recognized impairment expenses of R$ 1,063,411, with on Available-for-sale securities in the amount R$ 787,833 and Held-to-Maturity Financial Assets in the amount of R$ 275,578. Total loss, net of reversals, amounted to R$ 982,287 (R$ 1,522,012 of loss at 12/31/2016) and was recorded in the statement of income in line item Securities and derivative financial instruments.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.32

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	12/31/2017 (*)
		Scenarios
Risk factors	Risk of variation in:	I			II			III
Interest Rate	Fixed Income Interest Rates in reais		(677	)		(181,412	)		(293,515	)
Foreign Exchange Linked	Foreign Exchange Linked Interest Rates		(464	)		(38,269	)		(79,140	)
Foreign Exchange Rates	Prices of Foreign Currencies		1,720			126,269			392,106
Price Index Linked	Interest of Inflation coupon		(586	)		(44,720	)		(82,604	)
TR	TR Linked Interest Rates		-			(1	)		(1	)
Equities	Prices of Equities		168			(1,885	)		(30,632	)
Other	Exposures that do not fall under the definitions above		8			1,238			2,671
TOTAL			169			(138,780	)		(91,115	)

(*) Amounts net of tax effects.

Trading and Banking portfolios	Exposures	12/31/2017 (*)
		Scenarios
Risk factors	Risk of variation in:	I			II			III
Interest Rate	Fixed Income Interest Rates in reais		(8,313	)		(1,653,629	)		(3,179,360	)
Foreign Exchange Linked	Foreign Exchange Linked Interest Rates		(1,759	)		(264,749	)		(505,366	)
Foreign Exchange Rates	Prices of Foreign Currencies		1,832			123,518			387,645
Price Index Linked	Interest of Inflation coupon		(3,198	)		(251,703	)		(474,026	)
TR	TR Linked Interest Rates		479			(121,136	)		(307,836	)
Equities	Prices of Equities		4,569			(110,354	)		(244,940	)
Other	Exposures that do not fall under the definitions above		(4	)		7,521			16,726
TOTAL			(6,394	)		(2,270,532	)		(4,307,157	)

(*) 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. – Prudencial Financial Statements – December 31, 2017 4.33

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

	12/31/2017																				12/31/2016
Risk levels	AA		A		B		C		D		E		F		G		H		Total		Total
Loan operations		208,081,846		105,449,462		38,889,849		16,935,595		9,713,532		6,256,809		6,230,543		5,462,177		10,622,921		407,642,734		410,910,815
Loans and discounted trade receivables		81,212,837		87,837,549		29,682,843		13,815,256		7,775,680		4,748,529		4,703,723		3,626,485		9,583,599		242,986,501		240,114,387
Financing		55,466,540		11,278,205		6,868,531		1,994,479		1,357,100		965,825		742,851		1,527,670		654,244		80,855,445		88,914,657
Farming and agribusiness financing		6,970,690		1,016,584		477,298		53,551		74,587		92,559		204		1,975		22,768		8,710,216		10,642,618
Real estate financing		64,431,779		5,317,124		1,861,177		1,072,309		506,165		449,896		783,765		306,047		362,310		75,090,572		71,239,153
Lease operations		1,930,770		3,657,296		1,166,949		306,658		217,809		39,014		178,769		38,849		189,755		7,725,869		8,674,870
Credit card operations		-		62,479,500		2,444,813		2,284,728		828,103		517,185		644,341		490,258		3,162,277		72,851,205		64,459,708
Advance on exchange contracts (1)		2,056,651		1,472,854		347,126		97,081		38,486		60,010		108,967		638		-		4,181,813		4,929,847
Other sundry receivables (2)		24,651		586,902		-		24,115		620		143,007		2,176		125,722		288,781		1,195,974		2,244,495
Total operations with credit granting characteristics		212,093,918		173,646,014		42,848,737		19,648,177		10,798,550		7,016,025		7,164,796		6,117,644		14,263,734		493,597,595		491,219,735
Financial Guarantees Provided(3)		-		-		-		-		-		-		-		-		-		70,661,924		70,943,938
Total with Financial Guarantees Provided		212,093,918		173,646,014		42,848,737		19,648,177		10,798,550		7,016,025		7,164,796		6,117,644		14,263,734		564,259,519		562,163,673
Total – 12/31/2016		227,484,745		154,011,919		43,418,130		21,046,447		11,446,751		7,105,160		6,787,748		4,777,044		15,141,791		491,219,735

(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. – Prudencial Financial Statements – December 31, 2017 4.34

II – By maturity and risk level

	12/31/2017																													12/31/2016
	AA		A			B			C			D			E			F			G			H			Total			Total
	Overdue Operations (1) (2)
Falling due installments		-		-			1,868,783			1,778,335			1,371,187			1,435,039			1,293,465			1,099,064			4,072,202			12,918,075			13,715,852
01 to 30		-		-			71,802			67,354			49,697			38,986			37,033			37,782			163,836			466,490			561,250
31 to 60		-		-			60,353			58,081			44,909			34,945			37,073			34,443			152,257			422,061			493,751
61 to 90		-		-			56,110			53,188			41,347			37,263			34,375			31,478			163,524			417,285			462,406
91 to 180		-		-			159,000			151,724			119,446			118,899			97,515			94,963			381,726			1,123,273			1,264,462
181 to 365		-		-			219,916			260,887			225,856			340,268			233,122			179,550			679,191			2,138,790			2,265,589
Over 365		-		-			1,301,602			1,187,101			889,932			864,678			854,347			720,848			2,531,668			8,350,176			8,668,394
Overdue installments		-		-			1,065,372			1,024,071			1,035,273			825,789			2,163,730			1,368,873			6,187,246			13,670,354			13,651,132
01 to 14		-		-			25,225			44,302			24,112			27,452			86,698			14,974			66,894			289,657			233,911
15 to 30		-		-			817,627			118,051			102,724			51,982			51,312			39,199			125,616			1,306,511			1,414,082
31 to 60		-		-			222,520			718,913			172,664			105,069			671,255			198,431			253,297			2,342,149			1,992,697
61 to 90		-		-			-			118,462			624,669			125,505			654,852			256,474			317,217			2,097,179			1,611,963
91 to 180		-		-			-			24,343			111,104			484,331			647,179			793,720			1,212,179			3,272,856			3,484,064
181 to 365		-		-			-			-			-			31,450			52,434			66,075			4,031,878			4,181,837			4,758,790
Over 365		-		-			-			-			-			-			-			-			180,165			180,165			155,625
Subtotal		-		-			2,934,155			2,802,406			2,406,460			2,260,828			3,457,195			2,467,937			10,259,448			26,588,429			27,366,984
Specific allowance		-		-			(29,342	)		(84,072	)		(240,646	)		(678,248	)		(1,728,598	)		(1,727,556	)		(10,259,448	)		(14,747,910	)		(15,948,756	)
Subtotal - 12/31/2016		-		-			2,869,490			2,863,282			2,766,775			1,935,812			2,332,538			2,628,713			11,970,374			27,366,984
		Non-overdue operations
Falling due installments		211,147,019		171,725,177			39,513,528			16,599,620			8,249,847			4,619,438			3,648,863			3,598,506			3,955,418			463,057,416			460,661,311
01 to 30		17,287,728		38,737,272			5,521,450			3,287,602			978,419			372,740			383,136			211,050			444,225			67,223,622			66,782,558
31 to 60		14,630,369		17,080,052			3,228,051			1,100,925			442,845			256,146			209,523			46,542			249,865			37,244,318			39,622,739
61 to 90		7,760,888		10,259,862			2,150,420			772,770			212,111			101,343			97,695			57,912			212,597			21,625,598			22,386,713
91 to 180		22,153,254		20,790,785			5,078,185			1,694,254			589,959			332,833			365,509			242,686			435,059			51,682,524			49,421,033
181 to 365		28,252,080		21,883,123			5,916,493			2,300,953			1,015,501			570,386			409,648			435,166			356,494			61,139,844			59,963,466
Over 365		121,062,700		62,974,083			17,618,929			7,443,116			5,011,012			2,985,990			2,183,352			2,605,150			2,257,178			224,141,510			222,484,802
Overdue up to 14 days		946,899		1,920,837			401,054			246,151			142,243			135,759			58,738			51,201			48,868			3,951,750			3,191,440
Subtotal		212,093,918		173,646,014			39,914,582			16,845,771			8,392,090			4,755,197			3,707,601			3,649,707			4,004,286			467,009,166			463,852,751
Generic allowance		-		(868,230	)		(399,146	)		(505,373	)		(839,209	)		(1,426,559	)		(1,853,801	)		(2,554,795	)		(4,004,286	)		(12,451,399	)		(11,042,697	)
Subtotal - 12/31/2016		227,484,745		154,011,919			40,548,640			18,183,165			8,679,976			5,169,348			4,455,210			2,148,331			3,171,417			463,852,751
Grand total		212,093,918		173,646,014			42,848,737			19,648,177			10,798,550			7,016,025			7,164,796			6,117,644			14,263,734			493,597,595			491,219,735
Existing allowance		-		(868,230	)		(428,488	)		(589,445	)		(1,079,855	)		(4,848,956	)		(7,164,080	)		(6,117,033	)		(14,263,734	)		(37,309,465	)		(37,431,102	)
Minimum allowance required		-		(868,230	)		(428,488	)		(589,445	)		(1,079,855	)		(2,104,808	)		(3,582,398	)		(4,282,351	)		(14,263,734	)		(27,199,309	)		(26,991,453	)
Additional allowance included Financial Guarantees Provided		-		-			-			-			-			(2,744,148	)		(3,581,682	)		(1,834,682	)		-			(10,110,156	)		(10,439,649	)
Financial Guarantees Provided		-		-			-			-			-			-			-			-			-			(1,949,644	)		(1,445,445	)
Additional allowance (3)		-		-			-			-			-			(2,744,148	)		(3,581,682	)		(1,834,682	)		-			(8,160,512	)		(8,994,204	)
Grand total - 12/31/2016		227,484,745		154,011,919			43,418,130			21,046,447			11,446,751			7,105,160			6,787,748			4,777,044			15,141,791			491,219,735
Existing allowance		-		(770,060	)		(434,181	)		(631,392	)		(1,144,676	)		(6,299,922	)		(6,787,069	)		(4,776,566	)		(15,141,791	)		(37,431,102	)
Minimum allowance required		-		(770,060	)		(434,181	)		(631,392	)		(1,144,676	)		(2,131,548	)		(3,393,874	)		(3,343,931	)		(15,141,791	)		(26,991,453	)
Additional allowance included Financial Guarantees Provided		-		-			-			-			-			(4,168,374	)		(3,393,195	)		(1,432,635	)		-			(10,439,649	)
Financial Guarantees Provided (4)		-		-			-			-			-			-			-			-			-			(1,445,445	)
Additional allowance (3)		-		-			-			-			-			(4,168,374	)		(3,393,195	)		(1,432,635	)		-			(8,994,204	)

(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$ 19,104,845 (R$ 19,942,065 at 12/31/2016);

(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. The amount on December 31, 2016 was reclassified for comparison purposes.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.35

III – By business sector

	12/31/2017		%			12/31/2016		%
Public Sector		2,366,262		0.5	%		3,050,723		0.6	%
Private sector		491,231,333		99.5	%		488,169,012		99.4	%
Companies		247,102,807		50.0	%		257,682,657		52.5	%
Individuals		244,128,526		49.5	%		230,486,355		46.9	%
Grand total		493,597,595		100.0	%		491,219,735		100.0	%

IV - Financial guarantees provided by type

	12/31/2017					12/31/2016 (*)
Type of guarantees	Portfolio		Provision			Portfolio		Provision
Endorsements or sureties pledged in legal and administrative tax proceedings		36,157,228		(901,225	)		34,532,756		(310,133	)
Sundry bank guarantees		24,872,713		(855,078	)		27,274,416		(923,780	)
Other financial guarantees provided		4,647,823		(123,071	)		4,572,472		(113,851	)
Tied to the distribution of marketable securities via a Public Offering		291,600		(52	)		-		-
Restricted to bids, auctions, service provision or execution of works		3,931,528		(63,613	)		3,427,539		(68,782	)
Restricted to supply of goods		613,924		(5,773	)		811,736		(3,291	)
Restricted to international trade of goods		147,108		(832	)		325,019		(25,608	)
Total		70,661,924		(1,949,644	)		70,943,938		(1,445,445	)

(*) The breakdown of balances as at 12/31/2016 was adjusted to conform to the new classification requirement set out by the Regulator.

b) Credit concentration

	12/31/2017				12/31/2016
Loan, lease and other credit operations (*)	Risk		% of total		Risk		% of total
Largest debtor		4,079,032		0.7		4,134,421		0.7
10 largest debtors		28,957,637		5.1		31,171,715		5.5
20 largest debtors		46,312,823		8.2		48,129,040		8.6
50 largest debtors		74,764,354		13.3		79,010,496		14.1
100 largest debtors		101,141,728		17.9		106,712,267		19.0

(*) The amounts include financial guarantees provided.

	12/31/2017				12/31/2016
Loan, lease and other credit operations and securities of companies and financial institutions (*)	Risk		% of total		Risk		% of total
Largest debtor		7,667,580		1.2		7,783,779		1.2
10 largest debtors		39,982,381		6.2		43,510,712		6.7
20 largest debtors		64,826,981		10.1		69,454,912		10.7
50 largest debtors		108,820,520		16.9		113,259,454		17.4
100 largest debtors		144,293,248		22.4		151,391,990		23.3

(*) The amounts include financial guarantees provided.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.36

c) Changes in allowance for loan losses

	01/01 to			01/01 to
	12/31/2017			12/31/2016
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	)		-
Balance arising from the acquisition of Citibank operations		(665,725	)		-
Net increase for the period		(18,749,556	)		(25,323,771	)
Required by Resolution No. 2,682/99		(19,480,689	)		(25,869,306	)
Required by Resolution No. 4,512/16		(102,559	)		-
Additional allowance (1)		833,692			545,535
Others		6,707			-
Write-Off		19,957,074			23,784,376
Exchange variation		(25,223	)		387,007
Closing balance (2)		(37,309,465	)		(37,431,102	)
Required by Resolution No. 2,682/99		(27,199,309	)		(26,991,453	)
Specific allowance (3)		(14,747,910	)		(15,948,756	)
Generic allowance (4)		(12,451,399	)		(11,042,697	)
Additional allowance included Provision for Financial Guarantees Provided		(10,110,156	)		(10,439,649	)
Provision for Financial Guarantees Provided (5)		(1,949,644	)		(1,445,445	)
Additional allowance (1)		(8,160,512	)		(8,994,204	)

(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$ (378,974) (R$ (353,163) at 12/31/2016).

(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 December 31, 2016 was reclassified for comparison purposes.

At December 31, 2017, the balance of the allowance in relation to the loan portfolio is equivalent to 7.6% (7.6% at 12/31/2016).

d) Renegotiated loan operations

	12/31/2017									12/31/2016
	Portfolio (1)			Allowance for Loan Losses			%			Portfolio (1)			Allowance for Loan Losses			%
Amended Credit Agreements		26,401,485			(10,807,411	)		40.9	%		24,341,718			(9,927,667	)		40.8	%
(-) Renegotiated loans overdue up to 30 days (2)		(9,147,755	)		2,122,979			23.2	%		(7,944,027	)		1,804,918			22.7	%
Renegotiated loans overdue over 30 days (2)		17,253,730			(8,684,432	)		50.3	%		16,397,691			(8,122,749	)		49.5	%

(1) The amounts related to the lease portfolio are R$ 126,819 (R$ 183,228 at 12/31/2016).

(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.

	12/31/2017										01/01 to 12/31/2017			12/31/2016		01/01 to 12/31/2016
	0 - 30		31 - 180		181 - 365		Over 365 days		Total		Income (expenses)			Total		Income (expenses)
Restricted operations on assets
Loan operations		123		73,698		-		6,053,850		6,127,671		258,431			2,954		11,786
Liabilities - restricted operations on assets
Foreign borrowing through securities		123		73,698		-		6,001,525		6,075,346		(258,451	)		2,893		(4,701	)
Net revenue from restricted operations												(20	)				7,085

At December 31, 2017 and 2016 there were no balances in default.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.37

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 12/31/2017 where the entity substantially retained the related risks and benefits, is R$ 106,503 (R$ 134,359 at 12/31/2016), composed of real estate financing of R$ 98,054 (R$ 124,205 at 12/31/2016) and farming financing of R$ 8,449 (R$ 10,154 at 12/31/2016).

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.

	12/31/2017								12/31/2016
	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		2,362,540		2,303,414		2,354,221		2,295,095		2,936,924		2,834,625		2,930,747		2,828,448
Working capital		2,650,606		2,650,606		2,570,017		2,570,017		2,767,733		2,767,733		2,767,520		2,767,520
Vehicles (2)		-		-		2,266		2,266		-		-		4,308		4,308
Companies - loan (2)		-		-		4,211		4,211		-		-		8,004		8,004
Total		5,013,146		4,954,020		4,930,715		4,871,589		5,704,657		5,602,358		5,710,579		5,608,280

(1) Under Other sundry liabilities.

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

The sale or transfer transactions involving financial assets that posted loss, with no retention of risk if benefits affected the result of the period by R$ 67,224 (R$ 69,463 from January 1 to December 31, 2016).

The sale or transfer transactions involving financial assets of the active portfolio, with no retention of risk and benefits totaled R$ 2,007,631 (R$ 5,019,360 at December 31, 2016) with effect on the result for the period of R$ 325,627 (R$ 161,465 from January 1 to December 31, 2016), of which R$ 252,829 (R$ 82,270 from January 1 to December 31, 2016) in result for the period and R$ 72,798 (R$ 79,195 from January 1 to December 31, 2016) to be deferred in result, according to transactions terms), net of the Allowance for Loan Losses.

As at December 31, 2017, 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 transferred, in the amount of R$ 15,240,988 (R$ 7,950,620 at 12/31/2016) fully written down to losses, was realized for the amount of R$ 206,056 (R$ 22,442 at 12/31/2016) according to an external appraisal report. The transaction did not have impact on the consolidated results.

There were acquisitions of loan portfolios with the retention of assignor’s risks during of period of 2017 the amount R$ 165,353 (R$ 435,102 at 12/31/2016).

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.38

Note 9 - Foreign exchange portfolio

	12/31/2017			12/31/2016
Assets - other receivables		52,257,314			52,210,701
Exchange purchase pending settlement – foreign currency		25,709,425			27,579,861
Bills of exchange and term documents – foreign currency		2,504			30,689
Exchange sale rights – local currency		26,814,236			24,943,401
(Advances received) – local currency		(268,851	)		(343,250	)
Liabilities – other liabilities (Note 2a)		52,444,243			52,831,971
Exchange sales pending settlement – foreign currency		27,284,404			24,428,272
Liabilities from purchase of foreign currency – local currency		24,975,375			28,229,781
Other		184,464			173,918
Memorandum accounts		1,550,303			1,612,307
Outstanding import credits – foreign currency		829,753			974,191
Confirmed export credits – foreign currency		720,550			638,116

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.39

Note 10 – Funding, borrowing and onlending

a) Summary

	12/31/2017												12/31/2016
	0-30		31-180		181-365		Over 365 days		Total		%		Total		%
Deposits		217,388,961		34,639,386		23,244,055		130,586,561		405,858,963		42.5		331,558,062		35.8
Deposits received under securities repurchase agreements		219,592,385		16,826,525		17,174,540		72,205,449		325,798,899		34.1		368,569,469		39.8
Funds from acceptance and issuance of securities		6,819,995		23,229,503		18,387,515		59,144,011		107,581,024		11.3		93,716,666		10.1
Borrowing and onlending		4,804,260		17,194,632		16,710,333		24,731,795		63,441,020		6.6		75,613,909		8.1
Subordinated debt		1,314,648		10,190,516		993,577		40,197,134		52,695,875		5.5		57,420,075		6.2
Total		449,920,249		102,080,562		76,510,020		326,864,950		955,375,781				926,878,181
% per maturity term		47.1		10.7		8.0		34.2
Total – 12/31/2016		399,953,236		94,921,522		104,294,589		327,708,834		926,878,181
% per maturity term		43.2		10.2		11.2		35.4

b) Deposits

	12/31/2017												12/31/2016
	0-30		31-180		181-365		Over 365 days		Total		%		Total		%
Demand deposits		69,366,205		-		-		-		69,366,205		17.0		62,711,299		18.9
Savings accounts		120,004,481		-		-		-		120,004,481		29.6		108,275,266		32.7
Interbank		87,751		907,837		669,043		517,143		2,181,774		0.5		3,756,706		1.1
Time deposits		27,927,933		33,731,549		22,575,012		130,069,418		214,303,912		52.8		156,814,791		47.3
Other deposits		2,591		-		-		-		2,591		0.0		-		0.0
Total		217,388,961		34,639,386		23,244,055		130,586,561		405,858,963				331,558,062
% per maturity term		53.5		8.5		5.7		32.2
Total – 12/31/2016		202,885,522		30,217,069		18,044,684		80,410,787		331,558,062
% per maturity term		61.2		9.1		5.4		24.3

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.40

c) Deposits received under securities repurchase agreements

	12/31/2017												12/31/2016
	0 - 30		31 - 180		181 - 365		Over 365 days		Total		%		Total		%
Own portfolio		53,160,909		14,442,175		16,110,059		27,557,492		111,270,635		34.1		165,303,872		44.8
Government securities		43,614,615		4,430		-		-		43,619,045		13.4		25,544,435		6.9
Corporate Securities		6,564,059		-		-		-		6,564,059		2.0		4,906,420		1.3
Own issue		2,592,079		14,434,513		16,110,059		27,557,492		60,694,143		18.6		134,628,475		36.5
Foreign		390,156		3,232		-		-		393,388		0.1		224,542		0.1
Third-party portfolio		158,000,043		-		-		-		158,000,043		48.5		140,973,618		38.2
Free portfolio		8,431,433		2,384,350		1,064,481		44,647,957		56,528,221		17.4		62,291,979		16.9
Total		219,592,385		16,826,525		17,174,540		72,205,449		325,798,899				368,569,469
% per maturity term		67.3		5.2		5.3		22.2
Total – 12/31/2016		189,337,694		14,473,296		49,391,135		115,367,344		368,569,469
% per maturity term		51.4		3.9		13.4		31.3

d) Funds from acceptance and issuance of securities

	12/31/2017												12/31/2016
	0-30		31-180		181-365		Over 365 days		Total		%		Total		%
Funds from bills:		3,922,774		16,903,316		14,016,454		26,474,085		61,316,629		57.0		54,187,258		57.8
Financial		713,462		3,795,205		8,725,700		14,457,357		27,691,724		25.7		19,566,267		20.9
Real estate		1,822,948		9,469,374		2,754,008		4,478,460		18,524,790		17.2		19,178,742		20.5
Bill of credit related to agribusiness		1,386,364		3,638,737		2,536,746		7,538,268		15,100,115		14.0		15,442,249		16.5
Foreign securities		2,826,239		6,143,196		2,862,116		30,045,568		41,877,119		38.9		34,292,654		36.6
Brazil risk note programme		6,358		3,750,272		574,852		1,625,031		5,956,513		5.6		5,753,154		6.1
Structure note issued		86,515		862,874		980,303		3,743,402		5,673,094		5.3		6,257,627		6.7
Bonds		2,582,781		354,934		906,213		20,737,904		24,581,832		22.8		19,099,896		20.4
Fixed rate notes		98,139		902,437		124,454		1,994,289		3,119,319		2.9		582,863		0.6
Eurobonds		-		-		86		9,733		9,819		0.0		1,721,164		1.8
Mortgage notes		15,615		17,088		29,773		283,737		346,213		0.3		395,930		0.4
Other		36,831		255,591		246,435		1,651,472		2,190,329		2.0		482,020		0.5
Structured Operations Certificates (*)		70,982		182,991		1,508,945		2,624,358		4,387,276		4.1		5,236,754		5.5
Total		6,819,995		23,229,503		18,387,515		59,144,011		107,581,024				93,716,666
% per maturity term		6.2		21.6		17.1		55.0
Total – 12/31/2016		3,090,420		15,728,706		17,464,786		57,432,754		93,716,666
% per maturity term		3.3		16.8		18.6		61.3

(*) As of December 31, 2017, the market value of the funding from Structured Operations Certificates issued is R$ 4,605,105 (R$ 5,816,233 at 12/31/2016) according to BACEN Circular Letter No. 3,623.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.41

e) Borrowing and onlending

	12/31/2017												12/31/2016
	0-30		31-180		181-365		Over 365 days		Total		%		Total		%
Borrowing		4,045,438		13,901,156		12,771,764		8,541,383		39,259,741		61.9		45,786,088		60.6
Domestic		2,265,004		-		-		1,664		2,266,668		3.6		1,491,521		2.0
Foreign (*)		1,780,434		13,901,156		12,771,764		8,539,719		36,993,073		58.3		44,294,567		58.6
Onlending		758,822		3,293,476		3,938,569		16,190,412		24,181,279		38.1		29,827,821		39.4
Domestic – official institutions		758,822		3,293,476		3,938,569		16,190,412		24,181,279		38.1		29,827,821		39.4
BNDES		313,022		1,302,809		1,869,273		7,961,414		11,446,518		18.0		12,776,607		16.9
FINAME		433,311		1,942,929		2,014,970		7,764,062		12,155,272		19.2		16,356,819		21.6
Other		12,489		47,738		54,326		464,936		579,489		0.9		694,395		0.9
Total		4,804,260		17,194,632		16,710,333		24,731,795		63,441,020				75,613,909
% per maturity term		7.6		27.1		26.3		39.0
Total – 12/31/2016		4,011,589		25,954,220		17,514,478		28,133,622		75,613,909
% per maturity term		5.3		34.3		23.2		37.2

(*) 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 December 31, 2016, the expense on financial operations – Borrowings and Onlending is presented with credit nature.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.42

f) Subordinated debt, including perpetual ones

	12/31/2017															12/31/2016
	0-30		31-180		181-365		Over 365 days			Total			%			Total			%
CDB		-		-		-		-			-			-			929,395			1.6
Financial treasury bills		1,283,273		10,145,385		917,572		4,482,428			16,828,658			31.9			25,485,743			44.4
Euronotes				-		-		26,119,121			26,119,121			49.6			25,759,211			44.9
Bonds		31,375		45,131		76,005		5,461,280			5,613,791			10.6			5,301,922			9.2
Debt instruments eligible as capital		-		-		-		4,148,367			4,148,367			7.9			-			-
(-) Transaction costs incurred (Note 4b)		-		-		-		(14,062	)		(14,062	)		(0.0	)		(56,196	)		(0.1	)
Grand total (*)		1,314,648		10,190,516		993,577		40,197,134			52,695,875						57,420,075
% per maturity term		2.5		19.3		1.9		76.3
Total – 12/31/2016		628,011		8,548,231		1,879,506		46,364,327			57,420,075
% per maturity term		1.1		14.9		3.3		80.7

(*) According to current legislation, the accounting balance of subordinated debt as of December 2017 was used for the calculation of reference equity as of December, 2012, totaling R$ 42,686,968.

On December 12, 2017, ITAÚ UNIBANCO HOLDING CONSOLIDATED issued perpetual subordinated notes/AT1, in the total amount of R$ 4,135,000. The Notes were issued at the fixed rate of 6.125% to be validated until the 5th anniversary of the issue date. As from this date, inclusive, the interest rate will be recalculated every 5 years based on the interest rate of securities issued by the Treasury of the United States of America for the same period. The offer price of the Notes was 100%, which will result to investors in a return of 6.125% until the 5th anniversary of the Issue date. The Issue is neither subject to registration rules with the Securities Exchange Commission - SEC, in compliance with the Federal North-American law “Securities Act of 1933”, as amended (Securities Act), nor to registration with CVM, in Brazil, in compliance with applicable law and regulations. Notes are subject to BACEN’s approval for composition of Supplementary Capital of its Referential Equity, thus increased by approximately 0.6 p.p. the Company’s Tier I capitalization ratio, in compliance with CMN Resolution 4,192/13.

Description

Name of security / currency	Principal amount (original currency)		Issue	Maturity	Return p.a.	Account balance
Subordinated financial bills - BRL
		42,000	2011	2018	IGPM + 7%		64,115
		30,000			IPCA + 7.53% to 7.7%		50,499
		6,373,127	2012	2018	108% to 113% of CDI		7,346,546
		460,645			IPCA + 4.4% to 6.58%		804,432
		3,782,100			100% of CDI + 1.01% to 1.32%		3,888,194
		112,000			9.95% to 11.95%		192,443
		2,000	2011	2019	109% to 109.7% of CDI		3,982
		1,000	2012	2019	110% of CDI		1,957
		12,000			11.96%		23,385
		100,500			IPCA + 4.7% to 6.3%		173,364
		1,000	2012	2020	111% of CDI		1,969
		20,000			IPCA + 6% to 6.17%		40,303
		6,000	2011	2021	109.25% to 110.5% of CDI		12,283
		2,306,500	2012	2022	IPCA + 5.15% to 5.83%		4,198,804
		20,000			IGPM + 4.63%		26,382
					Total		16,828,658
Subordinated euronotes - USD
		1,000,000	2010	2020	6.2%		3,343,100
		1,000,000		2021	5.75%		3,428,645
		750,000	2011	2021	5.75% to 6.2%		2,463,150
		550,000	2012	2021	6.2%		1,819,400
		2,625,000		2022	5.5% to 5.65%		8,836,595
		1,870,000		2023	5.13%		6,214,169
					Total		26,105,059
Subordinated bonds - CLP		13,739,331	2008	2022	7.4% to 7.99%		120,031
		41,528,200		2033	3.5% to 4.5%		220,122
		110,390,929		2033	4.8%		858,315
		98,151,772	2009	2035	4.8%		781,329
		2,000,000		2019	10.7%		2,604
		94,500,000		2019	IPC + 2%		119,957
		11,311,860	2010	2032	4.4%		75,419
		24,928,312		2035	3.9%		173,464
		125,191,110		2036	4.4%		825,241
		87,087,720		2038	3.9%		601,000
		68,060,124		2040	4.1%		462,679
		33,935,580		2042	4.4%		225,595
		104,000,000	2013	2023	IPC + 2%		118,265
		146,000,000		2028	IPC + 2%		166,082
		510,107,100	2014	2024	LIB + 4%		569,911
		47,831,440		2034	3.8%		293,777
					Total		5,613,791
Debt instruments eligible as capital - USD
		1,250,000	2017		6.12%		4,148,367
					Total		4,148,367
Total							52,695,875

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.43

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$ 3,256,436 (R$ 3,160,786 at 12/31/2016), in this amount there are no values resulting from interests in joint ventures.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.44

- 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$ 121,396 (R$ 77,419 at 12/31/2016).

- 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
	01/01 to 12/31/2017												12/31/2016
	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 acquisition of Citibank operations		38,702			283,525			-			322,227			-
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		4,882,202			6,195,647			258,375			11,336,224			9,866,264
Monetary restatement / charges		95,943			592,037			-			687,980			834,280
Changes in the period reflected in results (Notes 12f and 12i)		1,385,476			2,372,300			(108,512	)		3,649,264			4,104,802
Increase (*)		1,926,342			2,592,526			4,067			4,522,935			4,944,707
Reversal		(540,866	)		(220,226	)		(112,579	)		(873,671	)		(839,905	)
Payment		(1,398,857	)		(3,033,175	)		-			(4,432,032	)		(3,791,349	)
Subtotal		4,964,764			6,126,809			149,863			11,241,436			11,013,997
(+) Contingencies guaranteed by indemnity clauses (Note 4m I)		243,032			993,271			-			1,236,303			1,316,548
Closing balance		5,207,796			7,120,080			149,863			12,477,739			12,330,545
Closing balance at 12/31/2016		5,099,589			6,972,581			258,375			12,330,545
Escrow deposits at 12/31/2017		1,421,788			2,119,609			-			3,541,397
Escrow deposits at 12/31/2016		1,505,328			2,219,447			-			3,724,775

(*) Civil provisions include the provision for economic plans amounting to R$ 184,448 (R$ 408,129 from January 1 to December 31, 2016) (Note 21k).

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.45

- 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
	01/01 to 12/31/2017									12/31/2016
	Legal
Provisions	obligation			Contingencies			Total			Total
Opening balance		3,767,411			3,506,134			7,273,545			6,553,688
Effect of change in Consolidation Criteria (Note 2b)		-			-			-			500
(-) Contingencies guaranteed by indemnity clauses (Note 4m II)		-			(63,343	)		(63,343	)		(59,156	)
Subtotal		3,767,411			3,442,791			7,210,202			6,495,032
Monetary restatement/charges		208,527			359,272			567,799			684,097
Changes in the period reflected in results		45,047			97,335			142,382			117,161
Increase		123,099			309,942			433,041			326,401
Reversal		(78,052	)		(212,607	)		(290,659	)		(209,240	)
Payment (*)		(1,000	)		(1,803,349	)		(1,804,349	)		(86,088	)
Subtotal		4,019,985			2,096,049			6,116,034			7,210,202
(+) Contingencies guaranteed by indemnity clauses (Note 4m II)		-			66,189			66,189			63,343
Closing balance (Note 13c)		4,019,985			2,162,238			6,182,223			7,273,545
Closing balance at 12/31/2016 (Note 13c)		3,767,411			3,506,134			7,273,545

(*) Includes the adhesion to PERT (Special Tax Regularization Program) which allowed the use of deferred tax assets.

										01/01 to
	01/01 to 12/31/2017									12/31/2016
	Legal
Escrow deposits	obligation			Contingencies			Total			Total
Opening balance		3,872,128			528,561			4,400,689			3,884,176
Effect of change in Consolidation Criteria (Note 2b)		-			-			-			600
Appropriation of income		238,252			89,187			327,439			380,426
Changes in the period		(15,503	)		(1,594	)		(17,097	)		135,487
Deposited		80,314			34,505			114,819			214,222
Withdrawals		(93,090	)		(2,936	)		(96,026	)		(52,623	)
Reversals to income		(2,727	)		(33,163	)		(35,890	)		(26,112	)
Closing balance		4,094,877			616,154			4,711,031			4,400,689
Closing balance at 12/31/2016		3,872,128			528,561			4,400,689

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

· CSLL – Isonomy – R$ 1,282,132: 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$ 1,266,195;

· ISS – Banking Activities – R$ 512,383: 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$ 427,986;

· PIS and COFINS – Calculation basis – R$ 623,582: 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$ 598,516;

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.46

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$ 17,570,099, are described below:

· INSS – Non-compensatory amounts – R$ 5,099,781: 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$ 2,579,958: the deductibility of goodwill with future expected profitability on the acquisition of investments;

· PIS and COFINS - Reversal of Revenues from Depreciation in Excess – R$ 1,657,882: 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$ 1,455,928: 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$ 1,272,897: cases in which the liquidity and the ability of offset credits are discussed;

· ISS – Banking Institutions – R$ 1,086,729: 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 / CSLL – Deductibility of Losses in Credit Operations – R$ 704,589 – 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$ 1,059,235 (R$ 1,120,742 at 12/31/2016) (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:

	12/31/2017		12/31/2016
Securities (basically financial treasury bills – Note 7b)		942,186		931,525
Deposits in guarantee		4,230,937		4,148,602

ITAÚ UNIBANCO PRUDENTIAL’s litigation provisions are long-term, considering the time required to conclude legal cases through the court system in Brazil, which prevents the disclosure of a deadline for their conclusion.

The legal advisors believe that ITAÚ UNIBANCO PRUDENTIAL is not a party to this or any other administrative proceedings or lawsuits that could significantly affect the results of its operations.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.47

e) Programs for Settlement or Installment Payment of Municipal Taxes

ITAÚ UNIBANCO PRUDENTIAL conglomerate companies adhered to the Installment Payment Incentive Program – PPI, established by a number of Municipality Authorities, among which are São Paulo and Rio de Janeiro (Laws No. 16,680/17 and No. 6,156/17, respectively).

The programs permitted to regularize tax or other debts, with discounts on interest and fine amounts.

f) Special Tax Regularization Program - PERT

In the federal levels, ITAÚ UNIBANCO PRUDENTIAL conglomerate companies adhered to the Special Tax Regularization Program - PERT, established by Law No. 13,496, of October 24, 2017, related to tax and social security debts management by the Federal Revenue Service and by the General Attorney’s Office of the National Treasury.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.48

Note 12 - Breakdown of accounts

a) Other sundry receivables

	12/31/2017			12/31/2016
Social contribution for offset (Note 13b I)		611,140			637,311
Taxes and contributions for offsetting		7,669,081			6,229,337
Escrow deposits for foreign fund raising program		604,311			852,740
Receivables from reimbursement of contingent liabilities (Note 11c)		1,059,235			1,120,742
Receivables from reimbursement of contingent liabilities		2,230,122			2,232,407
(Allowance for loan losses)		(1,170,887	)		(1,111,665	)
Sundry domestic debtors		2,485,638			1,606,603
Premiums from loan operations		316,097			849,655
Sundry foreign debtors		1,864,038			1,826,625
Retirement plan assets (Note 18)		1,064,494			1,111,594
Recoverable payments		46,098			31,566
Salary advances		116,213			54,904
Amounts receivable from related companies		108,202			110,357
Operations without credit granting characteristics		1,962,243			1,654,098
Securities and credits receivable		2,860,437			2,054,451
(Allowance for loan losses)		(898,194	)		(400,353	)
Other		860,020			537,027
Total		18,766,810			16,622,559

b) Prepaid expenses

	12/31/2017		12/31/2016
Commissions (*)		484,058		909,104
Related to vehicle financing		44,835		92,627
Linked to Payroll Advance Loans		268,833		641,102
Other		170,390		175,375
Advertising		678,586		456,838
Other		1,109,358		838,799
Total		2,272,002		2,204,741

(*) In the fourth quarter of 2017, the impact on income from commissions from local correspondents, as described in Note 4g, was R$ 139,408 (R$ 68,487 at 12/31/2016).

c) Other sundry liabilities

	12/31/2017		12/31/2016
Liabilities from Payment Transactions (Note 4e)		37,101,553		29,998,035
Provisions for sundry payments		3,699,533		2,186,434
Personnel provision		1,522,461		1,377,133
Sundry creditors - local		1,909,058		2,442,541
Sundry creditors - foreign		3,365,977		2,772,168
Liabilities for official agreements and rendering of payment services		984,626		864,238
Provision for Citibank integration expenditures		504,300		-
Creditors of funds to be released		1,134,248		935,865
Funds from consortia participants		156,818		129,134
Provision for Retirement Plan Benefits (Note 18)		721,159		749,366
Provision financial guarantees provided (Note 8c)		1,949,644		1,445,445
Liabilities from transactions related to credit assignments (Note 8f)		4,930,715		5,710,579
Liabilities from sales operations or transfer of financial assets		36,463		38,162
Other		5,140,087		5,480,069
Total		63,156,642		54,129,169

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.49

d) Banking service fees

	01/01 to		01/01 to
	12/31/2017		12/31/2016
Asset management		5,088,138		4,437,312
Funds management fees		4,459,904		3,762,266
Consortia management fees		628,234		675,046
Current account services		748,894		818,147
Credit cards -  Relationship with stores		10,561,019		10,177,345
Relationship with stores		10,560,963		10,177,256
Credit card processing		56		89
Sureties and credits granted		2,608,769		2,508,386
Loan operations		1,091,231		1,046,548
Guarantees provided		1,517,538		1,461,838
Receipt services		1,659,790		1,578,657
Collection fees		1,407,973		1,335,071
Collection services		251,817		243,586
Other		2,834,063		3,020,508
Custody services and management of portfolio		407,802		365,345
Economic and financial advisory		670,994		602,930
Foreign exchange services		118,875		93,429
Other services		1,636,392		1,958,804
Total		23,500,673		22,540,355

e) Income from bank charges

	01/01 to		01/01 to
	12/31/2017		12/31/2016
Loan operations/registration		875,827		830,778
Credit cards – annual fees and other services		3,566,610		3,203,539
Deposit account		196,094		176,539
Transfer of funds		302,363		249,142
Income from securities brokerage		770,648		454,641
Service package fees		6,201,537		5,706,605
Total		11,913,079		10,621,244

f) Personnel expenses

	01/01 to			01/01 to
	12/31/2017			12/31/2016
Compensation		(8,257,826	)		(7,816,026	)
Charges		(2,793,593	)		(2,529,500	)
Welfare benefits (Note 18)		(3,362,955	)		(2,595,997	)
Training		(229,952	)		(191,595	)
Labor claims and termination of employees (Note 11b)		(2,815,270	)		(3,421,657	)
Stock Option Plan		(233,632	)		(303,131	)
Total		(17,693,228	)		(16,857,906	)
Employees’ profit sharing		(3,425,480	)		(3,239,702	)
Total including employees’ profit sharing		(21,118,708	)		(20,097,608	)

g) Other administrative expenses

	01/01 to			01/01 to
	12/31/2017			12/31/2016
Data processing and telecommunications		(4,073,648	)		(3,906,275	)
Depreciation and amortization		(2,241,522	)		(2,160,734	)
Installations		(3,376,397	)		(3,299,221	)
Third-party services		(4,135,070	)		(4,365,548	)
Financial system services		(806,563	)		(701,613	)
Advertising, promotions and publication		(1,075,617	)		(960,228	)
Transportation		(336,757	)		(390,390	)
Materials		(347,496	)		(310,844	)
Security		(722,112	)		(714,845	)
Travel expenses		(210,053	)		(193,379	)
Other		(1,210,726	)		(1,151,808	)
Total		(18,535,961	)		(18,154,885	)

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.50

h) Other operating revenue

	01/01 to		01/01 to
	12/31/2017		12/31/2016
Reversal of operating provisions		56,532		43,601
Recovery of charges and expenses		117,316		164,632
Program for Settlement or Installment Payment of Federal (Note 11e)		-		13,344
Other		837,141		549,061
Total		1,010,989		770,638

i) Other operating expenses

	01/01 to			01/01 to
	12/31/2017			12/31/2016
Provision for contingencies (Note 11b)		(1,303,655	)		(1,530,891	)
Civil lawsuits		(1,385,476	)		(1,236,445	)
Tax and social security contributions		(26,691	)		(301,685	)
Other		108,512			7,239
Selling - credit cards		(3,348,118	)		(2,797,334	)
Claims		(310,401	)		(295,590	)
Refund of interbank costs		(305,909	)		(307,931	)
Amortization of goodwill on investments and acquisition		(3,115,564	)		(2,731,515	)
Provision for Citibank integration expenditures		(504,300	)		-
Impairment – Operations with no Credit Granting Characteristics		(551,711	)		-
Impairment – Other receivables Sundry		(249,284	)		-
Other		(2,741,469	)		(2,163,809	)
Total		(12,430,411	)		(9,827,070	)

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.51

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 12/31/2017			01/01 to 12/31/2016
Income before income tax and social contribution		28,777,345			32,911,025
Charges (income tax and social contribution) at the rates in effect (Note 4n)		(12,949,805	)		(14,809,961	)
Increase/decrease to income tax and social contribution charges arising from:
Investments in affiliates		1,521,770			(299,727	)
Foreign exchange variation on investments abroad		279,271			(3,676,946	)
Interest on capital		3,838,979			3,588,532
Dividends and interest on external debt bonds		420,223			361,947
Other nondeductible expenses net of non taxable income (*)		3,871,959			11,269,281
Income tax and social contribution expenses		(3,017,603	)		(3,566,874	)
Related to temporary differences
Increase (reversal) for the period		(3,826,801	)		(10,095,697	)
Increase (reversal) of prior periods		89,688			66,995
(Expenses)/Income from deferred taxes		(3,737,113	)		(10,028,702	)
Total income tax and social contribution expenses		(6,754,716	)		(13,595,576	)

(*) Includes temporary (additions) and exclusions.

II - Composition of tax expenses:

	01/01 a			01/01 a
	31/12/2017			31/12/2016
PIS and COFINS		(4,914,377	)		(6,043,683	)
ISS		(1,090,208	)		(1,020,551	)
Other		(589,311	)		(648,538	)
Total (Note 4n)		(6,593,896	)		(7,712,772	)

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. – Prudencial Financial Statements – December 31, 2017 4.52

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
							Realization /
	12/31/2016		12/31/2017		12/31/2016		Reversal			Increase (3)			12/31/2017
Reflected in income and expense accounts						49,832,699		(10,747,623	)		8,721,309			47,806,385
Related to income tax and social contribution loss carryforwards						5,479,894		(444,763	)		872,277			5,907,408
Related to disbursed provisions						29,342,552		(7,040,229	)		5,004,460			27,306,783
Allowance for loan losses						26,689,256		(6,737,671	)		3,966,137			23,917,722
Adjustment to market value of securities and derivative financial instruments (assets/liabilities)						95,347		(95,347	)		207,430			207,430
Allowance for real estate						181,931		(112,232	)		102,239			171,938
Goodwill on purchase of investments						316,026		(73,072	)		270,237			513,191
Other						2,059,992		(21,907	)		458,417			2,496,502
Related to non-disbursed provisions (1)		38,078,281		35,445,263		15,010,253		(3,262,631	)		2,844,572			14,592,194
Related to the operation		27,638,632		25,335,107		10,834,393		(3,262,631	)		2,502,908			10,074,670
Provision for contingent liabilities		13,431,798		12,345,228		5,410,156		1,105,262			(1,431,326	)		5,084,092
Civil lawsuits		4,745,114		4,750,385		1,929,649		(20,561	)		40,210			1,949,298
Labor claims		5,233,739		5,523,811		2,099,859		1,223,786			(1,164,602	)		2,159,043
Tax and social security contributions		3,442,791		2,062,181		1,377,116		(97,175	)		(306,934	)		973,007
Other		10,154		8,851		3,532		(788	)		-			2,744
Adjustments of operations carried out on the futures settlement market		1,289,343		599,933		537,938		(269,729	)		31,545			299,754
Legal obligation - tax and social security contributions		2,221,670		2,235,853		396,170		(553,902	)		489,320			331,588
Other non-deductible provisions		10,695,821		10,154,093		4,490,129		(3,544,262	)		3,413,369			4,359,236
Related to Additional Provisions in Relation to the Minimum Required Not Disbursed – Loan Losses, including		10,439,649		10,110,156		4,175,860		-			341,664			4,517,524
Financial Guarantees Provided.
Provision for Financial Guarantees Provided (Note 8c) (2)		1,445,445		1,949,644		650,450		-			226,890			877,340
Additional allowance		8,994,204		8,160,512		3,525,410		-			114,774			3,640,184
Reflected in stockholders’ equity accounts						1,568,476		(464,702	)		156,853			1,260,627
Adjustment to market value of available-for-sale securities		1,447,956		354,888		625,293		(464,702	)		-			160,591
Provision for retirement plan benefits		-		1,625		-		-			731			731
Cash flow hedge		2,095,963		2,748,262		943,183		-			156,122			1,099,305
Total (4)		41,622,200		38,550,038		51,401,175		(11,212,325	)		8,878,162			49,067,012
Social contribution for offset arising from Option established in article 8 of Provisional Measure No. 2,158-35 of August 24, 2001						637,311		(26,171	)		-			611,140

(1) From a financial point of view, rather than recording the provision of R$ 35,445,263 (R$ 38,078,281 at 12/31/2016) and deferred tax assets of R$ 14,592,194 (R$ 15,010,253 at 12/31/2016), only the net provisions of the corresponding tax effects should be considered, which would reduce the total deferred tax assets from R$ 49,067,012 (R$ 51,401,175 at 12/31/2016) to R$ 34,474,818 (R$ 36,390,922 at 12/31/2016).

(2) Refers to the recognition of tax credits in the amount of R$ 180,738 resulting from the initial application of CMN Resolution No. 4,512/16, recorded in retained earnings (accumulated losses), in equity.

(3) Includes balances arising from the acquisition of Citibank operations R$ 726,694.

(4) 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. – Prudencial Financial Statements – December 31, 2017 4.53

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

	12/31/2016		Realization / Reversal			Increase			12/31/2017
Reflected in income and expense accounts		12,446,087		(8,555,234	)		9,445,467			13,336,320
Depreciation in excess – leasing		935,600		(207,409	)		(114,843	)		613,348
Restatement of escrow deposits and contingent liabilities		1,103,511		(161,220	)		204,164			1,146,455
Provision for pension plan benefits		126,312		-			36,853			163,165
Adjustment to market value of securities and derivative financial instruments		8,178,341		(8,178,342	)		8,498,726			8,498,725
Adjustments of operations carried out on the futures settlement market		1,210,342		-			365,374			1,575,716
Taxation of results abroad – capital gains		-		-			7			7
Other		891,981		(8,263	)		455,186			1,338,904
Reflected in stockholders’ equity accounts		332,515		(316,162	)		13,136			29,489
Adjustment to market value of available-for-sale securities		298,043		(290,667	)		13,136			20,512
Provision for pension plan benefits (*)		34,472		(25,495	)		-			8,977
Total		12,778,602		(8,871,396	)		9,458,603			13,365,809

(*) Reflected in stockholders' equity, pursuant to CVM Resolution n° 4,424/15 (Note 18).

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.54

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 December 31, 2017, are:

	Deferred tax assets																				Provision for deferred
	Temporary differences		%			Tax loss/social contribution loss carryforwards		%			Total		%			Social contribution for offset		%			income tax and social contribution			%			Net deferred taxes		%
2018		24,166,032		56	%		2,585,126		44	%		26,751,158		54	%		7,053		1	%		(1,467,378	)		11	%		25,290,833		70	%
2019		11,170,598		26	%		125,850		2	%		11,296,448		23	%		10,470		2	%		(5,176,207	)		39	%		6,130,711		17	%
2020		1,822,520		4	%		594,277		10	%		2,416,797		5	%		422,334		69	%		(2,230,267	)		17	%		608,864		2	%
2021		1,339,024		3	%		554,715		9	%		1,893,739		4	%		171,283		28	%		(1,907,471	)		14	%		157,551		0	%
2022		726,890		2	%		708,141		12	%		1,435,031		3	%		-		0	%		(736,407	)		5	%		698,624		2	%
after 2022		3,934,540		9	%		1,339,299		23	%		5,273,839		11	%		-		0	%		(1,848,079	)		14	%		3,425,760		9	%
Total		43,159,604		100	%		5,907,408		100	%		49,067,012		100	%		611,140		100	%		(13,365,809	)		100	%		36,312,343		100	%
Present value (*)		40,001,978					5,236,027					45,238,005					543,945					(11,936,708	)					33,845,242

(*) 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 12/31/2017 and 12/31/2016, there are no unrecognized tax credits.

c) Tax and social security contributions

	12/31/2017		12/31/2016
Taxes and contributions on income payable		2,314,270		1,495,771
Taxes and contributions payable		2,911,642		2,333,016
Provision for deferred income tax and social contribution (Note 13b II)		13,365,809		12,778,602
Legal liabilities – tax and social security (Note 11b)		4,019,985		3,767,411
Total		22,611,706		20,374,800

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.

	12/31/2017		12/31/2016
Taxes paid or provided for		14,273,190		15,036,763
Taxes withheld and collected from third parties		17,036,352		16,174,633
Total		31,309,542		31,211,396

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.55

Note 14 – Permanent Assets

a) Investments

I) Composition of investments

	Number of shares held									12/31/2017										12/31/2016
	Common		Preferred		Quotas		% Participation at 12/31/2017			Stockholders’ equity		Net income			Investment (1)		Equity in earnings (1)			Investment (1)		Equity in earnings (1)
Domestic																21,740,657		3,484,136			18,467,327		(493,347	)
BSF Holding S.A (2a)		616,973,700		-		-		49.00	%		2,096,749		232,649			1,167,892		109,475			1,324,624		194,209
Cia Itaú Capitalização		318,709		-		-		47.50	%		786,177		304,818			373,436		144,737			303,319		174,455
Conectcar Soluções De Mobilidade Eletrônica S.A. (2b) (3)		169,860,500		-		-		50.00	%		122,451		(41,979	)		170,950		(20,989	)		-		-
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	%		209,583		12,092			181,943		10,497			171,546		13,642
Itaú Administração Previdenciária Ltda		-		-		538,571,667		100.00	%		177,788		30,589			177,775		30,714			147,019		32,883
Itaú BBA Participações S.A.		548,954		1,097,907		-		100.00	%		2,069,784		274,007			1,719,084		246,831			1,579,341		244,000
Itaú Participação Ltda.		-		-		90,000,000		100.00	%		278,625		14,838			278,625		14,838			263,786		7,896
Itaú Vida e Previdência S.A.		304,663,062		-		-		34.33	%		3,975,668		602,635			1,364,975		206,904			1,405,921		232,247
Itauseg Participações S.A.		5,071,251,017		-		-		100.00	%		8,689,560		1,733,256			8,686,157		1,735,112			6,941,690		1,662,282
Itauseg Saúde S.A.		12,750,985,600		-		-		53.72	%		1,055,822		114,374			567,187		61,442			426,756		24,511
ITB Holding Brasil Participações Ltda.		-		-		3,976,472,348		100.00	%		25,094,202		915,112			1,078,806		355,328			1,052,128		(3,557,679	)
Marcep Corretagem de Seguros S.A.		151,575,196		11,397,744		-		48.13	%		949,705		348,290			457,061		167,620			329,559		139,408
Provar Negócios de Varejo Ltda		-		-		304,624,820		100.00	%		2,284,174		116,484			2,284,116		116,481			2,167,435		25,148
Recovery do Brasil Consultoria S.A.(2c)		23,394,027		-		-		96.00	%		99,325		25,882			676,776		24,846			738,266		5,203
Trishop Promoção e Serviços Ltda. (4)		-		-		-		-			-		-			-		-			-		12,415
Unibanco Negócios Imobiliários Ltda. (5)		-		-		-		-			-		-			-		-			-		31,474
Other (6)																2,555,874		280,300			1,615,937		157,152
Foreign																2,403,227		56,839			2,483,261		(292,189	)
BICSA Holdings Ltd. (7a)		-		-		330,860,746		100.00	%		1,775,555		(94,479	)		1,729,477		(103,091	)		1,666,366		(316,525	)
CorpBanca Corredora de Seguro S.A.		307,957,965		-		-		99.99	%		73,549		35,522			73,541		35,519			72,243		31,214
IPI - Itaúsa Portugal Investimentos, SGPS Lda. (7b) (8)		-		-		-		-			-		-			-		-			-		(1,060	)
Itaú Asesorías Financeiras S.A.		30,000		-		-		100.00	%		9,552		7,619			9,551		7,619			15,578		17,134
Itaú Asia Securities LTD  (7c) (9)		161,116,850		-		-		100.00	%		68,018		(2,276	)		68,018		(2,902	)		-		-
Itaú Chile Administradora General de Fondos S.A.		16,609		-		-		99.99	%		59,584		24,416			59,576		24,412			56,461		27,179
Itaú Chile Corredora de Seguros Ltda.		-		-		99		99.90	%		68,688		48,258			68,618		48,209			65,327		53,676
Itaú Chile Holding, INC.  (10)		-		-		-		-			-		-			-		-			-		3,471
Itaú Europa Luxembourg S.A.		9,767		-		-		100.00	%		840,713		51,677			152,588		(25,955	)		191,237		(4,244	)
Jasper International Investiment LLC		42,487,620		-		-		100.00	%		1,711		(203	)		1,711		(203	)		163,218		4,180
Unión Capital AFAP S.A.		148,966,409		-		-		100.00	%		68,535		46,552			68,535		46,552			60,084		41,483
Other																171,612		26,679			192,747		(148,697	)
Total																24,143,884		3,540,975			20,950,588		(785,536	)

(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 12/31/2017 includes goodwill in the amount of a) R$ 140,485 (R$ 219,756 at 12/31/2016); b) R$ 109,724 and c) R$ 574,343 (R$ 655,651 at 12/31/2016);

(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) Companies merged on November 30, 2016;

(6) Includes equity in earnings not arising from net income;

(7) Includes foreign exchange variation of a) R$ (R$ 339,080) at 12/31/2016 b) R$ (1,813) at 12/31/2016 c) (R$ 329) at 12/31/2017; 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;

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

(9) Companies was no longer consolidated as from that May 31, 2017;

(10) Company liquidated on February 29, 2016.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.56

II) Other investments

	12/31/2017			12/31/2016
Other investments		453,204			660,851
Shares and quotas		23,773			53,281
Investments through tax incentives		142,804			142,759
Equity securities		12,369			12,369
Other		274,258			452,442
(Allowance for loan losses)		(149,512	)		(149,521	)
Total		303,692			511,330
Equity - Other investments		62,278			22,613

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.57

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		274,571			475			882			144,694			7,163			110,451			292,195			81,299			911,730
Disposals		-			(30	)		(60,113	)		(43,186	)		(1,325	)		(14,026	)		(284,973	)		(20,266	)		(423,919	)
Exchange variation		39			3,005			3,357			35,767			13,795			(11,160	)		6,205			2,238			53,246
Transfers		(302,747	)		-			68,532			122,199			26,004			-			85,996			-			(16	)
Other		(43	)		(886	)		(3,405	)		86,329			6,924			(138,515	)		56,589			9,953			16,946
Balance at 12/31/2017		355,722			599,664			2,469,358			2,190,922			1,890,418			1,126,928			6,410,953			1,143,244			16,187,209
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		-			-			(62,948	)		(207,467	)		(150,167	)		(101,843	)		(645,273	)		(105,068	)		(1,272,766	)
Disposals		-			-			7,218			27,437			492			6,470			255,287			18,826			315,730
Exchange variation		-			-			253			(13,769	)		11,692			27,941			(18,084	)		(4,153	)		3,880
Other		-			-			1,397			(66,389	)		(21,098	)		29,320			38,575			(8,454	)		(26,649	)
Balance at 12/31/2017		-			-			(1,380,851	)		(1,368,252	)		(1,104,142	)		(694,125	)		(5,041,032	)		(749,327	)		(10,337,729	)
Impairment
Balance at 12/31/2016		-			-			-			-			-			-			-			-			-
Additions/ assumptions		-			-			-			-			-			-			-			-			-
Reversals		-			-			-			-			-			-			-			-			-
Balance at 12/31/2017		-			-			-			-			-			-			-			-			-
Book value
Balance at 12/31/2017		355,722			599,664			1,088,507			822,670			786,276			432,803			1,369,921			393,917			5,849,480
Balance at 12/31/2016		383,902			597,100			1,133,334			737,055			892,796			524,165			1,583,404			419,542			6,271,298

(1) The contractual commitments for the purchase of the fixed assets totaled R$ 180,935, achievable by 2019.

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

(3) Includes the amount of R$ 3,292 (R$ 3,808 at 12/31/2016) related to attached real estate.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.58

II) Goodwill

				Changes
	Amortization period	Balance at 12/31/2016		Amortization expenses			Disposals (*)			Exchange variation		Balance at 12/31/2017
Goodwill (Notes 2b and 4j)	10 years		1,042,185		(250,853	)		(121,916	)		105		669,521

(*) Goodwill related to Conectar has not been consolidated since January 2017, in compliance with Bacen Resolution N. 4,517, of August 24, 2016.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.59

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		345,296			18,000			1,201,416			350,170			387,983			-			2,302,865
Disposals		(328,582	)		(16,416	)		-			(760	)		-			-			(345,758	)
Exchange variation		-			26,297			(69,856	)		-			650,931			32,383			639,755
Other		(2,147	)		677,821			(423,807	)		477,783			163,519			1,432			894,601
Balance at 12/31/2017		1,059,890			2,452,107			4,484,702			4,342,732			20,015,147			1,037,901			33,392,479
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)		(214,778	)		(272,508	)		(493,095	)		(446,323	)		(2,695,558	)		(23,947	)		(4,146,209	)
Disposals		309,682			16,416			-			(1,375	)		-			-			324,723
Exchange variation		-			(18,070	)		72,479			-			(105,950	)		(25,865	)		(77,406	)
Other		(11,506	)		1,752			125,420			(281,771	)		(153,157	)		-			(319,262	)
Balance at 12/31/2017		(471,372	)		(646,902	)		(1,986,769	)		(1,256,833	)		(11,346,215	)		(494,354	)		(16,202,445	)
Impairment (4)
Balance at 12/31/2016		(18,528	)		-			(53,179	)		(329,595	)		-			-			(401,302	)
Additions/ assumptions		-			-			-			(14,266	)		-			-			(14,266	)
Disposals		18,528			-			(1,107	)		1,386			-			-			18,807
Balance at 12/31/2017		-			-			(54,286	)		(342,475	)		-			-			(396,761	)
Book value
Balance at 12/31/2017		588,518			1,805,205			2,443,647			2,743,424			8,668,932			543,547			16,793,273
Balance at 12/31/2016		472,025			1,371,913			2,032,197			2,658,580			10,421,164			559,544			17,515,423

(1) The contractual commitments for the purchase of the new intangible assets totaled R$ 984,169, achievable by 2020.

(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. – Prudencial Financial Statements – December 31, 2017 4.60

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.

At the Meeting of the Board of Directors held on December 15, 2017, the cancellation of 31,793,105 common shares of own issue and held in treasury was approved, with no change in capital, upon capitation of the amounts recorded in Revenue Reserves – Statutory Reserve.

As a result of this last cancellation, capital is represented by 6,550,514,438 book-entry shares with no par value, of which 3,319,951,112 are common and 3,230,563,326 are preferred shares with no voting rights, but with tag-along rights, in the event of disposal of control, to be included in a public offering of shares, so as to ensure the price equal to eight per cent (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 amounts to R$ 97,148,000 (R$ 97,148,000 at December 31, 2016), of which R$ 65,482,470 (R$ 65,534,408 at December 31, 2016) refers to stockholders domiciled in the country and R$ 31,665,530 (R$ 31,613,592 at December 31, 2016) refers to stockholders domiciled abroad. The consequent statutory change in the number of shares will be resolved in the next Annual Stockholders’ Meeting.

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
(-) Cancellation of Shares – Meeting of the Board of Directors at December 15, 2017		(31,793,105	)		-			(31,793,105	)
Shares of capital stock at 12/31/2017		3,319,951,112			3,230,563,326			6,550,514,438
Residents in Brazil at 12/31/2017		3,299,073,506			1,116,291,341			4,415,364,847
Residents abroad at 12/31/2017		20,877,606			2,114,271,985			2,135,149,591
Treasury shares at 12/31/2016 (1)		3,074			69,604,462			69,607,536			(1,882,353	)
Purchase of treasury shares		46,214,237			37,982,900			84,197,137			(3,089,464	)
Exercised – granting of stock options		-			(28,008,923	)		(28,008,923	)		728,873
Disposals – stock option plan		-			(8,118,725	)		(8,118,725	)		321,925
(-) Cancellation of Shares – Meeting of the Board of Directors at December 15, 2017		(31,793,105	)		-			(31,793,105	)		1,178,252
Treasury shares at 12/31/2017 (1)		14,424,206			71,459,714			85,883,920			(2,742,767	)
Outstanding shares at 12/31/2017		3,305,526,906			3,159,103,612			6,464,630,518
Outstanding shares at 12/31/2016		3,351,741,143			3,160,958,864			6,512,700,007

(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.

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 12/31/2017:

Cost / Market value	Common		Preferred
Minimum		37.06		33.48
Weighted average		37.06		36.25
Maximum		37.06		38.56
Treasury shares
Average cost		37.05		30.90
Market value		37.69		42.58

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. – Prudencial Financial Statements – December 31, 2017 4.61

I - Calculation

Net income - ITAÚ UNIBANCO HOLDING	21,108,466
Adjustments:
(-) Legal reserve	(1,055,423	)
Dividend calculation basis	20,053,043
Mandatory dividend	5,013,262
Dividend – paid/provided for	17,557,262

II – Stockholders' compensation

	Gross		WTS			Net
Paid / Prepaid		3,665,940		(388,823	)		3,277,117
Dividends - 11 monthly installments of R$ 0.015 per share paid in February to December 2017		1,073,786		-			1,073,786
Interest on capital - R$ 0.3990 per share, paid on 08/25/2017		2,592,154		(388,823	)		2,203,331
Provided for (recorded in Other liabilities – Social and statutory)		1,876,548		(140,403	)		1,736,145
Dividends - 1 monthly installment of R$ 0.015 per share paid on 01/02/2018		97,637		-			97,637
Dividends declared - R$ 0.1304 per share		842,907		-			842,907
Interest on capital - R$ 0.1445 per share, credited on December 28, 2017 to be paid until April 30, 2018.		936,004		(140,403	)		795,601
Identified in Revenue Reserve In Stockholders’ Equity - R$ 2.1126 per share		13,657,985		(1,113,985	)		12,544,000
Total from 01/01 to 12/31/2017		19,200,473		(1,643,211	)		17,557,262
Total from 01/01 to 12/31/2016		11,573,623		(1,573,260	)		10,000,363

c) Capital and revenue reserves

	12/31/2017		12/31/2016
Capital reserves		1,733,611		1,589,343
Premium on subscription of shares		283,512		283,512
Granted options recognized – Law No. 11,638, Share-based instruments and Share-based payment		1,448,994		1,304,726
Reserves from tax incentives and restatement of equity securities and other		1,105		1,105
Revenue reserves		34,494,495		24,487,354
Legal		8,927,234		7,827,410
Statutory:		11,909,276		11,609,997
Dividends equalization (1)		6,600,802		5,123,271
Working capital increase (2)		2,625,005		3,096,248
Increase in capital of investees (3)		2,683,469		3,390,478
Unrealized profits (4)		13,657,985		5,049,947

(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 and dividends provided for up to December 31 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 12/31/2017		01/01 to 12/31/2016		12/31/2017			12/31/2016
ITAÚ UNIBANCO HOLDING		21,108,466		18,853,195		128,507,940			118,566,485
Amortization of goodwill		97,485		333,628		(102,452	)		(199,938	)
Hedge of net investments in foreign operations		790,524		-		-			-
ITAÚ UNIBANCO HOLDING PRUDENTIAL		21,996,475		19,186,823		128,405,488			118,366,547

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.62

e) Asset valuation adjustments

	12/31/2017			12/31/2016
Available-for-sale securities		(46,605	)		(897,888	)
Hedge cash flow		(1,407,664	)		(1,253,776	)
Remeasurements in liabilities of post-employment benefits		(835,364	)		(824,133	)
Foreign exchange variation on investments		61,782			-
Asset valuation adjustments		(2,227,851	)		(2,975,797	)

f) Non-controlling interests

	Stockholders’ equity				Net Income
	12/31/2017		12/31/2016		01/01 to 12/31/2017			01/01 to 12/31/2016
Itaú CorpBanca (Note 2c)		10,164,233		9,599,970		357,339			270,930
Itaú CorpBanca Colombia S.A. (Note 2c)		1,122,133		1,127,734		17,749			48,038
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento		333,328		524,235		(93,465	)		(119,128	)
Banco Itaú Consignado S.A. (Note 2c)		-		-		-			(47,296	)
Luizacred S.A. Soc. de Crédito, Financiamento e Investimento		302,079		283,711		(69,033	)		(48,327	)
Banco Investcred Unibanco S.A.		20,691		20,119		(858	)		(1,368	)
Other		38		12,621		(236	)		2,416
Total		11,942,502		11,568,390		211,496			105,265

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.63

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 12/31/2017, the accounting effect of the share-based payment in income was R$ (536,461) (R$ (590,925) from 01/01 to 12/31/2016).

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. – Prudencial Financial Statements – December 31, 2017 4.64

	Simple options
	Quantity			Weighted average exercise price		Weighted average 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 (*)		(1,204,728	)		41.11
Exercised		(20,485,872	)		35.58		42.06
Closing balance at 12/31/2017		16,342,906			37.81
Options exercisable at the end of the period		16,342,906			37.81
Options outstanding but not exercisable		-			-
Range of exercise prices
Granting 2010-2011					21.71 - 41.31
Granting 2012					30.45
Weighted average of the remaining contractual life (in years)		1.28

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

	Simple options
	Quantity			Weighted average exercise price		Weighted average 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 (*)		(127,798	)		35.91
Exercised		(12,381,844	)		26.92		35.15
Closing 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
Range of exercise prices
Granting 2009-2010					25.66 - 41.69
Granting 2011-2012					30.45 - 40.72
Weighted average of the remaining contractual life (in years)		2.63

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

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.65

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 12/31/2017 (R$ 19.45 per share at 12/31/2016).

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		(931,658	)
Exercised		(7,523,051	)
Balance at 12/31/2017		34,049,627
Weighted average of remaining contractual life (years)		2.46

	Quantity
Balance at 12/31/2015		33,666,355
New granted		12,392,845
Cancelled		(370,039	)
Exercised		(10,226,782	)
Balance at 12/31/2016		35,462,379
Weighted average of remaining contractual life (years)		2.73

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.66

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$ 38.23 per share at 12/31/2017 (R$ 21.96 per share at 12/31/2016).

Change in variable compensation in shares	2017
	Quantity
Balance at 12/31/2016		24,539,406
New		8,556,882
Delivered		(12,048,631	)
Cancelled		(227,675	)
Balance at 12/31/2017		20,819,982

Change in variable compensation in shares	2016
	Quantity
Balance at 12/31/2015		22,325,573
New		13,422,462
Delivered		(11,136,079	)
Cancelled		(72,550	)
Balance at 12/31/2016		24,539,406

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.67

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 Alpargatas 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. – Prudencial Financial Statements – December 31, 2017 4.68

The transactions with these related parties are basically characterized by:

	ITAÚ UNIBANCO HOLDING PRUDENTIAL
	Assets / (liabilities)						Revenue / (expense)
	12/31/2017			12/31/2016			01/01 to 12/31/2017			01/01 to 12/31/2016
Securities and derivative financial instruments - assets		-			-			7			49
Afinco Madeira		-			-			7			-
Banco Itaú Chile		-			-			-			49
Loan operations		98,643			-			5,937			201
Alpargatas S.A.		96,381			-			5,738			-
Itaú Chile Administradora General de Fondos		2,260			-			198			201
Others		2			-			1			-
Foreign exchange portfolio - assets		602,636			568,878			9,520			1,399
Itaú Europa Luxembourg S.A.		602,636			-			9,520			1,224
Itaú BBA International PLC		-			568,878			-			-
Banco Itaú Chile		-			-			-			175
Deposits received under securities repurchase agreements		(1,935,434	)		(2,608,335	)		(208,831	)		(200,760	)
Itauseg Participações S.A.		(1,032,087	)		(210,486	)		(79,619	)		(15,813	)
ITB Holding Brasil Participações Ltda.		(138	)		(21,794	)		(632	)		(27,593	)
Duratex S.A.		(21,881	)		(17,576	)		(2,067	)		(3,653	)
Itaú Chile Corredora de Seguros Limitada		(32,230	)		-			(962	)		(8,905	)
Itaú Rent Administração e Participações Ltda.		(260,109	)		(213,591	)		(19,518	)		(15,493	)
Marcep Corretagem de Seguros S.A.		(4,681	)		(219,228	)		(21,476	)		(16,205	)
Itaú-BBA Participações S.A.		(8,354	)		(420,543	)		(5,845	)		(17,907	)
Provar Negócios de Varejo Ltda.		(204,989	)		(1,014,525	)		(42,060	)		(32,975	)
IGA Participações		(173,579	)		(160,061	)		(15,801	)		(20,944	)
Others  (*)		(197,386	)		(330,531	)		(20,851	)		(41,272	)
Time deposits		(2,528,240	)		(540,818	)		(40,641	)		(23,686	)
BICSA Holdings Ltd		(1,167,062	)		-			(14,175	)		-
Itaúsa Europa - Investimentos, SGPS, Unipessoal, Lda.		(292,085	)		-			(100	)		-
Itaú Europa Luxembourg S.A.		(177,036	)		(179,894	)		(4,162	)		(2,235	)
Itauseg Participações S.A.		(174,479	)		-			(483	)		-
Provar Negócios de Varejo Ltda.		(141,451	)		-			(3,927	)		-
Kinea Investimentos Ltda.		(97,022	)		-			(2,540	)		-
Itaú Chile Compañia de Seguros de Vida S.A.		(76,822	)		(70,492	)		(2,976	)		(4,339	)
Itaú Asia Securities Ltd		(60,118	)		-			(754	)		-
Itaú Rent Administração e Participações Ltda.		(52,890	)		-			(2,857	)		-
IPI - Itaúsa Portugal Investimentos, SGPS Lda.		-			-			-			(1,639	)
Afinco Americas Madeira, SGPS, Soc. Unipessoal Ltda.		-			(220,181	)		(1	)		(1,349	)
Others		(289,275	)		(70,251	)		(8,666	)		(14,124	)
Derivative financial instruments - liabilities		-			-			-			(134	)
Banco Itaú Chile		-			-			-			(134	)
Foreign exchange portfolio - liabilities		(593,080	)		(570,466	)		(268	)		(2,655	)
Itaú Europa Luxembourg S.A.		(593,080	)		(570,466	)		(268	)		(2,630	)
Others		-			-			-			(25	)
Amounts receivable from (payable to) related companies / Banking service fees (expenses)		(130,538	)		(144,481	)		568,967			671,067
Itaú Seguros S.A.		(10,343	)		(8,307	)		459,980			567,304
Fundação Itaú Unibanco - Previdência Complementar		(106,134	)		(127,301	)		47,265			44,315
Itaú Vida e Previdência S.A.		12,767			12,003			47,870			51,316
Others		(26,828	)		(20,876	)		13,852			8,132
Negotiation and intermediation of securities - liabilities		(251	)		(251	)		-			-
Jasper International Investment LLC		(251	)		(251	)		-			-
Rent revenues (expenses)		-			-			(333,226	)		(289,985	)
Itaú Rent Administração e Participações Ltda.		-			-			(164,578	)		(159,744	)
Fundação Itaú Unibanco - Previdência Complementar		-			-			(48,601	)		(44,078	)
Itaú Seguros S.A.		-			-			(39,821	)		(33,841	)
Others		-			-			(80,226	)		(52,322	)
Donation expenses		-			-			(66,577	)		(36,570	)
Instituto Itaú Cultural		-			-			(56,157	)		(29,650	)
Associação Itaú Viver Mais		-			-			(920	)		(920	)
Associação Cubo Coworking Itaú		-			-			(9,500	)		(6,000	)

(*) Corresponds to related parties with 19 directly-controlled subsidiaries, not included in Prudential Consolidated.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.69

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
	12/31/2017		12/31/2016
Compensation		420,556		356,964
Board of Directors		59,438		31,565
Management members		361,118		325,399
Profit sharing		237,650		233,892
Board of Directors		3,107		1,904
Management members		234,543		231,988
Contributions to pension plans		9,079		12,030
Board of Directors		219		235
Management members		8,860		11,795
Stock option plan – Management members		219,568		259,486
Total		886,853		862,372

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. – Prudencial Financial Statements – December 31, 2017 4.70

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)
	Book value				Market				Results						Stockholders’ equity
	12/31/2017		12/31/2016		12/31/2017		12/31/2016		12/31/2017			12/31/2016			12/31/2017			12/31/2016
Interbank deposits		29,048,473		22,690,342		29,112,201		22,729,229		63,728			38,887			63,728			38,887
Securities and derivative financial instruments		259,495,553		219,773,560		260,091,596		219,592,300		393,252			(1,530,856	)		596,043			(181,260	)
Adjustment of available-for-sale securities										196,616			(849,990	)		-			-
Adjustment of held-to-maturity securities										196,636			(680,866	)		596,043			(181,260	)
Loan, lease and other credit operations		458,237,774		452,343,188		464,611,435		461,654,174		6,373,661			9,310,986			6,373,661			9,310,986
Investments - B3		14,610		14,610		249,707		180,868		235,097			166,258			235,097			166,258
Funding and borrowing (2)		363,326,451		300,074,251		363,901,926		301,457,146		(575,475	)		(1,382,895	)		(575,475	)		(1,382,895	)
Subordinated debt (Note 10f)		52,695,875		57,420,075		53,855,629		58,061,440		(1,159,754	)		(641,365	)		(1,159,754	)		(641,365	)
Treasury shares		2,742,767		1,882,353		3,586,403		2,356,203		-			-			843,636			473,850

(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. – Prudencial Financial Statements – December 31, 2017 4.71

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. – Prudencial Financial Statements – December 31, 2017 4.72

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
	12/31/2017			12/31/2016			12/31/2017			12/31/2016		12/31/2017			12/31/2016			12/31/2017			12/31/2016
Cost of current service		(69,234	)		(61,601	)		-			-		-			-			(69,234	)		(61,601	)
Net interest		(15,266	)		(13,911	)		75,874			239,137		(21,953	)		(19,502	)		38,655			205,724
Effects on asset ceiling		-			-			(91,124	)		121,190		-			-			(91,124	)		121,190
Benefits paid		-			-			-			-		14,538			13,018			14,538			13,018
Total Amounts Recognized		(84,500	)		(75,512	)		(15,250	)		360,327		(7,415	)		(6,484	)		(107,165	)		278,331

(*) In the period, contributions to the defined contributions plan, including PGBL, totaled R$ 333,637 (R$ 338,291 from 01/01 to 12/31/2016), of which R$ 91,124 (R$ 115,076 from 01/01 to 12/31/2016) arising from social security funds.

Total amounts recognized in Stockholders’ Equity – Asset valuation adjustment

	Defined benefit						Defined contribution						Other benefits						Total
	12/31/2017			12/31/2016			12/31/2017			12/31/2016			12/31/2017			12/31/2016			12/31/2017			12/31/2016
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		97,703			(633,085	)		(385,859	)		(1,244,021	)		-			-			(288,156	)		(1,877,106	)
Remeasurements		11,310			608,572			339,120			235,907			(28,183	)		(35,830	)		322,247			808,649
Total Amounts Recognized		39,862			(69,151	)		(1,370,515	)		(1,323,776	)		(76,583	)		(48,400	)		(1,407,236	)		(1,441,327	)

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017 4.73

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 Itaú Unibanco - 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. – Prudencial Financial Statements – December 31, 2017  4.74

c) Defined benefit plan

I - Main assumptions used in actuarial valuation of Retirement Plans

	12/31/2017	12/31/2016
Discount rate (1)	9.98% p.a.	10.24% p.a.
Mortality table (2)	AT-2000	AT-2000
	Itaú Experience	Itaú Experience
Turnover (3)	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 12/31/2017 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. – Prudencial Financial Statements – December 31, 2017  4.75

- 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. – Prudencial Financial Statements – December 31, 2017  4.76

At December 31, 2017 and 2016, the allocation of plan assets and the allocation target for 2018, by type of asset, are as follows:

	Fair value				% Allocation
Types	12/31/2017		12/31/2016		12/31/2017			12/31/2016			2018 Target
Fixed income securities		16,851,376		15,134,389		95.81	%		91.61	%	53% to 100%
Variable income securities		18,986		684,786		0.11	%		4.15	%	0% to 20%
Structured investments		24,477		9,013		0.14	%		0.05	%	0% to 10%
Real estate		614,683		622,598		3.49	%		3.77	%	0% to 7%
Loans to participants		78,855		69,259		0.45	%		0.42	%	0% to 5%
Total		17,588,377		16,520,045		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$ 11,614 (R$ 575,255 at 12/31/2016) and real estate rented to Group companies, with a fair value of R$ 530,998 (R$ 596,781 at 12/31/2016).

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 2017, 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:

	12/31/2017			12/31/2016
1 - Net assets of the plans		17,588,377			16,520,045
2 - Actuarial liabilities		(14,490,545	)		(13,722,558	)
3- Surplus (1-2)		3,097,832			2,797,487
4- Asset restriction (*)		(3,217,361	)		(3,008,536	)
5 - Net amount recognized in the balance sheet (3-4)		(119,529	)		(211,049	)
Amount recognized in Assets (Note 12a)		344,907			317,192
Amount recognized in Liabilities (Note 12c)		(464,436	)		(528,241	)

(*) 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. – Prudencial Financial Statements – December 31, 2017  4.77

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

	12/31/2017
				Actuarial									Recognized
	Plan net assets			liabilities			Surplus			Asset Ceiling			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		-			(69,234	)		(69,234	)		-			(69,234	)
Net interest (1)		1,638,738			(1,346,572	)		292,166			(307,432	)		(15,266	)
Benefits paid		(1,141,459	)		1,141,459			-			-			-
Contributions of sponsor		71,453			-			71,453			-			71,453
Contributions of participants		12,294			-			12,294			-			12,294
Effects on asset ceiling		-			-			-			97,703			97,703
Exchange variation		1,838			(6,284	)		(4,446	)		-			(4,446	)
Remeasurements (2) (3)		485,468			(487,356	)		(1,888	)		904			(984	)
Value at end of the period		17,588,377			(14,490,545	)		3,097,832			(3,217,361	)		(119,529	)

	12/31/2016
				Actuarial									Recognized
	Plan net assets			liabilities			Surplus			Asset Ceiling			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		-			(61,601	)		(61,601	)		-			(61,601	)
Net interest (1)		1,483,119			(1,255,435	)		227,684			(241,595	)		(13,911	)
Benefits paid		(1,060,058	)		1,060,058			-			-			-
Contributions of sponsor		148,771			-			148,771			-			148,771
Contributions of participants		14,598			-			14,598			-			14,598
Effects on asset ceiling		-			-			-			(633,085	)		(633,085	)
Balance  arising  from  the  merger  with CorpBanca (note 2c)		-			(206,561	)		(206,561	)		-			(206,561	)
Exchange variation		(8,540	)		42,940			34,400			-			34,400
Remeasurements (2) (3)		2,308,754			(1,714,779	)		593,975			-			593,975
Value at end of the period		16,520,045			(13,722,558	)		2,797,487			(3,008,536	)		(211,049	)

(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$ 2,124,206 (R$ 3,791,873 at 12/31/2016).

During the period, contributions made totaled R$ 71,453 (R$ 148,771 from 01/01 to December 31, 2016). The contribution rate increases based on the beneficiary’s salary.

In 2018, the expected contribution to retirement plans sponsored by ITAÚ UNIBANCO HOLDING PRUDENTIAL is R$ 55,682.

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

	Estimated payment
2018		1,103,020
2019		1,125,737
2020		1,156,848
2021		1,189,665
2022		1,220,291
2023 to 2027		6,562,643

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%		740,200			5.11	%		268,981
- Increase by 0.5%		(677,029	)		(4.67	%)		153,064

(*) Net of effects of asset ceiling

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  4.78

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:

	12/31/2017									12/31/2016
	Pension Plan						Recognized			Pension Plan						Recognized
	Fund			Asset Ceiling			Amount			Fund			Asset Ceiling			Amount
Amount - beginning of the period		1,285,334			(490,932	)		794,402			2,226,880			(269,828	)		1,957,052
Net interest		125,992			(50,118	)		75,874			269,574			(30,437	)		239,137
Contribution		(91,124	)		-			(91,124	)		121,190			-			121,190
Receivables allocation of funds (*)		(12,826	)		-			(12,826	)		(514,863	)		-			(514,863	)
Effects on asset ceiling		(14,980	)		(370,879	)		(385,859	)		(1,053,354	)		(190,667	)		(1,244,021	)
Remeasurements		339,120			-			339,120			235,907			-			235,907
Amount - end of the period (Note 12a)		1,631,516			(911,929	)		719,587			1,285,334			(490,932	)		794,402

(*) 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:

	12/31/2017			12/31/2016
At the beginning of the period		(221,125	)		(178,811	)
Cost of interest		(21,953	)		(19,502	)
Benefits paid		14,538			13,018
Remeasurements		(28,183	)		(35,830	)
At the end of the period (Note 12c)		(256,723	)		(221,125	)

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

	Estimated
Period	payment
2018		14,986
2019		16,029
2020		17,060
2021		18,154
2022		19,271
2023 to 2027		114,593

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		3,162		(3,000	)
Present value of obligation	Asset valuation adjustment		31,686		(26,453	)

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  4.79

Note 19 – Information on foreign subsidiaries

	Foreign consolidated (*)
	12/31/2017			12/31/2016
Assets
Current assets and long-term receivables
Cash and cash equivalents		10,415,591			11,346,771
Interbank investments		23,470,475			17,617,666
Securities		120,545,883			109,675,385
Loan, lease and other credit operations		207,525,134			210,931,365
Foreign exchange portfolio		55,574,883			56,976,874
Other assets		12,369,340			16,631,764
Permanent assets		9,485,187			8,939,718
Total		439,386,493			432,119,543
Liabilities
Current and long-term liabilities
Deposits		144,753,433			138,692,565
Deposits received under securities repurchase agreements		17,054,462			20,990,401
Funds from acceptance and issuance of securities		38,738,083			33,709,786
Borrowing		36,588,359			43,024,774
Derivative financial instruments		11,245,313			9,204,594
Foreign exchange portfolio		55,605,469			57,000,970
Other liabilities		47,818,168			48,126,719
Deferred income		431,632			362,377
Non-controlling interests		11,286,403			1,140,357
Stockholders’ equity		75,865,171			79,867,000
Total		439,386,493			432,119,543
Statement of Income
Income from financial operations		17,590,299			21,149,408
Expenses of financial operations		(8,285,048	)		(12,875,631	)
Result of loan losses		(2,045,316	)		(3,312,935	)
Gross income from financial operations		7,259,935			4,960,842
Other operating revenues (expenses)		(4,031,286	)		(4,059,083	)
Operating income		3,228,649			901,759
Non-operating income		28,398			27,272
Income before taxes on income and profit sharing		3,257,047			929,031
Income tax		86,342			(187,796	)
Statutory participation in income		(30,385	)		(46,435	)
Non-controlling interests		374,851			50,453
Net income (loss)		3,687,855			745,253

(*) Basically composed of subsidiaries Itaú Unibanco S.A. - Itaú Unibanco S.A. Cayman Branch, Itaú Unibanco S.A. New York Branch, Itaú Unibanco S.A. Nassau Branch, Itaú Unibanco Holding S.A - Itaú Unibanco Holding Cayman Branch, Itau Bank, Ltd., ITB Holding Ltd., Banco Itaú Argentina S.A., Banco Itaú Uruguay S.A., Banco CorpBanca Colômbia S.A., Itaú CorpBanca S.A. e Banco Itaú Paraguay S.A.; only at 12/31/2016, Itaú BBA International (Cayman) LTD; Itaú Asia Securities LTD; Itaú BBA UK Securities LTD.; Itaú BBA México Casa de Bolsa, S.A. de C.V.; Itaú BBA Corredores de Bolsa Limitada e Corpbanca Securities Inc.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  4.80

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, emphasizing the behavior that will help people in any level of the institution to assume and manage risk on a responsible way. With these principles disseminated by the institution, there is an incentive for the risk to be understood and discussed frankly, maintained within the limits established for risk appetite, and so that each employee, regardless of their position, area or function, also assumes responsibility for managing risks of their business.

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 Brazil 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. – Prudencial Financial Statements – December 31, 2017  4.81

· 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.

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 strategy towards control and management of market risk of all institution.

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 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 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.

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.

The structure of limits and warnings is in line with the Board of Directors’ guidelines, and it is reviewed and approved on an annual basis. This structure has specific limits aiming at improving the risk monitoring and understanding process, and at avoiding concentration. These limits are quantified by assessing the forecasted results of the balance sheet, size of stockholders’ equity, liquidity, market complexity and volatility, as well as the institution’s appetite for risk.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  4.82

In order to set up operations within the defined limits, ITAÚ UNIBANCO HOLDING CONSOLIDATED hedges transactions with clients and proprietary positions, including its foreign investments. Derivatives are commonly used for these hedging activities, and can be characterized as accounting or economic hedge, both 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.

Market risk management analyses is 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

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

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  4.83

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 December 31, 2017, ITAÚ UNIBANCO HOLDING CONSOLIDATED posted a Total VaR of R$ 372.3 million (R$ 329.8 million at December 31, 2016). The growth in Total VaR Total noted as compared to the prior year was mainly due to the increase of interest rate exposure.

The document “Public Access Report – Market Risk“, which includes the guidelines established by the institutional credit risk control policy, which is not an integral part of the financial statements, can be viewed at www.itau.com.br/investor-relations, under Corporate Governance, Regulations and Policies.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  4.84

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 provides for operational limits and risk mitigating mechanisms, in addition for establishing processes and tools to measure, monitor and control the credit risk inherent in all products, portfolio concentrations and the impacts from 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

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 managers of executive areas adopt corporate methodologies developed and made available by the internal controls, compliance and operational risk area.

As part of governance of risk management process, consolidated reports on risk monitoring, controls, action plans and operating losses are periodically presented to the business areas’ executives.

In line with the principles of CMN Resolution No. 4,557, the document “Public Access Report 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. – Prudencial Financial Statements – December 31, 2017  4.85

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.

The control over liquidity risk is carried out by an area independent from the business area and responsible for establishing the reserve composition, estimating the cash flow and exposure to liquidity risk in different horizons of time, and monitoring the minimum limits to absorb losses in stress scenarios for each country where ITAÚ UNIBANCO HOLDING CONSOLIDATED operates. All activities are subject to verification by the independent validation, internal control and audit areas.

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)	Forth quarter of 2017
	Total Adjusted Amount(1)
Total high-quality liquid assets (2)		187,090,072
Total potential cash outflows (3)		98,356,111
Liquidity Coverage Ratio (%)		190.2	%

(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 Insurance companies belonging to ITAÚ UNIBANCO HOLDING CONSOLIDATED are related to life and all risks insurances, private pension plans and capitalization. The main risks inherent in these products are described below and their definitions are presented in their respective chapters.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  4.86

· 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.

The management process of insurance, pension plan and capitalization risks is independent and focused on the specifics of each risk.

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 identification, the phases of prioritization, response, monitoring and reporting of assessed risks supplement this risk monitoring at ITAÚ UNIBANCO HOLDING CONSOLIDATED.

The social and environmental risk management is carried out by the first line of defense in its daily operations, with the technical support of the legal and risk control areas, which have a dedicated team. 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.

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. – Prudencial Financial Statements – December 31, 2017  4.87

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:

	12/31/2017			12/31/2016
Permanent foreign investments		53,643,405			49,409,100
Net amount of other assets and liabilities indexed to foreign currency, including derivatives		(136,526,048	)		(124,848,678	)
Net foreign exchange position		(82,882,643	)		(75,439,578	)

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 funds and managed portfolios - ITAÚ UNIBANCO HOLDING CONSOLIDATED, 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 (1)				Number of funds
	12/31/2017		12/31/2016		12/31/2017		12/31/2016		12/31/2017		12/31/2016
Investment funds		801,303,247		663,768,689		801,303,247		663,768,689		5,521		2,338
Fixed income		753,871,559		624,114,915		753,871,559		624,114,915		5,149		1,965
Shares		47,431,688		39,653,774		47,431,688		39,653,774		372		373
Managed portfolios		262,552,738		236,669,902		168,554,581		150,557,747		18,837		17,352
Customers		200,634,987		174,704,782		149,227,864		127,895,352		18,757		17,271
Itaú Group (2)		61,917,751		61,965,120		19,326,717		22,662,395		80		81
Total		1,063,855,985		900,438,591		969,857,828		814,326,436		24,358		19,690

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

(2) Changes were made in balances at December 31, 2016 for comparison purposes.

d) Consortia funds

	12/31/2017		12/31/2016
Monthly estimate of installments receivable from participants		174,045		165,800
Group liabilities by installments		11,054,378		10,741,858
Participants – assets to be delivered		9,264,395		9,102,228
Funds available for participants		1,758,861		1,642,539
(In units)
Number of managed groups		561		625
Number of current participants		392,813		395,474
Number of assets to be delivered to participants		131,131		147,238

e) Fundação Itaú Social - ITAÚ UNIBANCO HOLDING 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 12/31/2017 and 01/01 to 12/31/2016, the subsidiaries did not make donations and the foundation´s net assets totaled R$ 4,000,429 (R$ 3,019,116 at 12/31/2016). 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. – Prudencial Financial Statements – December 31, 2017  4.88

f) Instituto Itaú Cultural – ITAÚ UNIBANCO HOLDING 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 12/31/2017 and 01/01 to 12/31/2016, the subsidiaries made donations in the amount of R$ 56,157 (R$ 29,650 from 01/01 to 12/31/2016) and the institute’s net assets totaled R$ 30,195 (R$ 35,404 at 12/31/2016). 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 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 12/31/2017 and 01/01 to 12/31/2016, the subsidiaries did not make donations and the institute’s net assets totaled R$ 1,784,304 (R$ 1,549,017 at 12/31/2016). 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 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 12/31/2017 and 01/01 to 12/31/2016, the subsidiaries did not make donations and the institute’s net assets totaled R$ 19,492 (R$ 18,668 at 12/31/2016). 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 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 12/31/2017 and 01/01 to 12/31/2016, the subsidiaries made donations in the amount of R$ 920 (R$ 920 at 12/31/2016). and the association’s net assets totaled R$ 538 (R$ 1,121 at 12/31/2016). 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 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 12/31/2017 and 01/01 to 12/31/2016, the subsidiaries made donations in the amount of R$ 9,500 (R$ 6,000 from 01/01 to 12/31/2016) and the association’s net assets totaled R$ 3,416 (R$ 3,545 at 12/31/2016). 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. – Prudencial Financial Statements – December 31, 2017  4.89

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

On May 11, 2017, ITAÚ UNIBANCO HOLDING PRUDENTIAL, through its subsidiary 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 will continue with the shareholders of XP CONTROLE, that will hold the majority of voting shares.

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

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

m) Reclassifications for comparison purposes – In compliance with the circular letter 3,828, of 06/19/2017, of BACEN, the Company carried out reclassifications in the balances of December 31, 2016, for financial statements comparison purposes, in view of the regrouping of the following headings.

						Adjusted
ASSETS	Prior disclosure		Reclassification			balances
Current assets and Long term receivables		1,230,354,152		-			1,230,354,152
Interbank accounts		86,556,889		27,003,822			113,560,711
Pending settlement		447,752		27,003,822			27,451,574
Other receivables		169,083,505		(27,003,822	)		142,079,683
Transactions with credit card issuers		27,003,822		(27,003,822	)		-
Total assets		1,276,644,976		-			1,276,644,976
LIABILITIES
Current and Long term liabilities		1,144,700,113		-			1,144,700,113
Interbank accounts		592,287		25,877,129			26,469,416
Pending settlement		407,725		25,877,129			26,284,854
Other liabilities		244,043,853		(25,877,129	)		218,166,724
Credit card operations		59,700,870		(59,700,870	)		-
Sundry		21,750,873		33,823,741			55,574,614
Total liabilities		1,276,644,976		-			1,276,644,976

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  4.90

Itaú Unibanco Holding S.A.

and subsidiaries -

Prudential Conglomerate 

Financial statements at

December 31, 2017

and independent auditor's report

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  5.0

(A free translation of the original in Portuguese)

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 December 31, 2016 and the consolidated statements of income, changes in stockholders´equity and cash flows for the year and 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 December 31, 2017, and the consolidated financial performance and cash flows, for the year and 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.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  5.1

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 year and the six-month period ended in December 31, 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 February 5, 2018, 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.

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

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  5.2

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.

• 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.

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  5.3

• 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, February 23, 2018

PricewaterhouseCoopers

Auditores Independentes

CRC 2SP000160/O-5

Washington Luiz Pereira Cavalcanti

Contador CRC 1SP172940/O-6

Itaú Unibanco Holding S.A. – Prudencial Financial Statements – December 31, 2017  5.4