Exhibit 99.1

Contents

Management Discussion & Analysis	03
Executive Summary	05
Income Statement and Balance Sheet Analysis	15
Managerial Financial Margin	16
Cost of Credit	17
Credit Quality	19
Commissions and Fees & Result from Insurance, Pension Plan and Premium Bonds	22
Insurance, Pension Plan and Premium Bonds Operations	25
Non-interest Expenses	28
Balance Sheet	30
Credit Portfolio	31
Funding	33
Balance Sheet by Currency	34
Risk and Capital Management	35
Results by Business Segments	37
Results by Region - Brazil and Latin America	40
Activities Abroad	41
Additional Information	45
Itaú Unibanco Shares	46
Disclosure Criteria	47
Report of Independent Auditors	48
Complete Financial Statements	49

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Itaú Unibanco Holding S.A. 04

Management Discussion & Analysis Executive Summary

Managerial Income Statement

We present below pro forma information and selected financial indicators of Itaú Unibanco.

In R$ millions (except where indicated), end of period	2Q18			1Q18			2Q17			1H18			1H17
Results
Recurring Net Income		6,382			6,419			6,169			12,801			12,345
Operating Revenues (1)		28,021			27,426			27,205			55,446			54,471
Managerial Financial Margin (2)		17,295			16,999			17,385			34,294			34,800
Performance
Recurring Return on Average Equity – Annualized (3)		21.6	%		22.2	%		21.5	%		22.0	%		21.8	%
Recurring Return on Average Assets – Annualized (4)		1.7	%		1.7	%		1.7	%		1.7	%		1.7	%
Nonperforming Loans Ratio (90 days overdue) - Total		2.8	%		3.1	%		3.2	%		2.8	%		3.2	%
Nonperforming Loans Ratio (90 days overdue) - Brazil		3.4	%		3.7	%		3.9	%		3.4	%		3.9	%
Nonperforming Loans Ratio (90 days overdue) - Latin America		1.5	%		1.6	%		1.2	%		1.5	%		1.2	%
Coverage Ratio (Total Allowance/NPL 90 days overdue) (5)		248	%		236	%		243	%		248	%		243	%
Efficiency Ratio (IE) (6)		47.1	%		45.9	%		45.7	%		46.5	%		44.6	%
Risk-Adjusted Efficiency Ratio (RAER) (6)		61.0	%		60.8	%		63.4	%		60.9	%		63.9	%
Shares
Recurring Net Income per Share (R$) (7)		0.98			0.99			0.95
Net Income per Share (R$) (7)		0.96			0.97			0.92
Number of Outstanding Shares at the end of period – in millions		6,476			6,488			6,499
Book Value per Share (R$)		18.80			18.27			18.22
Dividends and Interest on Own Capital net of Taxes (8)		3,066			2,247			2,467
Market Capitalization (9)		260,639			333,596			239,020
Market Capitalization (9) (US$ million)		67,597			100,366			72,251
Balance Sheet
Total Assets		1,542,684			1,524,354			1,448,335
Total Credit Portfolio, including Financial Guarantees Provided and Corporate Securities		623,256			601,056			587,335
Deposits + Debentures + Securities + Borrowings and Onlending (10)		666,635			664,674			649,603
Loan Portfolio/Funding (10)		77.8	%		74.5	%		73.9	%
Stockholders’ Equity		121,758			118,511			118,379
Solvency Ratio - Prudential Conglomerate (BIS Ratio)		17.2	%		16.6	%		18.4	%
Common Equity Tier I		15.1	%		14.5	%		15.7	%
Estimated BIS III (Common Equity Tier I) (11)		13.2	%		13.6	%		13.5	%
Liquidity Coverage Ratio (LCR)		169.5	%		173.5	%		201.7	%
Other
Assets Under Administration		1,050,220			1,026,534			900,543
Total Number of Employees		99,914			99,618			95,065
Brazil		86,144			85,843			81,252
Abroad		13,770			13,775			13,813
Branches and CSBs – Client Service Branches		4,904			4,976			4,955
ATM – Automated Teller Machines (12)		47,650			47,086			46,572

Note: (1) Operating Revenues are the sum of Managerial Financial Margin, Commissions and Fees, Other Operating Income and Result from Insurance, Pension Plan and Premium Bonds Operations before Retained Claims and Selling Expenses; (2) Detailed on Managerial Financial Margin section; (3) Annualized Return was calculated by dividing Recurring Net Income by Average Stockholders’ Equity. The quotient was multiplied by the number of periods in the year to derive the annualized rate. The calculation bases of returns were adjusted by the amount of dividends that has not yet been approved at shareholders’ or Board meetings, proposed after the balance sheet closing date; (4) Return was calculated by dividing Recurring Net Income by Average Assets; (5) Includes the balance of allowance for financial guarantees provided; (6) For further details on the calculation methodologies of both Efficiency and Risk-Adjusted Efficiency ratios, please refer to Non-Interest Expenses section; (7) Calculated based on the weighted average number of outstanding shares for the period; (8) Interest on own capital. Amounts paid/provisioned, declared and reserved in stockholders’ equity; (9) Total number of outstanding shares (common and non-voting shares) multiplied by the average price of the non-voting share on the last trading day in the period; (10) As detailed on the Balance section; (11) Includes impacts from schedule anticipation of deductions and the impact of the investment in XP Investimentos; (12) Includes ESBs (electronic service branches) and service points at third parties’ locations and Banco24Horas ATMs.

Itaú Unibanco Holding S.A. 05

Management Discussion & Analysis Executive Summary

Net Income and Recurring Net Income

Non-Recurring Events Net of Tax Effects

In R$ millions	2Q18			1Q18			2Q17			1H18			1H17
Recurring Net Income		6,382			6,419			6,169			12,801			12,345
Non-Recurring Events		(138	)		(139	)		(155	)		(277	)		(278	)
Impairment		(10	)		(92	)		(7	)		(101	)		(7	)
∟ Adjustment to reflect the realization value of certain assets mainly related to technology
Goodwill Amortization		(150	)		(146	)		(123	)		(296	)		(248	)
∟ Effect from the amortization of goodwill generated by acquisitions made by the conglomerate
Tax Contingencies and Legal Liabilities		(7	)		2			-			(5	)		(33	)
∟ Mainly effects of our adherence to the program for the settlement or installment payment of federal, state and municipal taxes
Contingencies Provision		-			97			(22	)		97			(40	)
∟ Provisions for tax and social security lawsuits and losses from economic plans in effect in Brazil during the 1980’s and early 1990’s
Other		29			-			(2	)		29			51
Net Income		6,244			6,280			6,014			12,524			12,066

Note: The impacts of the non-recurring events, described above, are net of tax effects – further details are presented in Note 22-K of the Financial Statements.

Managerial Income Statement

In this report, besides the adjustment of non-recurring events, we apply managerial criteria to present our income statement. In relation to the accounting statement, these criteria affect the breakdown of our income statement but not the net income. Among the managerial adjustments, we highlight the tax effects of the hedge of investments abroad - originally included in tax expenses (PIS and COFINS) and income tax and social contribution on net income, which are reclassified to the financial margin. These reclassifications enable us to carry out business analyses from the management viewpoint and are shown in the table on the following page (Accounting and Managerial Statements Reconciliation) of this report.

Our strategy for foreign exchange risk management of the capital invested abroad is aimed at mitigating, through financial instruments, the effects of foreign exchange variations and includes the impact of all tax effects. We present below the foreign exchange variation of the Brazilian real:

Itaú Unibanco Holding S.A. 06

Management Discussion & Analysis Executive Summary

Accounting and Managerial Statements Reconciliation

Accounting and Managerial Financial Statements Reconciliation | 2^nd quarter of 2018

In R$ millions	Accounting			Non-recurring Events			Tax Effect of Hedge			Managerial Reclassifications			Managerial
Operating Revenues		21,304			(40	)		7,059			(301	)		28,021
Managerial Financial Margin		10,112			-			7,059			125			17,295
Financial Margin with Clients		15,468			-			-			485			15,953
Financial Margin with the Market		(5,356	)		-			7,059			(360	)		1,342
Commissions and Fees		9,535			-			-			(809	)		8,726
Result from Insurance, Pension Plan and Premium Bonds		1,345			(56	)		-			710			1,999
Operations Before Retained Claims and Selling Expenses
Other Operating Income		210			-			-			(210	)		-
Equity in Earnings of Affiliates and Other Investments		144			-			-			(144	)		-
Non-operating Income		(43	)		16			-			27			-
Cost of Credit		(2,708	)		-			-			(893	)		(3,601	)
Provision for Loan Losses		(3,635	)		-			-			(637	)		(4,271	)
Impairment		-			-			-			(1	)		(1	)
Discounts Granted		-			-			-			(273	)		(273	)
Recovery of Loans Written Off as Losses		927			-			-			18			945
Retained Claims		(335	)		-			-			-			(335	)
Other Operating Expenses		(14,709	)		310			(662	)		1,127			(13,934	)
Non-interest Expenses		(13,789	)		295			-			1,233			(12,261	)
Tax Expenses for ISS, PIS, Cofins and Other Taxes		(901	)		15			(662	)		(106	)		(1,654	)
Insurance Selling Expenses		(19	)		-			-			-			(19	)
Income before Tax and Profit Sharing		3,552			270			6,396			(67	)		10,151
Income Tax and Social Contribution		2,911			(18	)		(6,396	)		7			(3,496	)
Profit Sharing Management Members - Statutory		(60	)		-			-			60			-
Minority Interests		(159	)		(114	)		-			-			(273	)
Net Income		6,244			138			-			-			6,382

Accounting and Managerial Financial Statements Reconciliation | 1^st quarter of 2018

In R$ millions	Accounting			Non-recurring Events			Tax Effect of Hedge			Managerial Reclassifications			Managerial
Operating Revenues		26,823			2			415			186			27,426
Managerial Financial Margin		15,898			2			415			684			16,999
Financial Margin with Clients		14,551			2			-			708			15,261
Financial Margin with the Market		1,347			-			415			(24	)		1,738
Commissions and Fees		9,305			-			-			(777	)		8,528
Result from Insurance, Pension Plan and Premium Bonds		1,178			-			-			720			1,898
Operations Before Retained Claims and Selling Expenses
Other Operating Income		244			-			-			(244	)		-
Equity in Earnings of Affiliates and Other Investments		136			-			-			(136	)		-
Non-operating Income		63			-			-			(63	)		-
Cost of Credit		(3,135	)		-			-			(652	)		(3,788	)
Provision for Loan Losses		(3,911	)		-			-			(200	)		(4,111	)
Impairment		-			-			-			(187	)		(187	)
Discounts Granted		-			-			-			(284	)		(284	)
Recovery of Loans Written Off as Losses		776			-			-			19			795
Retained Claims		(279	)		-			-			-			(279	)
Other Operating Expenses		(14,009	)		266			(33	)		393			(13,382	)
Non-interest Expenses		(12,335	)		266			-			392			(11,676	)
Tax Expenses for ISS, PIS, Cofins and Other Taxes		(1,657	)		-			(33	)		1			(1,689	)
Insurance Selling Expenses		(17	)		-			-			-			(17	)
Income before Tax and Profit Sharing		9,399			268			383			(73	)		9,977
Income Tax and Social Contribution		(3,085	)		(23	)		(383	)		29			(3,462	)
Profit Sharing Management Members - Statutory		(44	)		-			-			44			-
Minority Interests		11			(106	)		-			-			(96	)
Net Income		6,280			139			-			-			6,419

Itaú Unibanco Holding S.A. 07

Management Discussion & Analysis Executive Summary

2^nd quarter of 2018 Income Statement

Operating Revenues Perspective

The Operating Revenues is composed by the sum of the main accounts in which revenues from banking, insurance, pension plan and premium bonds operations are recorded.

In R$ millions	2Q18			1Q18			∆			2Q17			∆			1H18			1H17			∆
Operating Revenues		28,021			27,426			2.2	%		27,205			3.0	%		55,446			54,471			1.8	%
Managerial Financial Margin		17,295			16,999			1.7	%		17,385			-0.5	%		34,294			34,800			-1.5	%
Financial Margin with Clients		15,953			15,261			4.5	%		15,762			1.2	%		31,214			31,309			-0.3	%
Financial Margin with the Market		1,342			1,738			-22.8	%		1,623			-17.3	%		3,080			3,491			-11.8	%
Commissions and Fees		8,726			8,528			2.3	%		8,037			8.6	%		17,255			15,881			8.6	%
Result from Insurance, Pension Plan and Premium Bonds		1,999			1,898			5.3	%		1,783			12.1	%		3,898			3,790			2.8	%
Operations Before Retained Claims and Selling Expenses
Cost of Credit		(3,601	)		(3,788	)		-4.9	%		(4,474	)		-19.5	%		(7,388	)		(9,755	)		-24.3	%
Provision for Loan Losses		(4,271	)		(4,111	)		3.9	%		(4,948	)		-13.7	%		(8,382	)		(10,340	)		-18.9	%
Impairment		(1	)		(187	)		-99.3	%		(105	)		-98.8	%		(188	)		(550	)		-65.7	%
Discounts Granted		(273	)		(284	)		-3.9	%		(254	)		7.5	%		(558	)		(547	)		1.8	%
Recovery of Loans Written Off as Losses		945			795			18.9	%		834			13.4	%		1,740			1,682			3.4	%
Retained Claims		(335	)		(279	)		19.9	%		(261	)		28.6	%		(614	)		(582	)		5.7	%
Other Operating Expenses		(13,934	)		(13,382	)		4.1	%		(13,218	)		5.4	%		(27,316	)		(25,912	)		5.4	%
Non-interest Expenses		(12,261	)		(11,676	)		5.0	%		(11,551	)		6.1	%		(23,938	)		(22,552	)		6.1	%
Tax Expenses for ISS, PIS, Cofins and Other Taxes		(1,654	)		(1,689	)		-2.1	%		(1,606	)		3.0	%		(3,342	)		(3,210	)		4.1	%
Insurance Selling Expenses		(19	)		(17	)		12.1	%		(61	)		-68.8	%		(36	)		(150	)		-75.9	%
Income before Tax and Minority Interests		10,151			9,977			1.7	%		9,253			9.7	%		20,127			18,222			10.5	%
Income Tax and Social Contribution		(3,496	)		(3,462	)		1.0	%		(2,892	)		20.9	%		(6,957	)		(5,659	)		22.9	%
Minority Interests in Subsidiaries		(273	)		(96	)		184.9	%		(191	)		42.7	%		(369	)		(219	)		68.7	%
Recurring Net Income		6,382			6,419			-0.6	%		6,169			3.4	%		12,801			12,345			3.7	%

Managerial Financial Margin Perspective

This perspective presents the income related to financial operations net of cost of credit.

In R$ millions	2Q18			1Q18			∆			2Q17			∆			1H18			1H17			∆
Managerial Financial Margin		17,295			16,999			1.7	%		17,385			-0.5	%		34,294			34,800			-1.5	%
Financial Margin with Clients		15,953			15,261			4.5	%		15,762			1.2	%		31,214			31,309			-0.3	%
Financial Margin with the Market		1,342			1,738			-22.8	%		1,623			-17.3	%		3,080			3,491			-11.8	%
Cost of Credit		(3,601	)		(3,788	)		-4.9	%		(4,474	)		-19.5	%		(7,388	)		(9,755	)		-24.3	%
Provision for Loan Losses		(4,271	)		(4,111	)		3.9	%		(4,948	)		-13.7	%		(8,382	)		(10,340	)		-18.9	%
Impairment		(1	)		(187	)		-99.3	%		(105	)		-98.8	%		(188	)		(550	)		-65.7	%
Discounts Granted		(273	)		(284	)		-3.9	%		(254	)		7.5	%		(558	)		(547	)		1.8	%
Recovery of Loans Written Off as Losses		945			795			18.9	%		834			13.4	%		1,740			1,682			3.4	%
Net Result from Financial Operations		13,694			13,212			3.7	%		12,911			6.1	%		26,906			25,044			7.4	%
Other Operating Income/(Expenses)		(3,544	)		(3,235	)		9.6	%		(3,658	)		-3.1	%		(6,779	)		(6,822	)		-0.6	%
Commissions and Fees		8,726			8,528			2.3	%		8,037			8.6	%		17,255			15,881			8.6	%
Result from Insurance, Pension Plan and Premium Bonds Operations		1,645			1,602			2.7	%		1,461			12.6	%		3,247			3,058			6.2	%
Non-interest Expenses		(12,261	)		(11,676	)		5.0	%		(11,551	)		6.1	%		(23,938	)		(22,552	)		6.1	%
Tax Expenses for ISS, PIS, Cofins and Other Taxes		(1,654	)		(1,689	)		-2.1	%		(1,606	)		3.0	%		(3,342	)		(3,210	)		4.1	%
Income before Tax and Minority Interests		10,151			9,977			1.7	%		9,253			9.7	%		20,127			18,222			10.5	%
Income Tax and Social Contribution		(3,496	)		(3,462	)		1.0	%		(2,892	)		20.9	%		(6,957	)		(5,659	)		22.9	%
Minority Interests in Subsidiaries		(273	)		(96	)		184.9	%		(191	)		42.7	%		(369	)		(219	)		68.7	%
Recurring Net Income		6,382			6,419			-0.6	%		6,169			3.4	%		12,801			12,345			3.7	%

Itaú Unibanco Holding S.A. 08

Management Discussion & Analysis Executive Summary

Digital Transformation

Promoting unique client experiences through technology

We strive to be a digital bank from inside out, and that is why we invest in initiatives that make life easier for our clients and employees and also generate more sustainable results. These frontlines cover actions that range from adopting groundbreaking technologies that anticipate our clients’ needs and intensify the use of data in business - such as blockchain, clouding, machine learning, and artificial intelligence - to platform evolution with integral digitization – from interactions with clients to back office activities. The way we operate has also been going through constant transformation. We have redesigned our people management strategy to encourage a collaborative working model, with teams from different functional origins and value deliveries.

Abreconta App

Launched in 2016, this app enables opening a current account on a fully online basis, speedily and with security, without the need to go to a brick and mortar branch.

New Accounts*

(in thousands)

 

* Number of current accounts opened through the app.

App Review

4.5 on Google Play 4.7 on Apple App Store on 07/16/2018

Use of Digital Channels ¹

Individuals 

Number of current account holders (in millions)

 

¹ Internet, mobile and SMS in the Retail Bank.

Companies

Number of current account holders (in millions)

 

Itaú Digital in numbers

One withdrawal a second without using any card Biometrics enables clients to manage their accounts at ATMs in a speedier and more secure way by using biometrics ID.

114 new apps versions in 2018 We launched 2 to 3 versions for each app on App Stores every month. In 2017, we launched 153 app versions.

- 81% unavailability rate* Speedier, simpler and more automatized tests and approvals > lower unavailability in digital channels.

- 35% time to market* Reduced delivery cycles by using Lean and Agile methodologies > lower average project delivery time.

* Comparison between 2Q18 and 2Q17.

Recent Initiatives

We focus on providing increasingly full services in internet and mobile banking and continuing to improve the client experience in our digital channels to make them even more intuitive and accessible.

	Itaú Keyboard Making cash transfers without exiting the app you’re using		Itaú + Apple and Samsung Pay Easy, fast and safe		Itaú Virtual Assistant with Artificial Intelligence
The Itaú Keyboard is the first tool to enable users to make cash transfers by mobile without having to exit the app they are currently using.		Itaú, Itaucard and Credicard clients can use their smartphones and smartwatches to make payments without using the physical credit card.		The Itaú virtual assistant was created with artificial intelligence technology aiming to answer doubts about our products and services. This tool has more than 700 thousand interactions per month with more than 80% rate in correct responses to users.

Itaú Unibanco Holding S.A. 09

Management Discussion & Analysis Executive Summary

Results

Recurring Net Income

 

 Income Before Tax and Minority Interests

Performance:

In the second quarter of 2018, our recurring net income remained relatively stable and reached R$6.4 billion, with a return on equity of 21.6%.

The performance in the quarter was due to the higher financial margin with clients and higher commissions and fees, in addition to the lower cost of credit. Higher non-interest expenses and lower financial margin with the market compensated these positive effects.

In the first half of 2018, we highlight a 10.5% increase in our income before taxes and minority interests, when compared to the same period of the previous year. This performance was due to the lower cost of credit and higher commissions and fees and was partially offset by the effect of tax collection at a rate of 45% and the recognition of deferred tax assets occurs at a rate of 40%, in line with the current legislation.

The loan portfolio grew 3.7% in the quarter and 6.1% year-on-year, and our delinquency ratios continue to improve.

Our tier I capital ratio fully loaded with Basel III rules reached 14.2% in June 2018, with a growth of 70 basis points compared to December 2017.

Events in the quarter

50% Stock Split

On July 27, 2018, an Extraordinary General Stockholders’ Meeting deliberated and approved the split in 50% of the current 6,536,090,232^(*) book-entry shares with no par value that comprise the capital stock, 3,305,526,906 of which are common and 3,230,563,326 are preferred shares. Therefore, shareholders will receive one (1) new share for each two (2) shares of the same type they own. The monthly dividends will be maintained at R$ 0.015 per share so that the total amounts monthly paid by the Company to stockholders will be increased by fifty percent (50%) after the inclusion of the split shares in the stockholding position.

We will announce the base date of the right to the stock split to the market after the approval of the resolutions by the Central Bank of Brazil (“BACEN”). Accordingly, the Company shares will continue, until the date to be opportunely announced, to be traded with the right to the stock split and, only after such date, they will be traded ex-rights to the split.

In the international market, concurrently with the operation in the Brazilian market and in the same proportion, the securities traded on the U.S. market (ADR - American Depositary Receipt) will also be split by fifty percent (50%) so that investors will receive one (1) new ADR for every two (2) ADRs they hold on the base date. Accordingly, the ADRs will continue to be traded in the proportion of one (1) preferred share of the Company to one (1) ADR.

* Considers 6,475,505,937 outstanding shares and 60,584,295 treasury shares.

Share Buyback

In the first six months of 2018, we acquired 13,100,000 preferred shares in the total amount of R$509.5 million, at the average price of R$38.89 per share.

Credicard in the Merchant Acquiring Segment

In July 2018, we announced the entry of Credicard brand into the merchant acquiring segment, with a POS machine family that can be purchased through its website. The first machines launched are the POP Credicard and the Mega POP Credicard.

Besides selling POS machines, the strategy is to have a simpler commercial proposal, based on shorter payment terms to retailers and competitive rates for debit and credit cards transactions.

With this operation we aim at reaching self-employed individuals, microentrepreneurs and small companies. This initiative complements our product offering in the acquiring market.

Itaú Unibanco Holding S.A.  10

Management Discussion & Analysis Executive Summary

Highlights in 2Q18

Financial Margin with Clients

 

In the quarter, resumed its growth due to the increase in volume of retail products with better spreads, in addition to the greater number of calendar days. There was also a growth in the financial margin with clients in our Latin America operations, related to the exchange rate variation of the period.

In the first six months, the better mix of products practically offset all the negative effect of the interbank interest rate decrease in our liabilities and working capital margins.

Further details on page 16

Cost of Credit

 

Reduction in the quarter in line with the improvement of the loan portfolio quality. As a result, we had lower impairment charges on corporate securities and increased recovery of loans at the Wholesale Bank in Brazil. These effects were partially offset by the increase in provision for loan losses, as a result of the growth of the credit portfolio in the Retail Bank in Brazil, as well as the impact of the foreign exchange variation in the period.

In the first six months, the reduction in the cost of credit is related to the improvement in delinquency ratios of the portfolio in Brazil, responsible for the lower provision for loan losses in the period.

Further details on pages 17-18

Commissions, Fees and Result from Insurance ¹

 

The positive evolution in the quarter is related to higher asset management fees, both in terms of volume and of performance fees. In addition, we had higher revenues related to our investment banking business.

In the first half of 2018, the higher volume of assets under management, in addition to the increase in the number of current account holders, led to the growth of asset management fees and of current account fees, when compared to the same period of the previous year.

Further details on pages 22-27

Non-Interest Expenses

 

The growth in the quarter was due to higher marketing expenses related to the Soccer World Cup and the new payment methods Itaú + Samsung and Apple Pay, in addition to higher expenses in Latin America (ex-Brazil), impacted by the foreign exchange variation in the period.

In the first half of 2018, expenses from Brazil, excluding the impact of the retail operation acquired from Citibank, increased 0.5% when compared to the same period of the previous year, below the accumulated inflation in the period.

Further details on pages 28-29

Return on Equity

Efficiency Ratio (E.R.) and Risk-Adjusted Efficiency Ratio (R.A.E.R.)

Further details on page 29

¹ Result from insurance operations includes the result from insurance, pension plan and premium bonds, net of retained claims and selling expenses.

Itaú Unibanco Holding S.A.  11

Management Discussion & Analysis Executive Summary

Highlights in 2Q18

Credit Portfolio with Financial Guarantees Provided and Corporate Securities

In the quarter, in addition to the portfolio for very small, small and middle-market companies, all credit portfolios for individuals increased. These positive performance were due to higher demand from clients in these segments.

The corporate loan portfolio remained stable in the quarter. However, excluding the effect of foreign exchange variation, the portfolio decreased 3.1% in the period, as a result from the low demand for credit in the segment.

In R$ billions, end of period	2Q18		1Q18		∆			2Q17		∆
Individuals		195.0		191.4		1.9	%		179.4		8.7	%
Credit Card Loans		66.1		65.0		1.7	%		56.4		17.2	%
Personal Loans		28.3		27.4		3.5	%		25.9		9.6	%
Payroll Loans 1		45.4		44.7		1.6	%		44.8		1.4	%
Vehicle Loans		14.7		14.3		2.4	%		14.1		3.9	%
Mortgage Loans		40.5		40.0		1.3	%		38.3		5.9	%
Companies		228.1		225.0		1.4	%		235.2		-3.0	%
Corporate Loans		162.5		162.0		0.3	%		175.4		-7.4	%
Very Small, Small and Middle Market Loans 2		65.6		63.0		4.1	%		59.8		9.8	%
Corporate Securities 3		34.6		34.7		-0.2	%		35.0		-1.0	%
Total Brazil with Financial Guarantees Provided and Corporate		457.8		451.1		1.5	%		449.6		1.8	%
Latin America		165.5		150.0		10.3	%		137.7		20.1	%
Argentina		9.3		8.6		8.7	%		6.7		38.0	%
Chile		108.0		98.4		9.7	%		90.4		19.4	%
Colombia		30.3		27.4		10.7	%		26.5		14.2	%
Paraguay		7.7		6.8		13.1	%		6.0		28.6	%
Panama		1.4		1.1		31.3	%		0.9		53.6	%
Uruguay		8.9		7.8		13.3	%		7.2		23.8	%
Total with Financial Guarantees Provided and Corporate Securities		623.3		601.1		3.7	%		587.3		6.1	%
Total with Financial Guarantees Provided and Corporate Securities (ex-foreign exchange rate variation) 4		623.3		621.0		0.4	%		618.0		0.9	%

(1) Include s operations originated by the institution and acquired operations. (2) Includes Rural Loans to Individuals. (3) Includes Debentures, Certificates of Real Estate Receivables (CRI) and Commercial Paper. (4) Calculated based on the conversion of the foreign currency portfolio (U.S. dollar and Latin American currencies). Note: the Mortgage and Rural Loan portfolios from the companies segment are allocated according to the client’s size. Further details on pages 31 and 32.

NPL Ratio (%) | over 90 days

The long-term delinquency ratio improved, in line with the credit quality of the portfolio. A highlight was the reduction of 60 basis points in very small, small and middle market companies in Brazil. In the corporate segment in Brazil, the improvement is related to the renegotiation and subsequent sale of an active portfolio that in the previous quarter became 90 days overdue.

The decrease in Latin America was mainly related to the Chilean individuals and companies operations.

Further details on pages 19-21

Coverage Ratio | 90 days

Increased 1,200 basis points driven by the renegotiation and later sale of an active portfolio of a corporate segment client that in the previous quarter became more than 90 days overdue.

In the long-term, we expect the reduction of the coverage ratio due to the improvement of the credit risk of the corporate portfolio, but until this improvement materializes we will experience some volatility in the indicator.

Further details on pages 19-21

NPL Creation

The 24.8% decrease from the previous period was driven by the lower portfolio of loans more than 90 days overdue in the Wholesale Banking in Brazil since we renegotiated and later sold the active portfolio of a client which in the previous quarter became 90 days overdue.

Further details on pages 19-21

¹ Includes units abroad ex-Latin America. ² Excludes Brazil. ³ Calculated by dividing the total allowance by the balance of operations more than 90 days overdue and renegotiated operations, excluding double counting of renegotiated operations more than 90 days overdue.

Itaú Unibanco Holding S.A.  12

Management Discussion & Analysis Executive Summary

2018 Forecast

We kept unchanged the ranges of our 2018 forecast. We present below our 2018 forecast including the effect of Citibank’s operations.

1) Includes units abroad ex-Latin America; 2) Includes financial guarantees provided and corporate securities;

3) Includes Result from Loan Losses, Impairment and Discounts Granted; 4) Commissions and Fees (+) Income from Insurance, Pension Plan and Premium Bonds Operations (-) Expenses for Claims (-) Insurance, Pension Plan and Premium Bonds Selling Expenses.

Although the growth plans and projections of results presented above are based on management assumptions and information available in the market to date, these expectations involve inaccuracies and risks that are diffito anticipate and there may be, therefore, results or consequences that differ from those anticipated. This information is not a guarantee of future performance. The use of these expectations should take into consideration the risks and uncertainties that involve any activities and that are beyond our control. These risks and uncertainties include, but are not limited to, our ability to perceive the dimension of the synergies projected and their timing, political and economic changes, volatility in interest and foreign exchange rates, technological changes, inflation, financial disintermediation, competitive pressures on products, prices and changes in tax legislation, among others.

Itaú Unibanco Holding S.A.  13

Management Discussion & Analysis Executive Summary

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Itaú Unibanco Holding S.A.  14

  

Management Discussion & Analysis Income Statement Analysis

Managerial Financial Margin

Highlights

· Financial margin with clients increased in the quarter driven by positive effects of the mix of products, higher number of calendar days and evolution in Latin America financial margin with clients related to foreign exchange variation in the quarter.

· The reduction of the cost of credit led to an increase of 20 basis points in the risk-adjusted financial margin with clients average rate.

· Lower gains from our trading book, in addition to the sale of B3 shares in the previous quarter that did not repeat this quarter, led to a lower financial margin with the market.

Managerial Financial Margin

Financial Margin with Clients
R$15,953 million	▲ + 4.5% (2Q18/1Q18)
	▲ + 1.2% (2Q18/2Q17)
Financial Margin with the Market
R$1,342 million	▼ - 22.8% (2Q18/1Q18)
	▼ - 17.3% (2Q18/2Q17)

 

Change in the Financial Margin with Clients Breakdown

 

⁽¹⁾ Change in the composition of assets with credit risk between periods. ⁽²⁾Considers credit and private securities portfolio net of more than 60 days overdue balance. Balances do not include the effects of foreign exchange rate variations. ⁽³⁾ Spreads variation of assets with credit risk between periods.

Annualized average rate of financial margin with clients

	2Q18								1Q18
	Average		Financial			Average Rate			Average		Financial			Average Rate
In R$ millions, end of period	Balance		Margin			(p.a.)			Balance		Margin			(p.a.)
Financial Margin with Clients		665,879		15,953			9.9	%		646,949		15,261			9.9	%
Spread-Sensitive Operations		572,345		14,192			10.3	%		546,440		13,417			10.3	%
Working Capital and Other		93,534		1,762			7.7	%		100,509		1,844			7.6	%
Cost of Credit				(3,601	)							(3,788	)
Risk-Adjusted Financial Margin with Clients		665,879		12,353			7.6	%		646,949		11,473			7.4	%

Spread-Sensitive Operations:

— 0 bp

· despite the increase in average rate in Brazil, the increase of the Latin America share led to the stability of the rate.

Working Capital and Other:

▲ + 10 bps

· the rise in the long-term yield curve in the last months have slightly affected our working capital and other rate.

Financial Margin with Clients:

— 0 bp

· despite the increase in average rate in Brazil, the increase of the Latin America share led to the stability of the rate.

Risk-Adjusted Financial Margin with Clients:

▲ + 20 bps

· mainly driven by the reduction of the cost of credit.

 

Itaú Unibanco Holding S.A. 16

Management Discussion & Analysis Income Statement Analysis

Cost of Credit

Highlights

· The cost of credit decrease in the quarter was concentrated in the Wholesale Banking segment in Brazil, with lower impairment charges on corporate securities and higher income from recovery of loans written off as losses.

· Provision for loan losses increased due to the growth of the portfolio of the Retail Banking segment and to the revision of pre-approved limits, mainly in credit cards, in addition to the impact of the foreign exchange variation in the period in Latin America (ex-Brazil).

· Compared to the first half of 2017, cost of credit decreased by R$2,367 million, mainly driven by lower provision for loan losses both in the retail and wholesale banking segments in Brazil.

In R$ millions	2Q18			1Q18			D			2Q17			D			1H18			1H17			D
Provision for Loan Losses		(4,271	)		(4,111	)		3.9	%		(4,948	)		-13.7	%		(8,382	)		(10,340	)		-18.9	%
Recovery of Loans Written Off as Losses		945			795			18.9	%		834			13.4	%		1,740			1,682			3.4	%
Result from Loan Losses		(3,326	)		(3,316	)		0.3	%		(4,115	)		-19.2	%		(6,642	)		(8,658	)		-23.3	%
Impairment		(1	)		(187	)		-99.3	%		(105	)		-98.8	%		(188	)		(550	)		-65.7	%
Discounts Granted		(273	)		(284	)		-3.9	%		(254	)		7.5	%		(558	)		(547	)		1.8	%
Cost of Credit		(3,601	)		(3,788	)		-4.9	%		(4,474	)		-19.5	%		(7,388	)		(9,755	)		-24.3	%

Compared to the previous quarter, the lower cost of credit was driven by the reduction of R$186 million in impairment charges on corporate securities and the increase of R$150 million in income from recovery of loans written off as losses, with both effects concentrated on the Wholesale Banking segment. Provision for loan losses increased in the Retail Banking segment in Brazil, in line with the growth of the loan portfolio of the segment and the revision of pre-approved limits, mainly in credit cards, in addition to the impact of the foreign exchange variation in the period in Latin America (ex-Brazil).

Comparing the first half of 2018 with the same period of the previous year, cost of credit decreased as a result of a R$1,958 million reduction in provision for loan losses in Brazil, both in the Retail Banking segment (R$634 million) and in the Wholesale Banking segment (R$1,469 million). These reductions are in line with the better credit quality of these portfolios. Additionally, impairment charges on corporate securities in the Wholesale Banking segment in Brazil decreased by R$361 million and income from recovery of loans written off as losses increased by R$58 million, mainly in the Wholesale Banking segment in Brazil.

The ratio of cost of credit over total risk reached 2.4%. This is the lowest level since 2014.

Cost of Credit

 

(*) Loan portfolio with financial guarantees provided and corporate securities. Average balance of the loan portfolio with financial guarantees provided and corporate securities, considering the last two quarters.

Provision for Loan Losses by Segment

 

(*) Average balance of the loan portfolio, considering the last two quarters.

Note: Retail Banking includes loan loss provisions expenses of Corporation segment. In the business segments section, Latin America is part of the Wholesale Banking.

· Wholesale Banking - Brazil: a decrease of R$225 million in expenses in the quarter driven by the improvement of the credit risk ratings of clients of the segment.

· Retail Banking - Brazil: increase of R$318 million in expenses in the quarter due to the loan portfolio growth and to the revision of pre-approved limits, mainly in credit cards.

Recovery of Loan Written off as Losses

 

The increase of R$150 million was driven by the sale of R$7.4 billion of credits that had already been written off as losses. This operation had a positive impact of R$184 million on recovery of loans written off as losses and of R$101 million on recurring net income.

Itaú Unibanco Holding S.A. 17

Management Discussion & Analysis Income Statement Analysis

Loan Portfolio by Risk Level

 

Allowance for Loan Losses and for Financial Guarantees Provided

There was a reduction of 1.5% in the allowance for loan losses and for financial guarantees provided compared to the end of March 2018.

This reduction was mainly driven by the allowance for loan losses of the Wholesale Banking segment in Brazil, as a consequence of the improvement of the credit risk ratings of clients of the segment, which was partially offset by the increase in allowance for loan losses in Latin America, as a result of the foreign exchange rate variation in the peri-od.

 

We present below the total allowance^(*) allocation by type of risk:

Overdue Risk: Allowances for overdue loans, as required by the Brazilian Central Bank, related to the minimum provision required for overdue operations according to CMN Resolution No. 2,682/1999. We also present the amount for loans 100% provisioned and for loans that do not require 100% of provision.

Aggravated Risk: Allowances for overdue loans with aggravated risk ratings above the minimum required by the Brazilian Central Bank, and allowances for renegotiated loans. Regarding renegotiated loans, we segregate allowances over the minimum required by the Brazilian Central Bank for overdue operations and allowances for non-overdue operations.

Potential Risk: Allowances for expected losses related to Retail Banking operations and allowances for potential losses related to Wholesale Banking operations, which includes allowance for financial guarantees provided.

¹ Includes units abroad ex-Latin America. ² Excludes Brazil. ³ Allowance for potential losses includes the allowance for financial guarantees provided. (*) Total allowance includes the allowance for loan losses and the allowance for financial guarantees provided, which totaled R$1,810 million in June 2018 and is recorded in liabilities in accordance with CMN Resolution No. 4,512/16.

Itaú Unibanco Holding S.A. 18

Management Discussion & Analysis Income Statement Analysis

Credit Quality

Highlights

· Nonperforming loans 90 days overdue ratio (NPL 90) decreased both in Brazil and in Latin America. In Brazil, the ratio decreased 10 bps for individuals, 80 bps for corporate and 60 bps for very small, small and middle-market companies.

· NPL 15 to 90 days overdue ratio for the corporate segment in Brazil increased in the quarter in clients that were already adequately provisioned.

· In Latin America, we recorded decreases in the NPL Ratio 15 to 90 days and in the NPL 90 days.

Nonperforming Loans

 

· Nonperforming loans - 90 days - Total: decreased 5.3% from the same period of the previous year, driven by better credit quality of both individuals and companies in Brazil.

NPL Ratio (%) | over 90 days

 

Analysis of the quarterly change in NPL 90 (%) | Credit Quality x Volume

 

· Consolidated: decreased from the previous quarter both in Brazil and in Latin America.

· Brazil¹: the ratio improved from the previous quarter and also from June 2017 due to lower delinquency rates for both individuals and companies. In this quarter, we renegotiated and later sold an active portfolio of a client in the corporate segment, which in the previous quarter was more than 90 days overdue.

· Latin America²: decreased in the quarter mainly driven by the growth in portfolios in Chile for both individuals and companies.

NPL Ratio - Brazil¹ (%) | over 90 days

 

Analysis of the quarterly change in NPL 90 (%) | Credit Quality x Volume

 

· Individuals: decreased for the 9^th consecutive quarter, reaching the lowest level since the merger between Itaú and Unibanco.

· Very small, small and middle-market companies: decreased for the 7^th consecutive quarter, reaching the lowest level since the merger between Itaú and Unibanco, due to better quality of recent vintages.

· Corporate: decreased in the quarter, mainly driven by the renegotiation and later sale of an active portfolio of a client that in the previous quarter was more than 90 days overdue.

NPL Ratio (%) | 15 to 90 days

 

* Note: Total and Latin America NPL Ratio (15-90 days) prior to June 2016 do not include CorpBanca.

Analysis of the quarterly change in NPL 15-90 (%) | Credit Quality x Volume

 

· Consolidated: remained stable in the quarter, with an improvement in Brazil being offset by the Latin America portfolio.

· Brazil¹: increased from the previous quarter, driven by the deterioration in the non-performing loans of the corporate segment.

· Latin America²: decreased in the quarter, mainly driven by lower delinquency rates for companies both in Chile and in Colombia. Delinquency rates also decreased for individuals in Chile, a result from the improvement in collection practices.

¹ Includes units abroad ex-Latin America.² Excludes Brazil.

Itaú Unibanco Holding S.A. 19

Management Discussion & Analysis Income Statement Analysis

NPL Ratio - Brazil¹ (%) | 15 to 90 days

 

Analysis of the quarterly change in NPL 15-90 (%) | Credit Quality x Volume

 

· Individuals: remained stable in the quarter, and it is worth mentioning the decrease in delinquency rates in personal, mortgage loans, and vehicles portfolios.

· Very small, small and middle-market companies: the ratio decreased and reached the lowest level of the last six years.

· Corporate: increased from the previous quarter in clients which were already adequately provisioned. There was no concentration on a specific client or sector.

Coverage Ratio | 90 days

 

 

⁽ⁱ⁾ Excluding the exposure of a corporate cliente, the Total coverage ratio would have been 244% and the Wholesale Banking in Brazil coverage ratio would have been 845%.

· Consolidated: increased in the quarter, driven by the renegotiation and later sale of an active portfolio of a corporate segment client that in the previous quarter was more than 90 days overdue, in addition to the increase in provisions of Latin America.

¹ Includes units abroad ex-Latin America.

Loan Portfolio Write-Off

 

(*) Loan portfolio average balance for the previous two quarters.

Loan portfolio write-offs decreased 1.3% from the last quarter. The ratio of written-off operations to the average balance of the loan portfolio remains in line with the level in the last quarters.

NPL Creation

 

⁽ⁱ⁾ Excluding the exposure of a corporate cliente, the Total NPL Creation would have been R$4,471 million and the Wholesale Banking in Brazil NPL Creation would have been R$578 million.

Note: The NPL Creation is the balance of loans that became overdue for more than 90 days in the quarter.

· Consolidated: decreased from the previous quarter, mainly driven by the reduction in the NPL 90 in the Wholesale Banking segment in Brazil, due to the renegotiation and later sale of an active portfolio of a client that in the previous quarter became more than 90 days overdue.

NPL Creation Coverage

 

Note: NPL Creation coverage ratio is calculated from the division of provision for loan losses by NPL Creation in the quarter.

In the second quarter of 2018, total NPL Creation coverage reached 113% due to the NPL Creation decrease and the provision for loan losses increase in the quarter, noting that the expected loss model includes provisions for operations that have not incurred in loss yet and not only for operations with incurred loss.

· Retail Segment - Brazil: the NPL Creation coverage level reached 100%, in line with the historical levels.

· Wholesale segment - Brazil: the NPL Creation coverage ratio was impacted by the renegotiation and later sale of the portfolio of a corporate client that in the previous quarter became more than 90 days overdue.

Itaú Unibanco Holding S.A. 20

Management Discussion & Analysis Income Statement Analysis

Renegotiated Loans Operations

Renegotiated loans are all types of renegotiation, either overdue, non overdue or from loans written off as losses.

Highlights

· Renegotiated loans operations remained stable compared to the previous quarter.

· Non-performing loans more than 90 days overdue decreased mainly driven by the migration of a corporate client that in the previous quarter was overdue for over 90 days in the renegotiated loans portfolio.

R$27.5 billion as of June 30, 2018

▼ - 0.5% (vs. Mar-18)

▲ + 4.1% (vs. Jun-17)

By overdue period

measured at the moment of renegotiation

Brazil ¹

 

¹Includes units abroad ex-Latin America.

NPL of Renegotiated Loans Operations

 

Renegotiated Loans Coverage

as of June 30, 2018

R$ billions

 

* Measured at the moment of renegotiation.

Sale of Financial Assets

In the second quarter of 2018, we recorded sales of assets with no risk retention to non-related companies with face value of R$608 million. This operation had positive impacts of R$6 million on the cost of credit and of R$3 million on net income. In addition, we sold active portfolios of our Latin America operation with face value of R$123 million, which had positive impacts of R$7 million on the cost of credit and of R$4 million on net income. These operation had no significant impact on NPL ratios.

We recorded sales of assets already written off as losses, with no risk retention, with face value of R$7.4 billion, with impact of R$101 million on net income. These sales of assets already written off as losses had no impact on NPL ratios.

In R$ millions (except where indicated)	2Q18			2Q18 (Ex Sale of Assets)			D
Income Statement
Operating Revenues		28,021			28,021			-
Cost of Credit		(3,601	)		(3,797	)		196
Provision for Loan Losses		(4,271	)		(4,289	)		18
Impairment		(1	)		(1	)		-
Discounts Granted		(273	)		(268	)		(6	)
Recovery of Loans Written Off as Losses		945			761			184
Other Operating Expense and Other 1		(14,542	)		(14,542	)		-
Income Tax and Social Contribution		(3,496	)		(3,408	)		(88	)
Recurring Net Income		6,382			6,274			108

¹ includes Other Operating Expenses, retained claims and minority interests in subsidiaries

Itaú Unibanco Holding S.A. 21

Management Discussion & Analysis Income Statement Analysis

Commissions and Fees and Result from Insurance Operations¹

Highlights

· Compared to the last quarter, income from financial advisory services and fund management fees contributed to the increase of R$198 million in the quarter.

· The R$1,373 million increase from the 1H17 was mainly due to: (i) fund management fees, due to the increase in the balance of investment funds and managed portfolios; (ii) current account services, due to the increase in the number of current account holders; and (iii) credit card fees, due to the higher number of clients and increased transaction volume.

· Result from insurance operations increased 6.2% from the first half of 2017 due to the positive effect with the Liability Adequacy Test occurred in 2Q18.

In R$ millions	2Q18		1Q18		D			2Q17		D			1H18		1H17		D
Credit Cards		3,050		3,139		-2.8	%		3,018		1.1	%		6,189		5,965		3.7	%
Current Account Services		1,819		1,818		0.1	%		1,679		8.4	%		3,637		3,330		9.2	%
Asset Management		1,106		1,014		9.1	%		824		34.2	%		2,119		1,677		26.4	%
Fund Management Fees		942		858		9.8	%		670		40.6	%		1,799		1,366		31.7	%
Consortia Administration Fees		164		156		5.1	%		154		6.5	%		320		310		3.0	%
Credit Operations and Guarantees Provided		847		845		0.2	%		825		2.6	%		1,692		1,664		1.7	%
Credit Operations		474		481		-1.4	%		454		4.5	%		956		930		2.8	%
Guarantees Provided		372		364		2.3	%		371		0.3	%		736		734		0.3	%
Collection Services		483		457		5.7	%		419		15.4	%		940		836		12.5	%
Advisory Services and Brokerage		418		321		29.9	%		321		30.1	%		739		588		25.8	%
Other		285		264		7.9	%		320		-11.1	%		548		580		-5.4	%
Foreign Exchange Services		38		35		9.2	%		28		36.8	%		73		55		31.8	%
Custody Service and Portfolio Management		90		87		3.5	%		82		9.1	%		176		165		6.8	%
Other Services		157		142		10.2	%		210		-25.4	%		299		359		-16.7	%
Latin America (ex-Brazil)		719		670		7.3	%		631		13.9	%		1,390		1,243		11.8	%
Commissions and Fees		8,726		8,528		2.3	%		8,037		8.6	%		17,255		15,881		8.6	%
Result from Insurance Operations¹		1,645		1,602		2.7	%		1,461		12.6	%		3,247		3,058		6.2	%
Total		10,371		10,130		2.4	%		9,498		9.2	%		20,501		18,940		8.2	%

Breakdown of Commissions and Fees and Result from Insurance Operations¹

 

Operational Coverage Ratio

The operational coverage ratio represents the extent to which non-interest expenses were covered by the commissions and fees added to the result from insurance¹. This ratio reached 84.6% in the quarter.

 

¹ Result from Insurance, Pension Plan and Premium Bonds Operations net of retained claims and selling expenses; ² Operating Revenues including the Result from Insurance, Pension Plan and Premium Bonds Operations net of retained claims and selling expenses.

Itaú Unibanco Holding S.A. 22

Management Discussion & Analysis Income Statement Analysis

Credit Cards

Credit card revenues decreased R$89 million from the previous quarter, due to higher expenses of the rewards programs, and lower revenues from machinery rental and from MDR (Merchant Discount Rate).

In the 1H18, credit card revenues reached R$6.2 billion, up 3.7% compared to 1H17, mainly driven by higher revenues from annuity fees, interchange and the incorporation of Citibank´s retail operations in Brazil.

Revenues | Acquiring and Issuance Services

 

New Developments—Acquiring

REDE started to fully capture Elo and Amex brands in 2017, seeking to better serve its clients in a more comprehensive way and to expand business.

The synergy agenda with Banco Itaú was intensified, resulting in differentiated offers to current account holders by means of products included in the current account package.

Additionally, we strengthened our operations in the non-current account market by expanding commercial teams and partnerships and seeking an increasingly closer contact with clients and their needs.

We further expanded our offering of products and services by launching the Credicard brand to meet a specific demand of both our clients and the market. We implemented the card machine sale and offer model with a

T + 2 settlement cycle.

· Card Issuance Activities

We are the leading player in the Brazilian credit card market, totaling approximately 31.1 million (in number of accounts) credit cards and 26.9 million (in number of accounts) debit cards. We operate through Itaucard, Hipercard, Hiper, Credicard, joint ventures and commercial agreements with leading companies in sectors such as telecom, vehicles, retail and aviation operating in the Brazilian market.

 

Note: Debit cards include account holders only.

· Acquiring Activities

Our merchant acquiring business comprises the process of capturing transactions through affliation, management and relationship with merchants.

In the second quarter of 2018, the volume of credit and debit card transactions increased 2.8% from the previous quarter. Compared to the same period of the previous year, there was a 8.3% increase.

 

 

The reduction in the equipment base is related to several factors, among which we can highlight the migration to non-POS solutions and the competition increase in the segment, influenced by the market opening, which allowed acquiring companies to capture all brands.

Itaú Unibanco Holding S.A. 23

Management Discussion & Analysis Income Statement Analysis

Current Account Services

Revenues from current account services remained stable from the previous quarter.

Compared to the first half of 2017, these revenues increased 9.2% driven by higher number of current-account holders, in addition to the incorporation of Citibank´s retail operations.

Asset Management

· Fund Management

Fund management fees increased R$84 million in the quarter, due to the 2.3% increase in assets under administration, higher revenues with performance fees and number of business days.

Compared to the first half of 2017, fund management fees grew R$433 million, mainly driven by an 16.1% increase in AuM and higher revenues with performance fees.

According to ANBIMA, in June 2018 we ranked second in fund management and managed portfolio*, with a 22.5% market share.

* Includes Itaú Unibanco and Intrag.

Portfolio Managed and Investment Fund

 

Note: Does not include Latin America (ex-Brazil). As from the third quarter of 2017, we deconsolidated managed portfolios from the Itaú group, and, for comparison purposes, the previous quarters were reprocessed.

· Consortia Administration Fees

In June 2018, we reached approximately 398 thousand active contracts, down 0.1% from the previous quarter. Installments receivable totaled R$11.4 billion at the end of the period, with increases of 1.7% from March 2018 and of 4.7% from June 2017.

 

Loan Operations and Financial Guarantees Provided

These revenues remained relatively stable from the previous quarter. Compared to the first half of 2017, revenues increased R$28 million, driven by the larger volume of origination of credit in 2018.

In the chart below, we show the annualized ratio of revenues from loan operations to the loan portfolio and of revenues from guarantees provided to the financial guarantees provided portfolio.

 

¹ Includes units abroad ex-Latin America. (*) Loan portfolio and financial guarantees provided average balances for the previous two quarters.

Collection Services

The higher volume of collection services, pricing and number of business days have led to an increase of 5.7% in collection services revenues compared to the previous quarter.

Compared to the first half of 2017, these revenues grew R$104 million, mainly driven by higher volume, pricing, increased offer and expansion of collection services due to the issuance and management of receivables in the mobile channel.

Advisory Services and Brokerage

The largest volume of operations in the second quarter of 2018 contributed to an increase of R$96 millions in revenues from advisory services and brokerage in the quarter.

Compared to the first half of 2017, these revenues increased R$152 million, driven by a higher volume of investment banking operations, related to the increase in capital markets activities in the first half of 2018.

Fixed Income: we took part in local operations with debentures, promissory notes and securitization, which totaled R$11.9 billion up to May 2018, reaching the leadership position in the ANBIMA ranking.

Equities: We carried out two offerings in South America in the first half of 2018, totaling US$0.4 billion.

Mergers and Acquisitions: in the first half of 2018, we provided financial advisory on 15 transactions in South America, totaling US$21.6 billion and reaching the leadership position in the Dealogic ranking.

Itaú Unibanco Holding S.A. 24

Management Discussion and Analysis Itaú Insurance, Pension Plan and Premium Bonds

Itaú Insurance, Pension Plan and Premium Bonds

Highlights

· Net income from recurring activities of Itaú´s Insurance, Pension Plan and Premium Bonds remained practically stable in the quarter. We had a positive impact of R$106 million with the liability adequacy test in pension plans, that was offset by the higher number of claim notices in the quarter.

As from the first quarter of 2018, we have disclosed the breakdown of Recurring Activities and Other Activities in Results from Itaú Insurance, Pension Plan and Premium Bonds. Major changes were the inclusion of IRB earnings in Recurring Activities and the reclassification of group life and credit life insurance portfolios distributed by brokers to Other Activities, since these portfolios are in run off.

Pro Forma Income Statement of Insurance Operations

	2Q18
				Recurring			Other			Recurring Activities
In R$ millions	Total			Activities			Activities			1Q18			D			2Q17			D
Earned Premiums		1,002			917			85			893			2.7	%		899			2.0	%
Revenues from Pension Plan and Premium Bonds		308			308			-			203			51.5	%		230			34.3	%
Retained Claims		(335	)		(241	)		(94	)		(200	)		20.4	%		(165	)		46.1	%
Selling Expenses		(19	)		(1	)		(18	)		(3	)		-49.2	%		(5	)		-71.9	%
Result from Insurance, Pension Plan and Premium Bonds		956			982			(26	)		893			10.0	%		959			2.5	%
Managerial Financial Margin		120			68			53			49			39.3	%		50			35.5	%
Commissions and Fees		528			524			4			548			-4.3	%		484			8.2	%
Earnings of Affiliates		104			104			-			95			8.9	%		94			9.7	%
Non-interest Expenses		(509	)		(487	)		(22	)		(467	)		4.3	%		(420	)		16.0	%
Tax Expenses for ISS, PIS and Cofins and other taxes		(87	)		(85	)		(2	)		(87	)		-2.3	%		(73	)		17.1	%
Income before Tax and Minority Interests		1,112			1,106			6			1,031			7.3	%		1,095			1.0	%
Income Tax/Social Contribution and Minority Interests		(475	)		(472	)		(3	)		(399	)		18.1	%		(468	)		0.8	%
Recurring Net Income		638			634			4			631			0.4	%		627			1.1	%
Allocated Capital		1,590			1,561			30			1,316			18.6	%		1,344			16.2	%
Average Allocated Capital		1,467			1,438			29			1,344			7.0	%		1,783			-19.3	%
Recurring Return on Average Allocated Capital		173.8	%		176.3	%		49.8	%		187.9	%		-1,160	bps		140.6	%		3,570	bps
Efficiency Ratio (ER)		31.4	%		30.6	%		78.2	%		31.2	%		-60	bps		27.7	%		290	bps
Combined Ratio		66.1	%		57.5	%		158.8	%		53.3	%		420	bps		43.9	%		1,360	bps

Note: Combined Ratio for insurance activities. Non-interest Expenses considers Personnel Expenses, Other Administrative Expenses and Other Operating Expenses.

Recurring Activities   Recurring activities consist of the offering of bancassurance products related to Life, Property, Credit, Pension Plan and Premium Bonds, and our interest in Porto Seguro and in IRB. Other Activities   Other activities correspond to Extended warranty, Health insurance and other discontinued insurance lines, whose portfolios are in run off.

Bankline/internet, mobile, ATMs, teller terminals and bankfone remain our key insurance and premium bonds products sales channels to account holders in the quarter, following our strategy to serve clients through the most efficient channels. In the second quarter of 2018, the amount of sales of insurance products and premium bonds to Digital Branches clients accounted for 19.0% of total sales.

We concentrate efforts on distribution through our own channels and on the expansion of the offer of insurance policies via an open platform, through which we provide products from partner insurance companies to our clients.

 

Itaú Unibanco Holding S.A. 25

Management Discussion and Analysis Itaú Insurance, Pension Plan and Premium Bonds

Insurance (Recurring Activities)

Our recurring insurance activities consist of the offering of bancassurance products related to life, property, credit life, and our interest in Porto Seguro and in IRB. We offer these products in synergy with retail channels – our branch network, partnership with retailers, credit card clients, real estate and vehicle financing and personal loans - and the wholesale channel. They have characteristics such as low volatility in result and less use of capital, making them strategic and relevant to the diversification of the conglomerate’s revenues.

54% share in the recurring net income of Itaú Insurance, Pension Plan and Premium Bonds

Pro Forma Income Statement of the Insurance Segment

In R$ millions	2Q18			1Q18			D			2Q17			D
Earned Premiums		917			893			2.7	%1		899			2.0	%
Retained Claims		(229	)		(190	)		20.8	%2		(150	)		52.5	%
Selling Expenses		(1	)		(2	)		-65.8	%		(4	)		-83.7	%
Underwriting Margin		687			701			-2.1	%		745			-7.8	%
Managerial Financial Margin		(14	)		(8	)		86.0	%		9			-253.8	%
Commissions and Fees		106			125			-14.8	%3		82	4		29.2	%
Earnings of Affiliates		104			95			8.9	%		94	5		9.7	%
Non-interest Expenses		(255	)		(237	)		8.0	%		(198	)		29.1	%
Tax Expenses for ISS, PIS and Cofins and other taxes		(42	)		(48	)		-13.0	%		(42	)		-1.0	%
Income before Tax and Minority Interests		585			629			-7.0	%		691			-15.3	%
Income Tax/Social Contribution and Minority Interests		(241	)		(231	)		4.2	%		(288	)		-16.5	%
Recurring Net Income		344			398			-13.4	%		402			-14.4	%
Efficiency Ratio (ER)		30.4	%		27.3	%		310	bps		22.3	%		810	bps

Highlight:

1. increase in earned premiums driven by higher sales, especially in credit-related insurance products;

2. higher number of claim notices in life and credit-related insurance portfolios;

3. lower revenues due to a decrease in the portfolio of retail operations acquired from Citibank in Brazil;

4. higher commissions and fees due to the incorporation of Citibank´s operations;

5. higher non-interest expenses driven by the incorporation of Citibank´s operations and by the improvement of the managerial cost allocation model of the operation in 2018.

Earned Premiums Breakdown

 

Underwriting Margin

 

Note: the underwriting margin is the sum of earned premiums, retained claims and selling expenses.

Retained Claims Breakdown

 

Combined Ratio

It reflects the operating cost as a percentage of income from earned premiums.

Increase in ratio driven by higher volume of retained claims especially in life and credit life insurance portfolios.

 

Note: The combined ratio is the sum of retained claims, selling expenses, administrative expenses, other operating income and expenses, tax expenses for ISS, PIS and Cofins and other taxes divided by earned premiums.

The extended combined ratio is the sum of these same expenses divided by the sum of earned premiums, managerial financial margin and commissions and fees.

Itaú Unibanco Holding S.A. 26

Management Discussion and Analysis Itaú Insurance, Pension Plan and Premium Bonds

Pension Plan

Product and advisory service innovation has played a significant role in the sustainable growth of pension plan operations for individuals. For companies, we offer specialized advisory services and develop customized solutions. We establish long-term partnerships with our corporate clients, adopting a communication strategy designed for the financial education of their employees.

39% share in the recurring net income of Itaú Insurance, Pension Plan and Premium Bonds

Pro Forma Income Statement of the Pension Plan Segment

In R$ millions	2Q18			1Q18			D			2Q17			D
Revenues from Pension Plan		180			78			130.5	%1		75			140.4	%
Selling Expenses		(1	)		(1	)		-6.1	%		(1	)		-11.7	%
Result from Pension Plan		179			77			131.8	%		74			142.0	%
Managerial Financial Margin		56			30			86.4	%		(13	)		-523.0	%
Commissions and Fees		418			424			-1.2	%2		403			3.8	%
Non-interest Expenses		(164	)		(166	)		-1.1	%		(151	)		8.8	%
Tax Expenses for ISS, PIS and Cofins and other taxes		(37	)		(33	)		12.3	%		(24	)		59.0	%
Income before Tax and Minority Interests		451			331			36.3	%		289			56.0	%
Income Tax/Social Contribution and Minority Interests		(200	)		(137	)		46.5	%		(128	)		56.3	%
Recurring Net Income		251			195			29.1	%		161			55.7	%
Efficiency Ratio (ER)		26.7	%		33.4	%		-670	bps		34.3	%		-760	bps

Highlight:

1. increase of R$106 million due to the liability adequacy test carried out in the quarter;

2. decrease driven by new products of pension plan with lower carrying rate.

Pension Plan Contribution

 

Note: Total pension plan contributions = Contributions (+) Portability requests accepted. Net pension plan contributions = Contributions (+) Portability requests accepted (-) Redemptions (-) Portability requests assigned.

Technical Provisions

 

Note: Redemption Rate = Redemptions/Balance of Technical Provisions for Pension Plan

Market Share *

Technical Provisions

Total

23.2%	▲	+ 30 bps
		(12 months)

Plans for Individuals

24.0%	▲	+ 50 bps
		(12 months)

* according to the National Federation of Pension and Life Insurance (FENAPREVI), in May 2018.

Premium Bonds

The PIC Premium Bonds product is targeted to clients who are interested in competing for prizes. This product can be purchased through single payment or monthly payment modality, in accordance with the profile and segment of each client.

6% share in the recurring net income of Itaú Insurance, Pension Plan and Premium Bonds

Pro Forma Income Statement of the Premium Bonds Segment

In R$ millions	2Q18			1Q18			D			2Q17			D
Revenues from Premium Bonds		117			115			1.5	%		140			-16.7	%1
Managerial Financial Margin		26			26			-0.1	%		54			-50.8	%2
Non-interest Expenses		(67	)		(64	)		4.7	%		(71	)		-5.3	%
Tax Expenses for ISS, PIS and Cofins and other taxes		(6	)		(6	)		2.4	%		(7	)		-14.3	%
Income before Tax and Minority Interests		69			71			-2.0	%		115			-39.6	%
Income Tax/Social Contribution and Minority Interests		(31	)		(32	)		-2.0	%		(52	)		-39.7	%
Recurring Net Income		38			39			-2.0	%		63			-39.6	%
Efficiency Ratio (ER)		49.1	%		47.5	%		160	bps		38.1	%		1,100	bps

Highlight:

1. due to lower revenues;

2. negative impact of the interbank deposit rate reduction on the remuneration of our

assets.

· In the second quarter of 2018, we distributed prizes in the aggregate amount of R$11.5 million.

· We started the sale of premium bonds via mobile in December 2017. In the second quarter of 2018, this channel accounted for 8.1% of sales to current account holders.

13.1 million outstanding certificates

▲ + 0.9% (vs. 1Q18)

▲ + 2.7% (vs. 2Q17)

Itaú Unibanco Holding S.A. 27

Management Discussion & Analysis Income Statement Analysis

Non-interest Expenses

Highlights

· Non-interest expenses increased 5.0% in the quarter, driven by higher administrative expenses, as a result of higher expenses on marketing related to the Soccer World Cup and to the new payment methods Itaú + Samsung and Apple Pay, and third-party services related to the IT department, in addition to higher expenses in Latin America (ex-Brazil), affected by the foreign exchange variation in the period.

· Compared to the first half of 2017, non-interest expenses increased 6.1%. Expenses from Brazil (ex-Citibank) increased 0.5%, below the inflation for the period (4.4% - IPCA).

In R$ millions	2Q18			1Q18			D			2Q17			D			1H18			1H17			D
Personnel Expenses		(5,193	)		(5,083	)		2.2	%		(4,989	)		4.1	%		(10,277	)		(9,769	)		5.2	%
Compensation, Charges and Social Benefits		(3,528	)		(3,417	)		3.3	%		(3,284	)		7.4	%		(6,945	)		(6,502	)		6.8	%
Management and Employees' Profit Sharing (*)		(1,103	)		(1,114	)		-1.0	%		(946	)		16.6	%		(2,217	)		(1,894	)		17.0	%
Employee Terminations and Labor Claims		(506	)		(510	)		-0.7	%		(706	)		-28.3	%		(1,016	)		(1,284	)		-20.9	%
Training		(56	)		(43	)		31.7	%		(53	)		6.7	%		(99	)		(89	)		11.3	%
Administrative Expenses		(4,153	)		(3,879	)		7.1	%		(3,969	)		4.7	%		(8,033	)		(7,756	)		3.6	%
Third-Party Services		(1,000	)		(935	)		7.0	%		(983	)		1.7	%		(1,935	)		(1,904	)		1.6	%
Data Processing and Telecommunications		(852	)		(902	)		-5.5	%		(945	)		-9.8	%		(1,753	)		(1,852	)		-5.3	%
Facilities		(685	)		(651	)		5.2	%		(637	)		7.6	%		(1,336	)		(1,255	)		6.5	%
Depreciation and Amortization		(536	)		(537	)		-0.2	%		(480	)		11.7	%		(1,074	)		(969	)		10.9	%
Advertising, Promotions and Publications		(381	)		(224	)		70.3	%		(267	)		42.8	%		(604	)		(466	)		29.6	%
Security		(169	)		(173	)		-2.2	%		(161	)		5.0	%		(342	)		(328	)		4.2	%
Financial System Services		(146	)		(145	)		1.0	%		(165	)		-11.2	%		(291	)		(320	)		-9.0	%
Transportation		(75	)		(75	)		0.2	%		(73	)		2.8	%		(150	)		(149	)		0.7	%
Materials		(64	)		(68	)		-5.0	%		(69	)		-6.7	%		(132	)		(137	)		-3.2	%
Travel		(56	)		(41	)		35.6	%		(49	)		14.4	%		(97	)		(88	)		9.5	%
Other		(189	)		(130	)		45.6	%		(140	)		34.3	%		(318	)		(288	)		10.6	%
Operating Expenses		(1,230	)		(1,167	)		5.4	%		(1,257	)		-2.1	%		(2,397	)		(2,322	)		3.3	%
Provision for Contingencies		(156	)		(166	)		-6.2	%		(339	)		-54.1	%		(321	)		(613	)		-47.6	%
Selling - Credit Cards		(545	)		(555	)		-1.9	%		(441	)		23.6	%		(1,100	)		(857	)		28.4	%
Claims		(77	)		(74	)		4.6	%		(71	)		8.4	%		(151	)		(144	)		5.3	%
Other		(452	)		(372	)		21.6	%		(406	)		11.6	%		(825	)		(708	)		16.4	%
Other Tax Expenses (**)		(80	)		(77	)		3.4	%		(88	)		-8.8	%		(157	)		(165	)		-4.6	%
Latin America (ex-Brazil) (***)		(1,605	)		(1,469	)		9.2	%		(1,249	)		28.4	%		(3,074	)		(2,540	)		21.0	%
Total		(12,261	)		(11,676	)		5.0	%		(11,551	)		6.1	%		(23,938	)		(22,552	)		6.1	%

^(*) Includes variable compensation and stock option plans. ^(**) Does not include ISS, PIS and Cofins. ^(***) Does not consider overhead allocation.

The increase in non-interest expenses in the quarter was driven by (i) higher administrative expenses, mainly in advertising expenses related to marketing campaigns for the Soccer World Cup and to the new mobile payment methods Itaú + Samsung and Apple Pay, in addition to the increase in third-party services related to the IT department and (ii) higher expenses in Latin America (ex-Brazil), impacted by the foreign exchange variation in the period.

Compared to the first half of 2017, the 6.1% increase was basically driven by the incorporation of the retail operations acquired from Citibank. Additionally, we recorded higher expenses in Latin America (ex-Brazil) driven by foreign exchange variation and higher rental, IT and marketing expenses. In the second quarter of 2017, we had the refund of the fine paid to SBIF (Superintendencia de Bancos e Instituciones Financieras de Chile).

Compared to the first half of 2017, expenses from Brazil (ex-Citibank) increased 0.5% in the first half of 2018, below the inflation for the period (4.4% - IPCA).

  Number of Employees - in thousands

 

99.9 thousand

employees at the end of the 2Q18

▲ + 0.3% (2Q18/1Q18)

▲ + 5.1% (2Q18/2Q17)

The retail operations acquired from Citibank in Brazil and the new employees hired for the branch network of the Retail Banking structure resulted in the expansion of our staff over the last 12 months. We are also hiring personnel to our technology area to speed up our digital transformation process.

Note: For companies under our control, 100% of the total number of employees is considered. No employees are considered for companies not controlled by us.

Itaú Unibanco Holding S.A. 28

Management Discussion & Analysis Income Statement Analysis

Efficiency Ratio

We present the effciency ratio and the risk-adjusted effciency ratio, which includes the cost of credit (result from loan losses, impairment and discounts granted).

Risk-Adjusted	=	Non-Interest Expenses (Personnel Expenses + Administrative Expenses + Operating Expenses + Other Expenses) + Cost of Credit
Effciency Ratio		(Managerial Financial Margin + Commissions and Fees + Result of Insurance, Pension Plan and Premium Bonds + Tax Expenses for ISS, PIS, Cofins and Other Taxes)

Efficiency Ratio:

· 12-month period: increase of 190 basis points from the same period of the previous year. Non-interest expenses increased 3.4%, whereas inflation for the period was 4.4% (IPCA). On the other hand, revenues decreased 1.0%, mainly as a result of the impact from the lower interbank deposit rate on our financial margin.

Risk-Adjusted Efficiency Ratio:

· 12-month period: decrease of 390 basis points from the same period of the previous year driven by the 27.9% decrease in cost of credit, due to lower provisions for loan losses and lower impairment charges on corporate securities.

Distribution Network

  Points of Service | Brazil and Abroad

The agreement with Tecban and its shareholders, announced on July 18, 2014, establishes the substitution of our external ATMs network for Banco24Horas ATMs. This agreement is enabling the increase in the total number of available ATMs.

 

Note: (i) Includes Banco Itaú Argentina and banks in Chile, Colombia, Paraguay and Uruguay; (ii) Includes ESBs (Electronic Service Branches) and points of service in third-parties’ establishments. (iii) Does not include points of sale.

  Branches and Client Service Branches | Brazil and Abroad

In Brazil, the reduction in the number of brick and mortar branches is related to the synergies coming from the retail operations acquired from Citibank.

 

(i) Includes IBBA representative offces abroad. Note: Includes Banco Itaú BBA, Banco Itaú Argentina and companies in Chile, Colombia, Panama, Paraguay and Uruguay.

Geographical Distribution of Service Network^(*)

Number of Branches and Client Service Branches

North		Northeast		Midwest		Southeast		South
	116		335		313		2,937		670

(*) In June 2018. Does not include branches and CSBs in Latin America and Itaú BBA.

Itaú Unibanco Holding S.A. 29

Management Discussion & Analysis Balance Sheet

Balance Sheet

Highlights

· 4.6% increase in the loan portfolio in this quarter, driven by the portfolios for individuals, very small, small and middle-market companies and Latin America.

· Annual growth of 21.1% in deposits, especially time deposits, due to the partial migration of funds derived from repurchase agreements backed by debentures (a 7.0% decrease in deposits received under securities repurchase agreements).

Assets
In R$ millions, end of period	2Q18			1Q18			D			2Q17			D
Current and Long-term Assets		1,514,685			1,496,519			1.2	%		1,422,005			6.5	%
Cash and Cash Equivalents		25,402			25,444			-0.2	%		22,700			11.9	%
Interbank Investments		277,465			264,524			4.9	%		288,333			-3.8	%
Securities and Derivative Financial Instruments		449,462			451,167			-0.4	%		389,593			15.4	%
Interbank and Interbranch Accounts		119,863			131,618			-8.9	%		117,856			1.7	%
Loan, Lease and Other Loan Operations		518,510			495,484			4.6	%		479,875			8.1	%
(Allowance for Loan Losses)		(34,308	)		(34,798	)		-1.4	%		(35,533	)		-3.4	%
Other Assets		158,292			163,081			-2.9	%		159,182			-0.6	%
Permanent Assets		27,999			27,835			0.6	%		26,330			6.3	%
Total Assets		1,542,684			1,524,354			1.2	%		1,448,335			6.5	%

Liabilities
In R$ millions, end of period	2Q18		1Q18		D			2Q17		D
Current and Long-Term Liabilities		1,405,008		1,391,216		1.0	%		1,315,971		6.8	%
Deposits		426,595		407,949		4.6	%		352,327		21.1	%
Deposits Received under Securities Repurchase Agreements		315,554		310,609		1.6	%		339,123		-7.0	%
Fund from Acceptances and Issue of Securities		115,008		115,237		-0.2	%		108,076		6.4	%
Interbank and Interbranch Accounts		42,871		42,506		0.9	%		36,126		18.7	%
Borrowings and Onlendings		61,872		63,230		-2.1	%		69,530		-11.0	%
Derivative Financial Instruments		31,655		34,355		-7.9	%		20,727		52.7	%
Technical Provisions for Insurance, Pension Plans and Premium Bonds		191,765		188,827		1.6	%		169,747		13.0	%
Other Liabilities		219,688		228,503		-3.9	%		220,314		-0.3	%
Deferred Income		2,678		2,408		11.2	%		2,181		22.8	%
Minority Interest in Subsidiaries		13,240		12,219		8.4	%		11,804		12.2	%
Stockholders' Equity		121,758		118,511		2.7	%		118,379		2.9	%
Total Liabilities and Equity		1,542,684		1,524,354		1.2	%		1,448,335		6.5	%

 

Itaú Unibanco Holding S.A. 30

Management Discussion & Analysis Balance Sheet

Credit Portfolio

Highlights

· In the quarter, all portfolios for individuals increased, except for rural loans. The portfolio for very small, small and middle-market companies increased 3.9%. These positive performances were due to higher demand from clients in these segments.

· The corporate loan portfolio remained stable in the quarter; however, excluding the effect of foreign exchange variation, the portfolio decreased 2.2% in the period, as a result from the low demand for credit in the segment.

Credit Portfolio by Product

In R$ billions, end of period	2Q18		1Q18		∆			2Q17		∆
Individuals - Brazil (1)		194.1		190.5		1.9	%		179.1		8.4	%
Credit Card Loans		66.1		65.0		1.7	%		56.4		17.2	%
Personal Loans		27.3		26.4		3.5	%		25.4		7.6	%
Payroll Loans (2)		45.4		44.7		1.6	%		44.8		1.4	%
Vehicle Loans		14.7		14.3		2.4	%		14.1		3.9	%
Mortgage Loans		40.5		40.0		1.3	%		38.3		5.9	%
Rural Loans		0.1		0.1		-7.2	%		0.2		-28.5	%
Companies - Brazil (1)		169.8		164.4		3.3	%		171.6		-1.1	%
Working Capital (3)		86.1		82.9		3.9	%		90.2		-4.5	%
BNDES/Onlending		19.3		20.7		-7.1	%		28.8		-33.1	%
Export / Import Financing		45.6		41.3		10.6	%		30.2		51.2	%
Vehicle Loans		3.2		2.8		11.8	%		2.3		35.7	%
Mortgage Loans		7.1		7.8		-8.7	%		9.5		-25.7	%
Rural Loans		8.5		8.9		-4.4	%		10.6		-19.9	%
Latin America (4)		154.6		140.6		10.0	%		129.2		19.7	%
Total without Financial Guarantees Provided		518.5		495.5		4.6	%		479.9		8.1	%
Financial Guarantees Provided		70.1		70.9		-1.1	%		72.5		-3.2	%
Total with Financial Guarantees Provided		588.6		566.4		3.9	%		552.3		6.6	%
Corporate Securities (5)		34.6		34.7		-0.2	%		35.0		-1.0	%
Total Risk		623.3		601.1		3.7	%		587.3		6.1	%

(1) Includes units abroad ex-Latin America. (2) Includes operations originated by the institution and acquired operations. (3) Also includes Overdraft, Receivables, Hot Money, Leasing, and other. (4) Includes Argentina, Chile, Colombia, Panama, Paraguay, Peru and Uruguay. (5) Includes Debentures, Certificates of Real Estate Receivables (CRI) and Commercial Paper.

Credit Concentration

As of June 30, 2018

Only 17.1% of the credit risk is concentrated on the 100 largest debtors.

			% of total		% of total
In R$ billions	Risk*		credits		Assets
Largest Debtor		5.5		0.9		0.4
10 Largest Debtors		31.6		5.4		2.0
20 Largest Debtors		48.1		8.2		3.1
50 Largest Debtors		74.1		12.6		4.8
100 Largest Debtors		100.5		17.1		6.5

* Including financial guarantees provided

Credit Portfolio without Financial Guarantees Provided by Vintage

Companies Credit Portfolio by Business Sector

With Financial Guarantees Provided

In R$ billions, end of period	2Q18		1Q18		∆
Public Sector		5.4		5.2		3.7	%
Private Sector | Companies		326.6		313.8		4.1	%
Real Estate		21.5		21.1		2.2	%
Food and beverage		18.3		17.8		2.8	%
Agribusiness and fertilizers		17.2		17.1		1.1	%
Energy and water treatment		16.1		16.1		0.0	%
Transportation		15.8		13.8		14.6	%
Vehicles and auto parts		15.3		15.1		1.5	%
Infrastructure work		11.7		11.0		6.5	%
Banks and other financial institutions		10.9		10.8		0.8	%
Petrochemical and chemical		10.1		8.8		14.0	%
Mining		9.7		8.8		10.5	%
Steel and metallurgy		9.6		9.1		4.9	%
Telecommunications		9.5		8.9		6.7	%
Pharmaceutical and cosmetics		7.7		7.3		5.6	%
Sugar and Alcohol		6.7		6.9		-2.9	%
Oil and gas		6.6		6.4		2.0	%
Capital Assets		6.5		6.6		-2.5	%
Electronic and IT		6.3		6.5		-2.9	%
Construction Material		6.2		5.8		7.1	%
Clothing and footwear		5.2		4.9		6.4	%
Services - Other		41.9		38.8		8.1	%
Commerce - Other		18.6		17.5		6.4	%
Industry - Other		9.1		8.4		9.5	%
Other		46.0		46.3		-0.8	%
Total		332.0		319.0		4.1	%

Itaú Unibanco Holding S.A. 31

Management Discussion & Analysis Balance Sheet  

Credit Portfolio¹ (Individuals and Companies) - Brazil

⁽¹⁾ Without financial guarantees provided. ⁽²⁾ Includes Individuals and Companies. ⁽³⁾ Average origination per working day in the quarter.

Note: For further information on products, please see to our Institutional Presentation, available on our Investor Relations website.

Itaú Unibanco Holding S.A. 32

Management Discussion & Analysis Balance Sheet  

Funding

Highlights

· Due to the regulatory changes, the migration trend from debentures to funds from bills and time deposits continues in this quarter.

· Compared to the second quarter of 2017, time deposits growth is partially related to the migration of funds from debentures linked to repurchase agreements and also to the incorporation of deposits from Citibank clients.

· Savings deposits increased 4.0% in the quarter and 16.3% when compared to the same period of the previous year.

After being purchased by the bank (the Conglomerate’s leading company, the debentures issued by the Conglomerate’s leasing companies are traded with characteristics similar to those of CDs and other time deposits, although they are classified as deposits received under securities repurchase agreements.

In R$ millions, end of period	2Q18		1Q18		∆			2Q17		∆
Demand Deposits		70,646		66,430		6.3	%		63,989		10.4	%
Savings Deposits		127,342		122,412		4.0	%		109,517		16.3	%
Time Deposits		225,762		215,743		4.6	%		176,133		28.2	%
Debentures (Linked to Repurchase Agreements and Third Parties’ Operations)		35,392		45,030		-21.4	%		89,814		-60.6	%
Funds from Bills (1) and Structured Operations Certificates		71,540		73,821		-3.1	%		66,387		7.8	%
(1) Total - Funding from Account Holders and Institutional Clients		530,682		523,436		1.4	%		505,840		4.9	%
Onlending		20,221		21,893		-7.6	%		27,193		-25.6	%
(2) Total – Funding from Clients		550,902		545,329		1.0	%		533,033		3.4	%
Assets Under Administration		1,050,220		1,026,534		2.3	%		900,543		16.6	%
Technical Provisions for Insurance, Pension Plan and Premium Bonds		191,765		188,827		1.6	%		169,747		13.0	%
(3) Total – Clients		1,792,887		1,760,690		1.8	%		1,603,324		11.8	%
Interbank deposits		2,843		3,361		-15.4	%		2,686		5.8	%
Funds from Acceptance and Issuance of Securities		43,468		41,416		5.0	%		41,689		4.3	%
Total Funds from Clients + Interbank Deposits		1,839,198		1,805,467		1.9	%		1,647,699		11.6	%
Working Capital and Other		549,245		533,414		3.0	%		513,054		7.1	%
Repurchase Agreements (2)		280,162		265,579		5.5	%		249,309		12.4	%
Borrowings		41,652		41,337		0.8	%		42,337		-1.6	%
Foreign Exchange Portfolio		61,963		66,743		-7.2	%		61,472		0.8	%
Subordinated Debt		53,925		52,241		3.2	%		52,104		3.5	%
Collection and Payment of Taxes and Contributions		4,544		4,618		-1.6	%		3,979		14.2	%
Working Capital (3)		106,999		102,895		4.0	%		103,853		3.0	%
Total Funds (Working Capital, Raised and Managed Assets)		2,388,443		2,338,880		2.1	%		2,160,753		10.5	%

(1) Includes funds from Real Estate, Mortgage, Financial, Credit and Similar Notes. (2) Does not include own issued debentures classified as funding. (3) Stockholders’ Equity + Non-Controlling Interest – Permanent Assets.

Loans to Funding Ratio

In R$ millions, end of period	2Q18			1Q18			∆			2Q17			∆
Funding from Clients		550,902			545,329			1.0	%		533,033			3.4	%
Funds from Acceptance and Issuance of Securities Abroad		43,468			41,416			5.0	%		41,689			4.3	%
Borrowings		41,652			41,337			0.8	%		42,337			-1.6	%
Other (1)		30,613			36,592			-16.3	%		32,543			-5.9	%
Total (A)		666,635			664,674			0.3	%		649,603			2.6	%
(-) Reserve Required by Brazilian Central Bank		(93,008	)		(99,132	)		-6.2	%		(92,465	)		0.6	%
(-) Cash (Currency) (2)		(25,402	)		(25,444	)		-0.2	%		(22,700	)		11.9	%
Total (B)		548,225			540,097			1.5	%		534,438			2.6	%
Loan Portfolio (C) (3)		518,510			495,484			4.6	%		479,875			8.1	%
Loan Portfolio / Gross Funding (C/A)		77.8	%		74.5	%		320	bps		73.9	%		390	bps
Loan Portfolio / Net Funding (C/B)		94.6	%		91.7	%		280	bps		89.8	%		480	bps

(1) Includes installments of subordinated debt that are not included in the Tier II Referential Equity.

(2) Includes cash, bank deposits of institutions without reserve requirements, foreign currency deposits in Brazil, foreign currency deposits abroad, and cash and cash equivalents in foreign currency.

(3) The loan portfolio balance does not include financial guarantees provided.

Itaú Unibanco Holding S.A. 33

Management Discussion & Analysis Balance Sheet by Currency  

Balance Sheet by Currency

We have a foreign exchange risk management policy associated with our asset and liability positions, primarily intended to mitigate impacts from fluctuations in foreign exchange rates on consolidated results.

Brazilian tax legislation determines that gains and losses from exchange rate variation on permanent foreign investments must not be included in the tax basis. On the other hand, gains and losses arising from financial instruments used to hedge such asset positions are affected by tax effects. Therefore, in order not to expose net income to exchange rate variations, a liability position must be built at a higher volume than the hedged assets.

Assets | As of June 30, 2018

				Business in			Local			Foreign		Business
In R$ millions, end of period	Consolidated			Brazil			Currency			Currency		Abroad
Cash and Cash Equivalents		25,402			11,636			7,331			4,305		13,806
Short - Term Interbank Investments		277,465			259,110			259,110			0		18,354
Securities and Derivative Instruments		449,462			368,516			365,460			3,057		146,405
Loans, Leases and Other Loan Operations		484,201			295,527			281,423			14,104		208,944
Loans		518,510			322,310			308,206			14,104		216,470
(Allowance for Loan Losses)		(34,308	)		(26,783	)		(26,783	)		0		(7,525	)
Other Assets		278,155			236,444			213,725			22,718		80,321
Foreign Exchange Portfolio		62,309			35,679			13,296			22,383		64,911
Other		215,846			200,765			200,429			336		15,410
Permanent Assets		27,999			79,672			18,392			61,279		9,566
Total Assets		1,542,684			1,250,904			1,145,442			105,462		477,397
Derivatives - Purchased Positions											250,868
Total Assets After Adjustments (a)											356,330

Liabilities | As of June 30, 2018

			Business in		Local		Foreign			Business
In R$ millions, end of period	Consolidated		Brazil		Currency		Currency			Abroad
Deposits		426,595		272,699		272,060		639			153,935
Funds Received under Securities Repurchase Agreements		315,554		285,628		285,628		0			29,926
Funds from Acceptances and Issue of Securities		115,008		139,122		72,471		66,652			38,437
Borrowings and Onlendings		61,872		42,405		21,176		21,229			39,734
Interbank and Interbranch Accounts		42,871		42,034		38,648		3,386			837
Derivative Financial Instruments		31,655		17,254		17,254		-			14,401
Other Liabilities		219,688		135,514		116,817		18,697			125,695
Foreign Exchange Portfolio		61,963		35,368		16,813		18,556			64,876
Other		157,725		100,145		100,004		141			60,820
Technical Provisions of Insurance, Pension Plan and Premium Bonds		191,765		191,542		191,542		-			222
Deferred Income		2,678		2,155		1,323		832			523
Minority Interest in Subsidiaries		13,240		814		814		-			12,426
Stockholders' Equity of Parent Company		121,758		121,737		121,737		-			61,261
Capital Stock and Reserves		109,233		110,756		110,756		-			59,905
Net Income		12,524		10,980		10,980		-			1,355
Total Liabilities and Equity		1,542,684		1,250,904		1,139,469		111,435			477,397
Derivatives - Sold Positions								288,502
Total Liabilities and Equity After Adjustments (b)								399,937
Net Foreign Exchange Sold Position Itaú Unibanco (c = a - b)								(43,607	)
Net Foreign Exchange Sold Position Itaú Unibanco (c) in US$								(11,309	)

Note: Does not include eliminations of operations between local and foreign units.

Assets and liabilities denominated in foreign currencies

In R$ millions, end of period	2Q18			1Q18			∆
Investments Abroad		61,279			78,795			-22.2	%
Net Foreign Exchange Position (Except Investments Abroad)		(104,886	)		(137,932	)		-24.0	%
Total		(43,607	)		(59,137	)		-26.3	%
Total in US$		(11,309	)		(17,792	)		-36.4	%

The net foreign exchange position includes not only hedge positions of our investments abroad, but also directional positions in foreign currencies.

Itaú Unibanco Holding S.A. 34

Management Discussion & Analysis Risk and Capital Management  

Risk and Capital Management

We believe risk management is an essential tool to optimize the use of resources and select the best business opportunities to maximize value creation for shareholders. In this context, the risk appetite defines the nature and the level of risks acceptable and the risk culture guides the attitudes required to manage them.

With the aim of strengthening our values and aligning our employees' behavior with the guidelines established in risk management, we have adopted a number of initiatives to disseminate the risk culture. It strengthens the individual and collective responsibility of all employees in the management of the risks inherent to the performed activities, respecting our ethical way of doing business.

We take a prospective stance in relation to capital management and, through our Internal Capital Adequacy Assessment Process (ICAAP), we assess the adequacy of our capital to face the incurred risks, composed by credit, market, operational risks and to face other material risks. The result of the last ICAAP - dated as of December 2017 – showed that, in addition to having enough capital to face all material risks, we have a significant cushion, thus ensuring the soundness of our equity position.

Our risk management process includes:

· Identification and measurement of existing and potential risks in our operations.

· Alignment of institutional policies for risk management control, procedures and methodologies according to the guidelines of the Board of Directors and our corporate strategies.

· Management of our portfolio seeking optimal risk-return ratios.

For further information on the risk and capital management structure, please refer to the Investor Relations website at www.itau.com.br/investor-relations > Corporate Governance > Risk and Capital Management – Pillar 3.

Liquidity Coverage Ratio

(LCR)

In R$ millions	2Q18			1Q18
HQLA*		172,178			192,158
Potential Cash Outflows		101,584			110,756
LCR (%)		169.5	%		173.5	%

For 2018, the minimum required by the Brazilian Central Bank is 90%.

Values are calculated based on the methodology defined by the Brazilian Central Bank, which is in line with Basel III international guidelines.

*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.

Note: Potential Cash Outflows calculated in standardized stress, determined by Circular No. 3,749.

Value at Risk - VaR ^1,2

It is a statistical metric that quantifies the maximum potential economic loss expected in normal market conditions.

In R$ millions, end of period	2Q18(2)		1Q18(2)
VaR by Risk Factor
Brazilian Interest Rates		912.4		882.6
Currency		16.4		17.3
Shares of Stock Exchange		27.3		32.1
Commodities		1.0		1.8
Diversification Effect		-466.0		-549.9
Total VaR		491.1		383.9
Maximum VaR in the quarter		603.6		525.0
Average VaR in the quarter		431.0		432.7
Minimum VaR in the quarter		317.2		369.2

(1) Values represented above consider a 1-day time horizon and a 99% confidence level.

(2) The VaR by risk factors includes foreign units.

Evolution of Itaú Unibanco’s VaR

 

Itaú Unibanco Holding S.A. 35

Management Discussion & Analysis Risk and Capital Management  

Capital

Highlights

· On June 30, 2018, our CET1 fully loaded with Basel III rules and considering the impact of the investment in XP reached 13.2% and our Tier I capital ratio fully loaded reached 14.2%.

Capital Requirements

Our minimum capital requirements follow the set of rules disclosed by the Brazilian Central Bank, which implement the Basel III global capital requirements standards in Brazil. These requirements are expressed as ratios of available capital - stated by the Referential Equity, or of Total Capital, composed of Tier I Capital and Tier II Capital - and the risk-weighted assets, or RWA.

The following table presents the schedule for phased-in implementation by the Central Bank of the capital adequacy and liquidity coverage ratio requirements under Basel III, as applicable to Itaú Unibanco Holding.

	From January 1,
Basel III Schedule (%)	2015		2016		2017		2018		2019
Common Equity Tier I		4.5		4.5		4.5		4.5		4.5
Tier I Capital		6.0		6.0		6.0		6.0		6.0
Total Regulatory Capital		11.0		9.875		9.25		8.625		8.0
Additional Common Equity Tier I (ACP)		-		0.625		1.5		2.375		3.5
conservation buffer		-		0.625		1.25		1.875		2.5
countercyclical buffer¹		-		-		-		-		-
systemic		-		-		0.25		0.5		1.0
Common Equity Tier I + ACP		4.5		5.1		6.0		6.9		8.0
Total Regulatory Capital + ACP		11.0		10.5		10.75		11.0		11.5
Liquidity Coverage Ratio		60		70		80		90		100
Prudential adjustments deductions		40		60		80		100		100

¹ According to circular No.3,769 of Central Bank and the announcement No. 31,752/18, required ACP countercyclical is zero.

Solvency Ratios

In R$ millions, end of period	2Q18			1Q18
Consolidated stockholders’ equity (BACEN)		135,734			131,812
Deductions from Core Capital		(25,277	)		(21,477	)
Core Capital		110,457			110,336
Additional Capital		7,746			75
Tier I		118,203			110,410
Tier II		15,869			15,868
Referential Equity (Tier I and Tier II)		134,072			126,278
Required Referential Equity		67,338			65,562
ACPRequired		18,542			18,053
Total Risk-weighted Exposure (RWA)		780,728			760,139
Credit Risk-weighted Assets (RWACPAD)		685,245			665,358
Operational Risk-weighted Assets (RWAOPAD)		70,468			70,468
Market Risk-weighted Assets (RWAMINT)		25,015			24,313
Tier I (Core Capital + Additional Capital)		15.1	%		14.5	%
Tier II		2.0	%		2.1	%
BIS (Referential Equity / Total Risk-weighted
Exposure)		17.2	%		16.6	%

Main changes in the quarter:

Referential Equity: Increased 6.2% due to approval by the Central Bank of Brazil for the perpetual subordinated notes to compose Additional Tier I Capital.

RWA: Increase of R$20,589 million, mainly due to the higher exposure of credit risk-weighted assets (RWA_CPAD) driven by the increase in our credit portfolio and by the exchange rate variation in the period.

BIS ratio: Increased 60 basis points due to the increase in our Additional Tier I Capital.

Note: Includes financial institutions, consortium managers, payment institutions, companies that acquire operations or directly or indirectly assume credit risk and investment funds in which the conglomerate substantially retains risks and benefits.

Capital Ratio according to Full Basel III Rules

On June 30, 2018, our CET1 fully loaded with Basel III rules and considering the impact of the investment in XP reached 13.2% and our Tier I capital ratio fully loaded reached 14.2%.

 

(1) The 0.6% impact represents AT1 issued. (2) Includes deductions of Goodwill, Intangible Assets (generated before and after October 2013), Tax Credits from Temporary Differences and Tax Loss Carryforwards, Pension Fund Assets, Equity Investments in Financial Institutions, Insurance and similar companies, the increase of the multiplier of the amounts of market risk, operational risk and certain credit risk accounts. This multiplier is 11.6 nowadays and will be 12.5 in 2019. (3) Based on preliminary information. (4) Includes the 10 basis points impact from the exchange rate variation over the Additional Tier I Capital perpetual notes.

Itaú Unibanco Holding S.A. 36

Management Discussion and Analysis Segment Analysis  

Results by Business Segment

The Pro Forma financial statements of Retail Banking, Wholesale Banking and Activities with the Market + Corporation presented below are based on managerial information derived from internal models to more accurately reflect the activities of the business units.

2^nd quarter of 2018

Pro Forma Income Statement by Segment

							Activities with
In R$ millions	Retail Banking			Wholesale Banking			the Market + Corporation			Itaú Unibanco
Operating Revenues		18,112			7,454			2,454			28,021
Managerial Financial Margin		10,072			4,821			2,402			17,295
Financial Margin with Clients		10,072			4,821			1,060			15,953
Financial Margin with the Market		-			-			1,342			1,342
Commissions and Fees		6,236			2,470			20			8,726
Result from Insurance, Pension Plans and Premium Bonds Operations before Retained Claims and Selling Expenses		1,803			163			33			1,999
Cost of Credit		(3,111	)		(490	)		1			(3,601	)
Provision for Loan Losses		(3,483	)		(789	)		1			(4,271	)
Impairment		-			(1	)		-			(1	)
Discounts Granted		(254	)		(19	)		-			(273	)
Recovery of Loans Written Off as Losses		626			319			-			945
Retained Claims		(317	)		(18	)		-			(335	)
Other Operating Expenses		(10,025	)		(3,754	)		(155	)		(13,934	)
Non-interest Expenses		(8,831	)		(3,404	)		(27	)		(12,261	)
Tax Expenses for ISS, PIS, Cofins and Other Taxes		(1,183	)		(347	)		(123	)		(1,654	)
Insurance Selling Expenses		(11	)		(3	)		(4	)		(19	)
Income before Tax and Minority Interests		4,659			3,192			2,300			10,151
Income Tax and Social Contribution		(1,747	)		(996	)		(753	)		(3,496	)
Minority Interests in Subsidiaries		(43	)		(222	)		(8	)		(273	)
Recurring Net Income		2,868			1,973			1,540			6,382
Recurring Return on Average Allocated Capital		31.1	%		15.6	%		20.1	%		21.6	%
Efficiency Ratio (ER)		53.2	%		48.0	%		1.2	%		47.1	%
Risk-Adjusted Efficiency Ratio (RAER)		71.9	%		55.0	%		1.1	%		61.0	%

Note: Non-interest Expenses includes Personnel Expenses, Administrative Expenses, Other Tax Expenses and Operating Expenses.

Loan and Capital by Segment

In R$ millions	Retail Banking			Wholesale Banking			Activities with the Market + Corporation			Itaú Unibanco
Loan, Lease and Other Credit Operations		224,907			293,603			-			518,510
(Allowance for Loan Losses)		(14,672	)		(12,050	)		-			(26,723	)
(Complementary Expected Loss Provisions)		-			-			(7,586	)		(7,586	)
Economic Allocated Capital - Tier I (*)		35,961			50,657			35,139			121,758

^(*) The Economic Capital allocated to the Activities with the Market + Corporation column contains all the excess capital of the institution in order to arrive at the accounting net equity.

Itaú Unibanco Holding S.A. 37

Management Discussion and Analysis Segment Analysis  

Results by Business Segment

1^st quarter of 2018

Pro Forma Income Statement by Segment

In R$ millions	Retail Banking			Wholesale Banking			Activities with the Market + Corporation			Itaú Unibanco
Operating Revenues		17,692			6,821			2,913			27,426
Managerial Financial Margin		9,715			4,432			2,852			16,999
Financial Margin with Clients		9,715			4,432			1,114			15,261
Financial Margin with the Market		-			-			1,738			1,738
Commissions and Fees		6,234			2,273			21			8,528
Result from Insurance, Pension Plans and Premium Bonds Operations before Retained Claims and Selling Expenses		1,742			116			40			1,898
Cost of Credit		(2,780	)		(1,007	)		(0	)		(3,788	)
Provision for Loan Losses		(3,164	)		(946	)		(0	)		(4,111	)
Impairment		-			(187	)		-			(187	)
Discounts Granted		(275	)		(9	)		(0	)		(284	)
Recovery of Loans Written Off as Losses		659			136			-			795
Retained Claims		(260	)		(19	)		-			(279	)
Other Operating Expenses		(9,513	)		(3,656	)		(213	)		(13,382	)
Non-interest Expenses		(8,310	)		(3,338	)		(28	)		(11,676	)
Tax Expenses for ISS, PIS, Cofins and Other Taxes		(1,192	)		(316	)		(181	)		(1,689	)
Insurance Selling Expenses		(12	)		(2	)		(3	)		(17	)
Income before Tax and Minority Interests		5,139			2,138			2,700			9,977
Income Tax and Social Contribution		(1,922	)		(588	)		(952	)		(3,462	)
Minority Interests in Subsidiaries		(44	)		(43	)		(9	)		(96	)
Recurring Net Income		3,173			1,508			1,739			6,419
Recurring Return on Average Allocated Capital		35.1	%		12.6	%		22.1	%		22.2	%
Efficiency Ratio (ER)		51.2	%		51.5	%		1.0	%		45.9	%
Risk-Adjusted Efficiency Ratio (RAER)		68.3	%		67.0	%		1.1	%		60.8	%

Note: Non-interest Expenses includes Personnel Expenses, Administrative Expenses, Other Tax Expenses and Operating Expenses.

Loan and Capital by Segment

In R$ millions	Retail Banking			Wholesale Banking			Activities with the Market + Corporation			Itaú Unibanco
Loan, Lease and Other Credit Operations		221,077			274,407			-			495,484
(Allowance for Loan Losses)		(14,944	)		(11,896	)		-			(26,840	)
(Complementary Expected Loss Provisions)		-			-			(7,958	)		(7,958	)
Economic Allocated Capital - Tier I (*)		37,768			50,517			30,226			118,511

^(*) The Economic Capital allocated to the Activities with the Market + Corporation column contains all the excess capital of the institution in order to arrive at the accounting net equity.

Itaú Unibanco Holding S.A. 38

Management Discussion and Analysis Segment Analysis  

Retail Banking

Highlights

· In the second quarter of 2018, net income decreased 9.6% from the previous quarter mainly due to (i) the increase in the provision for loan losses, driven by the increase in the loan portfolio, (ii) higher expenses related to marketing campaigns for the soccer World Cup and the new mobile payment methods Itaú + Apple and Samsung Pay and (iii) the increase in the number of employees.

· On the other hand, the financial margin with clients increased of R$357 million as a result of the better mix of products and higher number of calendar days in the second quarter of 2018.

Retail banking comprises banking products and services to both current account and non-current account holders. Offered products and services include: personal loans, credit cards, payroll loans, vehicle financing, mortgage loans, insurance, pension plan and premium bond products, and acquiring services, among others.

Profile of clients served:

The client´s profiles determines the segment, which enables us to be closer to them and understand their needs, in addition to offer the most proper products to meet their requirements:

Retail (income up to R$4,000)

Uniclass (income between R$4,000 to R$10,000)

Personnalité (income above R$10,000 or holding investments over R$100,000)

Itaú Empresas (very small and small companies, revenues up to R$30 million)

Segment´s highlight

Products

Focus on the value proposal for the client:

· Expasion of insurance offer via an open platform, in which we offer products from partner insurance companies to our clients;

· Launching the Credicard Pop card machine the Credicard Black card.

Clients

In April 2018, we had around 48 million clients in the Retail Bank.

 

Wholesale Banking

Highlights

Net income for the Wholesale Banking segment was up 30.9% from the first quarter of 2018, driven by:

· a 51.3% decrease in cost of credit driven by lower impairment charges and higher income from recovery of loans;

· an 8.8% increase in financial margin with clients, favored by the margin with clients in Latin America, better mix of products and higher number of calendar days;

· an 8.7% increase in commissions and fees, driven by a higher volume of operations in the capital markets.

Wholesale Banking comprises: i) the activities of Itaú BBA, the unit responsible for commercial operations with large companies and for investment banking services, ii) the activities of our units abroad, and iii) the products and services offered to high-net worth clients (Private Banking) and to middle market companies and institutional clients.

Profile of clients served and areas of operation:

Middle-Market Companies 30,000 clients (economic groups) with revenues between R$30 million and R$200 million.

Corporate Approximately 5,900 large business groups and over 190 financial institutions with revenues over R$200 million.

Investment Banking Our activities help companies raise funds through fixed income instruments and equities in public and private capital markets, comprising mergers and acquisitions advisory services. We provide advisory services to companies, equities funds and investors willing to invest in variable income products and engage in mergers and acquisitions.

Private Banking With a full global wealth management platform, we are market leaders in Brazil and one of the main players in Latin America.

Asset Management Itaú Asset Management is specialized in managing clients’ assets. In June 2018, it held R$632.4* billion in managed assets, a market share of 14.6%.

Capital Market Solutions Our business units offer local custody, fiduciary, international custody services and corporate solutions.

Activities Abroad

Information on our activities abroad is presented on next pages.

 

^(*) Source: ANBIMA (Brazilian Financial and Capital Markets Association) Management Ranking – June 2018. Includes Itaú Unibanco and Intrag.

Activities with the Market + Corporation

The Activities with the Market + Corporation column presents the result from capital surplus, excess subordinated debt and the net balance of tax assets and liabilities. It also shows financial margin with the market, costs of Treasury operations, the equity pickup of companies not linked to each segment and our interest in Porto Seguro.

Itaú Unibanco Holding S.A. 39

Management Discussion and Analysis Brazil and Latin America

Results by Region (Brazil and Latin America)

We present below the income statement segregated between our operations in Brazil, which include units abroad excluding Latin America, and our operations in Latin America excluding Brazil.

Additional information on our activities abroad is available on next pages.

Quarterly Income Statement

	2Q18									1Q18									∆
							Latin									Latin									Latin
In R$ millions	Consolidated			Brazil 1			America (ex-Brazil)			Consolidated			Brazil 1			America (ex-Brazil)			Consolidated			Brazil 1			America (ex-Brazil)
Operating Revenues		28,021			25,068			2,952			27,426			24,946			2,480			2.2	%		0.5	%		19.0	%
Managerial Financial Margin		17,295			15,105			2,190			16,999			15,223			1,777			1.7	%		-0.8	%		23.3	%
Financial Margin with Clients		15,953			14,220			1,733			15,261			13,792			1,469			4.5	%		3.1	%		18.0	%
Financial Margin with the Market		1,342			885			457			1,738			1,431			307			-22.8	%		-38.1	%		48.6	%
Commissions and Fees		8,726			8,007			719			8,528			7,858			670			2.3	%		1.9	%		7.3	%
Result from Insurance 2		1,999			1,956			43			1,898			1,865			33			5.3	%		4.9	%		28.9	%
Cost of Credit		(3,601	)		(3,068	)		(533	)		(3,788	)		(3,282	)		(505	)		-4.9	%		-6.5	%		5.3	%
Provision for Loan Losses		(4,271	)		(3,650	)		(621	)		(4,111	)		(3,557	)		(554	)		3.9	%		2.6	%		12.2	%
Impairment		(1	)		(1	)		-			(187	)		(187	)		-			-99.3	%		-99.3	%		-
Discounts Granted		(273	)		(270	)		(3	)		(284	)		(283	)		(1	)		-3.9	%		-4.6	%		166.1	%
Recovery of Loans Written Off as Losses		945			853			92			795			746			49			18.9	%		14.5	%		86.0	%
Retained Claims		(335	)		(319	)		(16	)		(279	)		(261	)		(19	)		19.9	%		22.5	%		-14.8	%
Other Operating Expenses		(13,934	)		(12,214	)		(1,720	)		(13,382	)		(11,724	)		(1,658	)		4.1	%		4.2	%		3.8	%
Non-interest Expenses		(12,261	)		(10,538	)		(1,724	)		(11,676	)		(10,068	)		(1,608	)		5.0	%		4.7	%		7.2	%
Tax Expenses and Other 3		(1,673	)		(1,676	)		3			(1,706	)		(1,657	)		(49	)		-1.9	%		1.2	%		-107.1	%
Income before Tax and Minority Interests		10,151			9,467			684			9,977			9,679			298			1.7	%		-2.2	%		129.0	%
Income Tax and Social Contribution		(3,496	)		(3,349	)		(147	)		(3,462	)		(3,405	)		(57	)		1.0	%		-1.6	%		158.7	%
Minority Interests in Subsidiaries		(273	)		(51	)		(222	)		(96	)		(53	)		(43	)		184.9	%		-5.0	%		422.8	%
Recurring Net Income		6,382			6,067			315			6,419			6,220			199			-0.6	%		-2.5	%		57.8	%

Year-to-date Income Statement

	1H18									1H17									∆
							Latin									Latin									Latin
In R$ millions	Consolidated			Brazil 1			America (ex-Brazil)			Consolidated			Brazil 1			America (ex-Brazil)			Consolidated			Brazil 1			America (ex-Brazil)
Operating Revenues		55,446			50,014			5,433			54,471			50,053			4,419			1.8	%		-0.1	%		22.9	%
Managerial Financial Margin		34,294			30,328			3,966			34,800			31,685			3,114			-1.5	%		-4.3	%		27.4	%
Financial Margin with Clients		31,214			28,012			3,202			31,309			28,673			2,636			-0.3	%		-2.3	%		21.5	%
Financial Margin with the Market		3,080			2,316			764			3,491			3,013			478			-11.8	%		-23.1	%		59.8	%
Commissions and Fees		17,255			15,865			1,390			15,881			14,639			1,243			8.6	%		8.4	%		11.8	%
Result from Insurance 2		3,898			3,821			77			3,790			3,729			62			2.8	%		2.5	%		24.2	%
Cost of Credit		(7,388	)		(6,350	)		(1,038	)		(9,755	)		(8,788	)		(967	)		-24.3	%		-27.7	%		7.3	%
Provision for Loan Losses		(8,382	)		(7,207	)		(1,175	)		(10,340	)		(9,310	)		(1,030	)		-18.9	%		-22.6	%		14.0	%
Impairment		(188	)		(188	)		-			(550	)		(550	)		-			-65.7	%		-65.7	%		-
Discounts Granted		(558	)		(554	)		(4	)		(547	)		(524	)		(23	)		1.8	%		5.6	%		-82.5	%
Recovery of Loans Written Off as Losses		1,740			1,599			141			1,682			1,596			86			3.4	%		0.2	%		63.9	%
Retained Claims		(614	)		(580	)		(35	)		(582	)		(563	)		(18	)		5.7	%		2.9	%		89.4	%
Other Operating Expenses		(27,316	)		(23,938	)		(3,378	)		(25,912	)		(23,051	)		(2,861	)		5.4	%		3.8	%		18.1	%
Non-interest Expenses		(23,938	)		(20,605	)		(3,332	)		(22,552	)		(19,759	)		(2,793	)		6.1	%		4.3	%		19.3	%
Tax Expenses and Other 3		(3,379	)		(3,333	)		(46	)		(3,360	)		(3,292	)		(68	)		0.5	%		1.2	%		-33.1	%
Income before Tax and Minority Interests		20,127			19,146			982			18,222			17,650			572			10.5	%		8.5	%		71.7	%
Income Tax and Social Contribution		(6,957	)		(6,754	)		(203	)		(5,659	)		(5,597	)		(62	)		22.9	%		20.7	%		225.7	%
Minority Interests in Subsidiaries		(369	)		(104	)		(265	)		(219	)		(105	)		(114	)		68.7	%		-1.0	%		133.3	%
Recurring Net Income		12,801			12,287			514			12,345			11,949			396			3.7	%		2.8	%		29.7	%

¹ Includes units abroad ex-Latin America.

² Result from Insurance includes the Result from Insurance, Pension Plan and Premium Bonds Operations before Retained Claims and Selling Expenses.

³ Include Tax Expenses (ISS, PIS, COFINS and other) and Insurance Selling Expenses.

Note: Latin America information is presented in nominal currency.

Itaú Unibanco Holding S.A. 40

Management Discussion & Analysis Activities Abroad

Global Footprint

Latin America

Latin America is a priority for our international expansion due to geographic and cultural proximity to Brazil. Our purpose is to be recognized as the “Latin American Bank”, becoming a reference in the region for all financial services provided to individuals or companies.

Over the past years, we consolidated our presence in Argentina, Chile, Paraguay and Uruguay. In these countries, we operate in retail, companies, corporate and treasury segments, with commercial banking as our main focus. With the recent merger between Banco Itaú Chile and CorpBanca, which assured our presence in Colombia and Panama, we expanded even more our operations in the region. In Peru, we operate in the corporate segment through a representative office. In Mexico, we are present through an office dedicated to equity research activities.

 

Itaú CorpBanca

In Chile, Colombia and Panama we operate through Itaú CorpBanca, from which results have been consolidated since the second quarter of 2016.

This operation represents an important step in our strategy to expand our presence in Latin America, diversifying our operations in the region.

+ more information on the next page

 

Other Countries

Additionally, we have operations in Europe (Portugal, United Kingdom, Spain, France, Germany and Switzerland), in the United States (Miami and New York), in the Caribbean (Cayman Islands and Bahamas), in the Middle East (Dubai), and in Asia (Tokyo), mainly serving institutional clients, investment banking, corporate and private banking

Itaú BBA International

In 2016, Moody’s assigned to, for the first time, Itau BBA International plc (domiciled in the United Kingdom) an investment grade, long-term deposit and issuer ratings of A3. In assigning the ratings, Moody’s recognized the strength of Itau BBA International plc’s strong macro profile and balance sheet.

Other operations

Our international units offer a variety of financial products through its branches. Fund raising can be conducted by our branches located in the Cayman Islands, Bahamas and New York. These offices also enhance our ability to manage our international liquidity.

Itaú Unibanco Holding S.A. 41

Management Discussion & Analysis Activities Abroad  

We present the results of Latin American countries in constant currency, thus eliminating the effect of exchange rate variation and hedge adjustments, and in managerial concept, which considers Brazilian accounting criteria, in addition to the allocation of Brazil’s cost structure, the impact of Brazilian income tax and social contribution and the allocation of the tax benefit of interest on own capital.

Itaú CorpBanca

The table below shows results obtained by Itaú CorpBanca in Chile, Colombia and Panama. Focused on medium companies, corporate and retail, Itaú CorpBanca offers a wide range of banking products.

 

In Chile, Itaú CorpBanca is the 4th largest private bank in terms of loans. Branches migration and client segmentation were completed in December, 2017. In Colombia, as from May 2017, we have operated under the “Itaú” brand.

In R$ millions (in constant currency)	2Q18			1Q18			Δ
Operating Revenues		1,843			1,625			13.4	%
Managerial Financial Margin		1,487			1,279			16.3	%1
Financial Margin with Clients		1,182			1,110			6.5	%
Financial Margin with the Market		305			169			80.8	%
Commissions and Fees		355			347			2.5	%
Cost of Credit		(384	)		(493	)		-22.1	%2
Provision for Loan Losses		(463	)		(542	)		-14.7	%
Discounts Granted		(1	)		(1	)		-24.5	%
Recovery of Loans Written Off as Losses		80			51			57.6	%
Other Operating Expenses		(1,118	)		(1,087	)		2.8	%
Non-Interest Expenses		(1,115	)		(1,084	)		3.0	%3
Tax Expenses for ISS, PIS, Cofins and Other Taxes		(3	)		(3	)		3.0	%
Income before Tax and Minority Interests		341			45			649.8	%
Income Tax and Social Contribution		(37	)		25			-247.0	%
Minority Interests in Subsidiaries		(225	)		(46	)		387.4	%4
Recurring Net Income		79			24			225.0	%
Return on Average Equity - Annualized		4.6	%		1.4	%		320	bps
Efficiency Ratio		60.6	%		66.8	%		-620	bps

1. Higher margin with the market, mainly driven by the volatility of foreign exchange rates and by the marking to market of securities in Chile, and higher margin with clients, driven by the gain from commercial derivatives.

2. Decrease mainly driven by lower provisions in the corporate segment in Chile;

3. Increase mainly driven by higher personnel expenses, seasonally lower in the first quarter of the year;

4. Minority interests are calculated based on the accounting figures of the operation in BRGAAP.

Banco Itaú Argentina

We offer products and services for corporate, small and middle-market companies and retail segments, focused on large companies that have trade relations with Brazil.

 

In R$ millions (in constant currency)	2Q18			1Q18			Δ
Operating Revenues		357			274			30.5	%
Managerial Financial Margin		260			180			44.6	%
Financial Margin with Clients		221			164			34.8	%1
Financial Margin with the Market		39			16			145.5	%
Commissions and Fees		97			94			3.5	%
Cost of Credit		(33	)		(13	)		144.8	%
Provision for Loan Losses		(34	)		(14	)		138.1	%2
Discounts Granted		-			-			-
Recovery of Loans Written Off as Losses		1			1			-
Other Operating Expenses		(221	)		(209	)		5.4	%
Non-Interest Expenses		(192	)		(187	)		2.7	%
Tax Expenses for ISS, PIS, Cofins and Other Taxes		(29	)		(23	)		27.6	%
Income before Tax and Minority Interests		104			51			103.5	%
Income Tax and Social Contribution		(36	)		(12	)		194.8	%
Recurring Net Income		68			39			74.5	%
Return on Average Equity - Annualized		18.2	%		11.7	%		650	bps
Efficiency Ratio		58.4	%		74.3	%		-1,590	bps

1. Increase mainly driven by higher funding margin by both volume and spread;

2. Increase driven by higher provisions for the corporate segment;

Itaú Unibanco Holding S.A. 42

Management Discussion & Analysis Activities Abroad  

Banco Itaú Paraguai

In Paraguay, we offer products and services for small and medium companies, agribusiness and corporate segments, institutional clients and retail clients. The main sources of revenues in Paraguay are retail products, especially credit cards. In the corporate segment, we are a reference in agribusiness.

 

In R$ millions (in constant currency)	2Q18			1Q18			Δ
Operating Revenues		249			227			9.9	%
Managerial Financial Margin		183			162			13.0	%
Financial Margin with Clients		152			139			8.9	%1
Financial Margin with the Market		31			23			38.5	%
Commissions and Fees		66			65			2.1	%
Cost of Credit		(8	)		(25	)		-67.9	%2
Provision for Loan Losses		(17	)		(26	)		-34.0	%
Discounts Granted		(2	)		-			-
Recovery of Loans Written Off as Losses		12			2			592.8	%
Other Operating Expenses		(115	)		(118	)		-2.0	%
Non-Interest Expenses		(115	)		(117	)		-2.0	%
Tax Expenses for ISS, PIS, Cofins and Other Taxes		(1	)		(1	)		-
Income before Tax and Minority Interests		126			85			49.0	%
Income Tax and Social Contribution		(48	)		(29	)		67.3	%
Recurring Net Income		77			56			39.4	%
Return on Average Equity - Annualized		24.9	%		18.2	%		670	bps
Efficiency Ratio		46.1	%		51.7	%		-560	bps

1. Increase driven by higher spread in loan operations.

2. Decrease driven by lower provisions, in addition to gains from credit sale.

Banco Itaú Uruguai

We operate in the corporate, small and middle-market companies and retail segment, targeting medium and high-income clients. Through the OCA credit card company, more focused on the mass market, we complement our strategy of serving a wide range of clients through customized financial solutions.

 

In R$ millions (in constant currency)	2Q18			1Q18			Δ
Operating Revenues		419			399			5.0	%
Managerial Financial Margin		221			204			8.4	%
Financial Margin with Clients		182			167			8.8	%1
Financial Margin with the Market		39			37			6.6	%
Commissions and Fees		198			195			1.4	%
Cost of Credit		(12	)		(26	)		-54.6	%
Provision for Loan Losses		(12	)		(27	)		-53.2	%
Recovery of Loans Written Off as Losses		1			1			-
Other Operating Expenses		(264	)		(256	)		3.1	%
Non-Interest Expenses		(263	)		(255	)		3.1	%2
Tax Expenses for ISS, PIS, Cofins and Other Taxes		(1	)		(1	)		-
Income before Tax and Minority Interests		143			117			22.4	%
Income Tax and Social Contribution		(56	)		(44	)		27.3	%
Recurring Net Income		87			73			19.4	%
Return on Average Equity - Annualized		25.2	%		22.4	%		280	bps
Efficiency Ratio		63.0	%		64.2	%		-120	bps

1. Increase, mainly driven by higher spread in loan operations, in addition to higher funding margin by both volume and spread;

2. Increase mainly driven by higher administrative expenses with card processing.

Itaú Unibanco Holding S.A. 43

 

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Itaú Unibanco Holding S.A. 44

  

Management Discussion & Analysis Our Shares

Our Shares

Our capital stock is comprised of common shares (ITUB3) and non-voting shares (ITUB4), both traded on B3 (São Paulo stock exchange). Non-voting shares are also traded as depositary receipts - ADRs - on the NYSE (New York Stock Exchange).

Market Capitalization

R$261 billion │ US$68 billion

Market capitalization is the total number of outstanding shares (common and non-voting shares) multiplied by the average price of the non-voting share on the last trading day in the period.

Market Consensus (ITUB4)

Corporate Structure Chart and Free Float Participation

Strengths of our structure

· Family controlling ownership ensuring a long-term view

· Professional management team

· Broad shareholder base (52.74% of our shares in free float)

· Strong corporate governance

Performance in the Capital Market

	(R$)			(R$)			(US$)
	ITUB4			ITUB3			ITUB
Price and Volume	(PN Shares)			(ON Shares)			(ADR)
Closing Price at 6/29/2018		40.34			35.90			10.38
Maximum price in the quarter		52.27			45.70			15.76
Average price in the quarter		45.81			40.36			12.81
Minimum price in the quarter		37.26			33.50			9.92
Closing Price at 3/29/2018		51.31			45.13			15.60
Closing price at 6/30/2017		36.75			32.54			11.05
Change in the 2Q18		-21.4	%		-20.5	%		-33.5	%
Change in the last 12 months		9.8	%		10.3	%		-6.1	%
Average daily trading financial volume in 12 months - million		534.7			17.4			137.3
Average Daily Trading Volume in 2Q18 - million		620.4			4.8			142.0
Shareholder Base and Indicators	06/30/18			03/31/18			06/30/17
Number of Shares - million		6,536			6,536			6,582
Common Shares (ON) - million		3,306			3,306			3,352
Non-Voting Shares (PN) - million		3,231			3,231			3,231
Treasury Shares - million		60.6			48.4			83.7
Number of Outstanding Shares - million		6,476			6,488			6,499
Recurring Net Income per Share in the Quarter (R$)		0.98			0.99			0.95
Net Income per Share in the Quarter (R$)		0.96			0.97			0.92
Book Value per Share (R$)		18.80			18.27			18.22
Price/Earnings (P/E) (1)		10.72			13.78			10.41
Price/Book Value (P/B) (2)		2.15			2.81			2.02

(1) Closing price of non-voting share at the period end/earnings per share. For calculation purposes, the retained earnings of the last 12 months were included;

(2) Closing price of non-voting share at the period-end/Book value per share at the period end.

Shareholders’ Remuneration

Shares Buyback Program

In the first half of 2018, we acquired 13.1 million preferred shares of own issue at the average price of R$38.89 per share. Including buybacks already carried out, our current program allows the acquisition of up to 14,195,517 common shares and up to 36.9 million preferred shares of own issue, and may be carried out up to June 19, 2019.

Stock Split

The Board of Directors approved in Extraordinary General Stockholders’ Meeting held on July 27, 2018 the split of 50% of book-entry shares with no par value. Therefore, stockholders will receive one (1) new share for each two (2) shares of the same type they own. The monthly dividends will be maintained at R$ 0.015 per share so that the total amounts monthly paid by the Company to stockholders will be increased by fifty percent (50%) after the inclusion of the split shares in the stockholding position. We believe that trading our shares at a more accessible level combined with a larger number of outstanding shares will generate potentially more business and a higher financial volume.

For more information about our share buyback program and stock split, please refer to our Investor Relations website.

Itaú Unibanco Holding S.A. 46

Management Discussion & Analysis Disclosure Criteria

Disclosure Criteria

General

Managerial financial statements relating to prior periods may have been reclassified for comparison purposes.

The tables in this report show the figures in millions or billions. Variations and totals, however, are calculated in units. Therefore, there may be differences due to rounding.

Future expectations arising from the reading of this analysis should take into consideration the risks and uncertainties that involve any activities and that are outside the control of the companies of the conglomerate (political and economic changes, volatility in interest and foreign exchange rates, technological changes, inflation, financial disintermediation, competitive pressures on products, prices and changes in tax legislation, among others).

Managerial Financial Margin

Spread-Sensitive Operations: consists of the results from credit assets, non-credit interest-bearing assets and liabilities.

Financial Margin with the market: consists basically of treasury transactions that include Asset and Liability Management (ALM) and proprietary trading operations.

Coverage and Extended Coverage Ratio

Coverage ratio is calculated by dividing the total allowance balance by the balance of operations more than 90 days overdue. The extended coverage ratio is calculated by dividing the total allowance balance by the balance of operations more than 90 days overdue and renegotiated operations, excluding double counting of renegotiated operations more than 90 days overdue. Total allowance includes the allowance for financial guarantees provided, which totaled R$1,810 million in June 2018 and is recorded in liabilities in accordance with CMN Resolution No. 4,512/16.

Itaú Insurance, Pension Plan and Premium Bonds

The combined ratio is the sum of retained claims, selling expenses, administrative expenses, other operating income and expenses, tax expenses for ISS, PIS and Cofins and other taxes divided by earned premiums.

The extended combined ratio is the sum of these same expenses divided by the sum of earned premiums, managerial financial margin and commissions and fees.

VaR (Value at Risk)

The Consolidated VaR of Itaú Unibanco is calculated based on the Historical Simulation methodology, which fully reprices all its positions based on historical series of asset prices. In the third quarter of 2016, we started to calculate VaR of the regulatory portfolio based on internal models approved by the Brazilian Central Bank. Therefore, the breakdown of risk factors was standardized to comply with Circular No. 3,646 of the Brazilian Central Bank.

Business Analysis

Pro Forma Adjustments - Adjustments made to the balance sheet and income statement for the year are based on managerial information from the business units.

The financial statements were adjusted in order to replace the accounting stockholders’ equity with funding at market prices. Subsequently, the financial statements were adjusted to include revenues linked to allocated capital at each segment. The cost of subordinated debt and the respective remuneration at market prices were allocated to segments on a pro rata basis, in accordance with the economic allocated capital.

Impacts related to capital allocation are included in the Pro Forma financial statements. To this end, adjustments were made to the financial statements, using a proprietary model.

Allocated Capital - The economic allocated capital model (EAC) was adopted for the Pro Forma financial statements by segment and, as of 2015, we changed our calculation methodology. In addition to the Tier I allocated capital, the EAC model includes the effects of the calculated expected loan losses, complementary to that required by the Brazilian Central Bank through CMN Circular No. 2,682/99.

Accordingly, the allocated capital includes the following components: credit risk (including expected losses), operational risk, market risk, and insurance underwriting risk.

Based on Tier I capital measure we determined the Return on Allocated Capital, which corresponds to an operational performance ratio consistently adjusted to the required capital needed to support the risks of the financial positions assumed in accordance with our risk appetite.

As of the first quarter of 2016, we have adopted the Basel III rules in our managerial capital allocation model.

Income Tax Rate - We adopt the full income tax rate, net of the tax effect of payment of interest on capital, for the Retail Banking, Wholesale Banking and Activities with the Market + Corporation segments. The difference between the income tax amount determined for each segment and the effective income tax amount, as stated in the consolidated financial statements, is allocated in the column Activities with the Market + Corporation.

Itaú Unibanco Holding S.A. 47

(A free translation of the original in Portuguese)

Report of independent auditors on
supplementary information

To the Board of Directors and Stockholders
Itaú Unihanco Holding S.A.

Introduction

In connection with our review of the financial statements of Itaú Unibanco Holding S.A. (Bank) and Itaú Unibanco Holding S.A. and its subsidiary companies (Consolidated) as of June 30, 2018, on which we issued an unqualified opinion dated July 30, 2018, we performed a review of the accounting information contained in the supplementary information included in the Management Discussion and Analysis Report of Itaú Unibanco Holding S.A. and its subsidiaries for the six month period ended June 30, 2018.

Scope of the Review

We conducted our review in accordance with Brazilian standards issued by the Federal Accountancy Council. Our review mainly comprised: (a) inquiry of, and discussion with, management responsible for the accounting, financial and operational areas of the Bank and its subsidiaries with regard to the main criteria adopted for the preparation of the accounting information presented in the supplementary information and (b) review of the significant information and of the subsequent events which have, or could have, significant effects on the financial position and the operations of the Bank and its subsidiaries. The supplementary information included in the Management Discussion and Analysis Report is presented to permit additional analysis. Notwithstanding, this information should not be considered an integral part of the financial statements.

Conclusion

Based on our review, we are not aware of any material modifications that should be made to the accounting information contained in this supplementary information, in order for it to be adequately presented, in all material respects, in relation to the financial statements at June 30, 2018, taken as a whole, prepared in accordance with the accounting practices adopted in Brazil applicable to institutions authorized to operate by the Brazilian Central Bank (BACEN).

São Paulo, July 30, 2018

PricewaterhouseCoopers

Auditores Independentes

CRC 2SP000160/O-5

Washington Luiz Pereira Cavalcanti

Contador CRC 1SP172940/O-6

2 of 2

PricewaterhouseCoopers, Av. Francisco Matarazzo 1400, Torre Torino, São Paulo, SP, Brasil, 05001-903, Caixa Postal 61005,

T: +55 (11) 3674 2000, www.pwc.com.br

Itaú Unibanco Holding S.A. 48

MANAGEMENT REPORT – January to June 2018

The Management Report and the Financial Statements of Itaú Unibanco Holding S.A. (Itaú Unibanco or Company) and its subsidiaries for the period from January to June 2018 follow the regulations established by the Brazilian Corporate Law, the National Monetary Council (CMN), the Central Bank of Brazil (BACEN), the Brazilian Securities and Exchange Commission (CVM), the Superintendence of Private Insurance (SUSEP), the National Council of Private Insurance (CNSP), the National Superintendence of Supplementary Pension (PREVIC), and the recommendations of the International Accounting Standards Board (IASB).

1 Economic Environment

1.1) Domestic Scenario

The Central Bank of Brazil started a cycle of cuts in interest rates in October 2016 and, since then, the Selic rate was reduced to current 6.50% per year from 14.25%. Inflation for the 12-month period, measured by IPCA, reached 4.4% in June.

GDP increased 1.0% in 2017 and 1.3% in the twelve-month period up to March 2018. This result is an improvement from the perfomance recorded between 2015 and 2016, a period overshadowed by economic downturn.

According to data from BACEN, loans granted increased 4.9% in actual terms in the 12-month period up to May 2018. Inventory of actual loans fell 1.5% in May, considering the annual comparison, from a decrease of 6.0% in the same period of 2017. In the same comparison, the inventory of loans as a proportion of GDP fell to 46.6% in 2018 from 47.9% in 2017. The default rate reduced 80 bps over the last 12 months and is now at 3.3%.

At the end of the first half of 2018, the Brazilian real was priced at R$3.86 against the U.S. dollar, compared to R$3.31 at the end of 2017. The short position in BACEN foreign exchange swaps is US$67 billion. On the other hand, the volume of foreign exchange reserves closed June 2018 at US$379.5 billion.

1.2) Latin America Scenario (ex-Brazil)

The economic activity has been recovering in Chile, Colombia and Peru, driven by higher commodities prices and a more robust growth of the world economy. Economic expansion remains strong in Paraguay, supported by the growth of the agricultural production. On the other hand, in view of more adverse external financial conditions, Argentina has experienced a severe economic downturn, also impacted by the effects of the drought gripping that country. The activity in Uruguay has slowed down, in line with the slower growth in Argentina and Brazil.

Central banks are adopting a more conservative approach. Chile, Colombia and Peru are signaling that there is no more room for interest cuts, and Paraguay has kept interest rates stable considering that its inflation is under control. Argentina and Uruguay, in turn, have increased interest rates.

1.3) International Scenario

The U.S. economy grew 2.3% in 2017 and 2.5% in the twelve-month period up to March 2018. In this recent period, job creation has remained on a strong pace, higher than 200,000 by month, and unemployment rate fell to 4.0% in June 2018 from 4.1% in December 2017.

In the Euro zone, the growth of the economic activity has remained robust, boosted by domestic demand and a more accommodative policy adopted by the European Central Bank. After a 2.4% growth in 2017, the 12-month growth calculated for the first quarter of 2018 was 2.7%.

China grew 6.8% in the first quarter of 2018. However, China’s economy has shown signs of a gradual slowdown, as a result of slightly more restrictive policies.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 51

2 Itaú Unibanco Highlights

2.1) Corporate Governance

Fiscal Council

A permanent council reinforces our corporate governance

The Extraordinary General Stockholders’ Meeting of July 27 approved the permanent operation of our Fiscal

Council, which works independently from the Board of Directors, our external auditors and the Audit Committee. It is worth mentioning that the Fiscal Council has been established annually and continuously since 2000. Its main responsibilities are:

· inspecting the activities carried out by our Management; and

· reviewing and providing an opinion on our financial statements.

Reference Form

Available on our Investor Relations website, this document includes a number of significant information on the bank

In May, we filed with CVM the 2017 Reference Form, which addresses a number of significant information, such as the Company’s economic and financial position, risk factors, management structure, capital structure, and securities issued, among others. This is a regulatory document issued annually, which must be updated whenever significant changes occur over the year, in accordance with CVM Instruction No. 480.

In this edition, chapters on risks and compensation were restated, and we adopted the IFRS as the standard approach for this document. To access the Reference Form, visit website https://www.itau.com.br/investor-relations > Financial Information > CVM Filings.

Audit Committee

Election of a new member keeps its composition independence

At a meeting of the Board of Directors held in April, Antonio Carlos Barbosa de Oliveira was elected as a new member of the Audit Committee, replacing Geraldo Travaglia Filho, who has reached the maximum number of terms of office permitted (5 years).

Additionally, Committee’s Chairman Gustavo Jorge Laboissière Loyola and members Antonio Francisco de

Lima Neto, Diego Fresco Gutierrez¹, Maria Helena dos Santos Fernandes de Santana, and Rogério Paulo Calderón Peres were reelected.

All members of the Audit Committee are deemed independent members, as defined by the Central Bank of Brazil.

¹ Financial expert: a member with proven knowledge in accounting and auditing areas.

2.2) Strategic Frontlines

Seeking excellence and the creation of differentiated value for our stockholders and stakeholders, we have defined six strategic priorities with medium and long-term prospects, which have guided our management, as follows: client centricity, digital transformation, people management, risk management, sustainable profitability, and internationalization. Corporate governance and sustainability pervade all these frontlines.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 52

We highlight some significant initiatives in connection with this strategic agenda:

Digital Transformation

Samsung Pay

A simple, safe and private way to make payments and shop at stores, by apps or the Internet

We have continuously invested in new groundbreaking products and services. As of the first quarter of 2018, our clients were able to use Apple Pay (with a three-month exclusivity) and Samsung Pay as of June. Both tools are new ways for clients to make payments in the retail and e-commerce segments, enabling shopping with their iPhone, Apple Watch, iPad or Macbook (Apple Pay) or Samsung Smartphones and Smartwatch Gear (Samsung Pay), in a simple, safe and private way, without the need to use a plastic card.

People Management

New Dress Code

A new way to dress was implemented for all employees

In June, we launched the “Vou como Sou” campaign, aimed at providing employees with more freedom and comfort to dress to work, in addition to encouraging a diversity of styles within the organization. Based on surveys with employees and clients, this campaign aims at providing flexibility to our dress code, highlighting the importance of using common sense and respecting the environment scenario and the schedule of appointments in the day-to-day when choosing what to wear.

Diversity

Significant progress towards equal opportunities

In order to build up an increasingly fair company free from prejudice, we announced that the performance of our employees in maternity leave will be evaluated based on the period they worked in, with their profit sharing, nevertheless, being fully paid.

Accordingly, we have adjusted some issues that impacted exclusively and directly our women employees, thus making headway towards equal opportunities for all employees.

2.3) Return to Stockholders

Dividends and Interest on Capital

Stockholders with shareholding position on August 17, 2018 will be entitled to receive R$0.73042 per share, net of income tax

On July 30, 2018, the Board of Directors approved the payment of R$4.7 billion in dividends and interest on capital, net of income tax, to be credited on August 30, 2018, based on the shareholding position on August 17, 2018.

Up to June 30, 2018, we paid, provided or identified in the Stockholders’ Equity R$5.3 billion in dividends and interest on capital, net of income tax.

Share Buyback

Amount bought back from January to June 2018 totaled R$509.5 million

In the period from January to June 2018, we acquired 13.1 million preferred shares of own issue in the total amount of R$509.5 million at the average price of R$38.89 per share. It is worth mentioning that, including buybacks already carried out, our current program allows the acquisition of up to 14,195,517 common shares and up to 36.9 million preferred shares of own issue, and operations may be carried out up to June 19, 2019.

Accordingly, on June 30, 2018, our treasury stock totaled 60,584,295 preferred shares.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 53

This share buyback program aims at: (i) maximizing the capital allocation through the efficient application of available funds, (ii) arranging for the delivery of shares to employees and management members of the Company and its subsidiaries under the scope of remuneration models and long-term incentive plans; (iii) using the shares acquired if business opportunities arise in the future, and (iv) cancel them, eventually, increasing the individual share of each stockholder.

50% Stock Split

With a resulting 50% increase in dividends paid monthly

The Extraordinary General Stockholders’ Meeting of July 27 approved the 50% split of our shares and American Depositary Receipts (ADRs). Therefore, our stockholders will receive one new share for each two shares of the same type they own.

We believe that trading our shares at a more accessible level combined with a larger number of outstanding shares will generate potentially more business and a higher financial volume, which may create value to our stockholders.

After obtaining approval from the Central Bank of Brazil, we will disclose to the market the dates and other operational procedures to be carried out within the split operational scope.

2.4) Sustainability

Vigeo Eiris Best Emerging Market Performers Ranking

Making up this index for the sixth consecutive time

We once again make up the Vigeo Eiris Best Emerging Market Performers Ranking, composed of 101 companies from 20 countries with the best scores in indicators such as human rights, decent work practices, environment protection, corporate governance, business ethics, and contribution for economic and social development in the areas where they operate.

2.5) Regulatory Environment

Banking regulation is essential for the soundness and efficiency of the financial system. When amended, it may have direct impact on the bank’s results. We highlight below the main changes in this quarter:

Credit Cards

In April 2018, the Central Bank of Brazil disclosed new credit cards rules, which came into force on June 1, 2018, according to which financial institutions are barred from charging different interest rates for revolving credit for clients who pay at least the minimum amount of the bill and for those clients who are in default. The only difference permitted is that the bank may charge the latter with additional fine and interest in arrears. Additionally, the minimum percentage for payment of the bill (previously set at 15%) may be established by each institution individually, based on its own credit policy and the clients’ profile.

Since September 2017, Itaú Unibanco has equalized the rate for both audiences in order to be in conformity with Resolution No. 4,558, which, in the institution’s viewpoint, already imposed that condition to the card market.

Overdrafts

New self-regulation guidelines on the use of overdraft protection, announced in April by Febraban, came into force on July 1, 2018. Among these guidelines, we highlight the offer to pay the debit balance in installments for consumers who use this product on a non-emergency situation, that is, whenever they compromise at least 15% of the overdraft limit available during 30 consecutive days.

This initiative from Febraban is an important hallmark in the sector to make headway and encourage people to have a healthier financial management and make a more conscious use of this product. This is a measure designed inside the banking self-regulation environment, which should contribute to boost the credit activity in Brazil.

Accordingly, Itaú Unibanco has adopted the following practices:

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 54

· alerting the client whenever he or she uses the overdraft protection;

· providing the client, at any moment, with a credit line for making payments in installments, at lower interest rates;

· whenever the client uses the overdraft limit on a non-emergency situation, the bank will offer a cheaper credit line more adequate to his or her needs, such as consumer credit, payroll loans or customized credit;

· Information will be stated separately in the bank statement, making it easier for clients to monitor the balance and the overdraft limit available;

· agreements will be updated, emphasizing the emergency nature of this product.

The overdraft area on the website was redesigned, bringing, in addition to a simpler and more user-friendly language, videos to guide the use of this product and a calculator that enables the client to make simulations of the fees to be charged when using the overdraft protection.

Additionally, based on improved credit and default indicators and the successive reductions of the Selic rate, Itaú Unibanco has reduced interest rates in overdrafts in the last months.

For further information, please access: https://www.itau.com.br/creditos-financiamentos/cheque-especial/.

3 Awards, Recognition and Certifications

In the second quarter of 2018, we received recognition that contributed to strengthen our reputation. We list below the main awards received in the period:

Awards and Recognition

Segurador Brasil 2018 (Brazil Insurer 2018) Award (Segurador Brasil Magazine - April 2018)	Itaú Unibanco was the winner in “Sales Growth” and “Market Share Evolution” in the private pension plan category. The bank also won with the "Best Performance" in the extended warranty category.
Empresa Legal (Legally Cool Company) (Padrão Group / CIP – April 2018)	Itaú Unibanco was recognized as a Legally Cool Company, that is, it is a company recognized for engaging in settling conflicts through dialogue.
SP De Bike ao Trabalho 2018 (SP commuting by bike 2018) Award (Bike Anjo / Instituto Ethos / GCCA – Global Call for Climate Action – May 2018)	Itaú Unibanco was awarded in the Large Companies category for the impact and diversification of its actions.
Marcas Mais Amadas pelos Millennials (brands most beloved by millenials) award (Padrão Group / CIP - May 2018)	Itaú Unibanco was deemed the most beloved brand in the Banks segment.
Excelência em Serviços ao Cliente (Excellence in Customer Service) Award (Consumidor Moderno – May 2018)	Itaú Unibanco was the winner in the Banks and Cards categories, with ITAUCARD.
Efinance Award (Executivos Financeiros magazine - May 2018)	Itaú Unibanco was the winner in the Mobile Banking category with the “Depositing cheques on mobile” and "Essence of Personnalité service on Mobile" cases, and in the Education & Training category with the “Virtual Reality in Personnalité Features” case.
Euromoney FX Survey 2018 (Euromoney magazine - May 2018)	Banco Itaú Paraguay was the winner in the Paraguay’s best bank category.
Marcas Mais (brands most) (Estado Group - June 2018)	Itaú Unibanco ranked first in the Banks category and Itaú Seguros/Sulamerica ranked third in the Insurance Companies category.
Euromoney for Excellence (Euromoney magazine - June 2018)	Itaú Unibanco won as the best bank in Latin America, the best bank in Paraguay, and the best bank in Brazil.

Certifications

ISO 14001	Itaú Unibanco Business Center (local acronym IUCE) located at the Conceição district was certified for the first time, and Tatuapé Administrative Center was certified for the fourth consecutive time. ISO 14001 certification recognizes the bank's commitment to reduce environmental impact and promote the conscious use of natural resources.
ISO 27001	Itaú Unibanco holds the ISO 27001 certification, an international information security benchmark.
LEED	The Faria Lima 3500 building was recognized by the LEED operation and maintenance certification. This body assesses buildings with the best performance in connection with natural resources.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 55

4 Selected Financial Information

We offer a comprehensive range of banking services to a wide variety of market segments, including individuals and companies. We segregate our operations into wholesale and retail and we are structured to meet all our clients’ needs, either credit, investment, insurance or financial services in general. We present below a summary of our financial information:

	jun/30/2018			jun/30/2017
Profitability
Net Income (R$ billion)		12.5			12.1
Recurring Net Income (R$ billion)		12.8			12.3
Recurring Return on Average Equity - Annualized		22.0	%		21.8	%
Gross Income Related to Financial Operations (R$ billion)		20.2			24.5
Assets
Total Assets (R$ billion)		1,542.7			1,448.3
Total Credit Portfolio, including Financial Guarantees Provided (R$ billion)		588.6			552.3
Assets - Latin America (R$ billion)		212.7			180.1
Loan Portfolio/Funding(1)		77.8	%		73.9	%
Stockholders' Equity (R$ billion)		121.8			118.4
Funding
Demand, Savings, and Time Deposits (R$ billion)		423.7			349.6
Debentures (Linked to Repurchase Agreemens and Third Parties' Operations) (R$ billion)		35.4			89.8
Funds from Bills and Structured Operations Certificates (R$ billion)		71.5			66.4
Free, Raised and Managed Assets (R$ billion)		2,388.4			2,160.8
Capital and Liquidity
Solvency Ratio - Prudential Conglomerate (BIS Ratio)		17.2	%		18.4	%
Fixed Asset Ratio		21.4	%		24.0	%
Total High-Quality Liquid Assets(2)(3) (R$ billion)		172.2			185.3
Liquidity Coverage Ratio (LCR)(3)		169.5	%		201.7	%
Customer Service Network
Total Number of Employees (individuals)		99,914			95,065
Brazil		86,144			81,252
Abroad		13,770			13,813
Branches and Client Service Branches (CSBs) – units		4,904			4,955
Digital Branches		160			154
Branches - Brazil(4)		3,531			3,523
CSBs - Brazil		697			736
Branches + CSBs - Latin America		516			542
Automated Teller Machines (ATMs) – units(5)		47,650			46,572

⁽¹⁾  The loan portfolio does not include financial guarantees provided.

⁽²⁾  Correspond to weighted inventories of assets that remain liquid in the market even in periods of stress, which can easily be converted into cash and are classified as low risk. Used for LCR calculation.

⁽³⁾  We monitor the Liquidity Coverage Ratio (LCR), as it refers to free and highly liquid assets and net cash outflows over a 30-day period and is calculated based on the methodology defined by Circular No. 3,749, of the Central Bank of Brazil, in line with international guidelines. BACEN minimum requirement is 90% for 2018.

⁽⁴⁾  Includes IBBA representative offices abroad.

⁽⁵⁾  Includes CSBs (Client Service Branches), points of services in third parties’ establishments and Banco24horas ATMs.

From January to June 2018, net income was R$12.5 billion, up 3.8% from the same period of the previous year. Gross income related to financial operations was adversely impacted by the tax effect of our foreign investments hedge, which was offset in the tax lines of our statement of income. This income was also negatively impacted by the cycle of reductions in the Selic rate started in October 2016, which was offset by lower provisions for loan losses.

Our personnel, administrative and operating expenses increased 7.5% between the first six months of 2017 and 2018, mainly driven by an increase in compensation and benefits and in credit card selling expenses. Our risk-adjusted efficiency ratio was 60.9%, down 300 basis points from the same period of 2017.

Itaú Unibanco is present in 19 countries with a team totaling 99.9 thousand employees on June 30, 2018, whose work is customer-satisfaction oriented accordingly. Employees’ fixed compensation plus charges and benefits totaled R$8.2 billion in the first six months of 2018.

In this six-month period, we highlight the 8.9% increase in commissions and fees from the first half of 2017, mainly those related to fund management, service packages, and credit cards.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 56

Loan portfolio reached R$588.6 billion at the end of June 2018, up 6.6% from the same period in 2017. In the first half of 2018, we recorded an increase in the portfolios for individuals and very small, small and middle-market companies.

We highlight below our loan portfolio with financial guarantees provided at the end of June 2018:

The strategic credit risk management supports the quality of our loan portfolio, and nonperforming loans over 90 days overdue closed the first half of 2018 at 2.8%, down 40 basis points from the same period of the previous year.

4.1) Capital Management and Distribution of Profits

Aimed at ensuring soundness and capital availability to support our business growth, regulatory capital levels were kept above those required by the Central Bank of Brazil, as evidenced by the Common Equity Tier I, Tier I, and BIS ratios. We intend to maintain the minimum level, established by the Board of Directors, of 13.5% for Tier 1 Capital, which must be composed of at least 12% Common Equity Tier I. For further information, see to Risk and Capital Management Report – Pillar 3” report on our website www.itau.com.br/investor-relations > Corporate Governance.

The minimum capital requirement, either regulatory levels and those established by the Board of Directors, is directly associated with the percentage of dividends and interest on capital to be distributed to stockholders. This amount is determined based on: profitability in the year, the prospective use of capital based on the expected business growth, share buyback programs, mergers and acquisitions and regulatory changes that may modify capital requirements, and changes in tax legislation. Therefore, the percentage to be distributed may change every year based on the company’s profitability and capital demands, and always takes into account the minimum distribution set forth in the Bylaws.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 57

Itaú Unibanco remunerates its stockholders by means of monthly and complementary payments, and the latter have historically occurred twice a year and are equally distributed regardless of the type of share. The Stockholders Remuneration Policy is available on our Investor Relations website www.itau.com.br/investor-relations > Corporate Governance > Rules and Policies.

At the end of June 2018, the BIS ratio reached 17.2%, of which: (i) 15.1% related to Tier I Capital, which comprises Common Equity and Additional Tier I Capital, and (ii) 2.0% related to Tier II Capital. These indicators provide evidence of our effective capacity of absorbing unexpected losses. The amount of subordinated debt, which is part of our Tier II regulatory capital, reached R$15.8 billion on June 30, 2018.

· Perpetual Subordinated Notes – In March 2018, we accessed the international debt market by issuing perpetual subordinated notes/AT1¹ in the amount of US$750 million. We had already issued US$1.25 billion in these notes in December 2017.

In May 2018, the Central Bank of Brazil approved the inclusion of this debt, as from the issue date, in the bank’s Reference Equity as Additional Tier I Capital, adding approximately 38 basis points² to the bank’s Tier I Capital ratio. It is worth mentioning that in April 2018, the Central Bank of Brazil had already approved the issue carried out in December 2017, which composed approximately 60 basis points of the ratio.

Therefore, the total impact of these two AT1 issues on our Tier 1 capital ratio was 98 basis points².

1 These notes have a fixed rate of 6.5%, applicable until the fifth anniversary of the date of issue. Thereafter, the coupon will be reset every five years, based on the prevailing interest rate for U.S. Treasury bonds for the same period. Itaú Unibanco may repurchase these notes on the fifth anniversary of the issue date or on any subsequent interest payment date, subject to prior approval from Brazilian authorities, including the Central Bank of Brazil.

2 Takes into account the foreign exchange rate on June 30 at R$3.86.

5 Capital Markets

Itaú Unibanco is the largest private bank in Latin America, with market value of R$260.6 billion. We are ranked by Bloomberg among the 20 largest financial institutions in the world. We are deemed Brazil’s most valued brand by publications such as Interbrand, among other relevant recognition.

			R$		%
Shares	June 30, 2018		June 30, 2017		Change
Recurring net income per share(1)		1.98		1.90		4.2
Net income per share(1)		1.93		1.85		4.3
Book value per share(1)		18.80		18.22		3.2
Number of outstanding shares (in millions)		6,475.5		6,498.6		(0.4	)
Price of preferred share (ITUB4)(2)		40.25		36.78		9.4
Price of common share (ITUB3)(2)		35.81		32.48		10.3
Price of preferred share (PN)(2)/Recurring net income per share		10.16		9.68		5.0
Price of preferred share (PN)(2)/Book value per share		2.14		2.02		6.1
Average Daily Trading Volume (in millions)		1,203.2		932.1		29.1
B3 Volume (in millions)		673.7		454.5		48.2
NYSE Volume (in millions)		529.4		477.6		10.9
Market value (in billions)(3)(4)		260.6		239.0		9.0

(1) Calculated based on the weighted average of the number of shares.

(2) Based on the average quotation on the last day of the period.

(3) Calculated based on the average quotation of preferred shares on the last day of the period (quotation of average preferred multiplied by the number of outstanding shares at the end of the period).

(4) Taking into account the closing price of common and preferred shares multiplied by total outstanding shares of each type of shares, the market value reached R$246.5 billion on June 30, 2018 and R$ 224.7 billion on June 30, 2017, resulting in a variation of 9.7%.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 58

21 Years’ Worth of History on NYSE

A historical hallmark in the U.S. stock market

We are celebrating the 21st anniversary of our listing on the New York Stock Exchange, the largest in terms of business volume. To celebrate this date, we were honored at the Closing Bell, a traditional ceremony that marks the end of the trading day in this U.S. stock exchange. This occasion counted on the presence of members of the Executive Committee and Board of Directors.

Our shares are traded in the U.S. as ADRs with the ticker ITUB, with one ADR equivalent to one preferred share. In the first half of 2018, Itaú Unibanco shares traded daily on the NYSE amounted to an average of R$529.4 million (US$152.3 million).

APIMEC Cycle 2018

Commitment to transparency

Over 2018, we held 15 APIMEC meetings with the attendance of 1,770 participants. At these events we carried out presentations on the macroeconomic scenario and our results, strategies and outlooks. We responded to all the questions posted in these events, and the most recurring topics were the impact of interest rates on our results, capital and dividends, and competition in the digital market.

All presentations are available on our Investor Relations website and were submitted to capital markets regulators.

We invite you all to attend our Apimec meeting in the city of São Paulo on September 12. The event will be broadcast live and with simultaneous translation on our IR website.

Additionally, we took part in 12 conferences and two road shows in Brazil and abroad and held quarterly conference calls in English and Portuguese.

6 Regulation

6.1) INDEPENDENT AUDITORS – CVM Instruction No. 381

Procedures adopted by the Company

The policy adopted by us, including our subsidiaries and parent company, to contract non-audit related services from our independent auditors is based on the applicable regulations and internationally accepted principles that preserve the auditor’s independence. These principles include the following: (a) an auditor cannot audit his or her own work, (b) an auditor cannot function in the role of management in companies where he or she provides external audit services; and (c) an auditor cannot promote the interests of its client.

In the period from January to June 2018, the independent auditors and related parties did not provide non-audit related services in excess of 5% of total external audit fees.

According to CVM Instruction No. 381, we list below the non-audit services provided and related dates:

· January 11 - review of compliance with transfer pricing policies;

· February 1 and April 3 - review of tax-accounting bookkeeping; and

· February 15 and May 23 -acquisition of technical materials.

Independent Auditors’ justification – PricewaterhouseCoopers

The provision of the non-audit services described above does not affect the independence or the objectivity of the external audit of Itaú Unibanco, parent and its subsidiary/affiliated companies. The policy adopted for providing non-audit related services to Itaú Unibanco is based on principles that preserve the independence of Independent Auditors, all of which were observed in the provision of the referred services, including the approval from Itaú Unibanco’s Audit Committee.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 59

6.2) BACEN – Circular No. 3,068/01

We hereby represent to have the financial capacity and the intention to hold to maturity securities classified in the “held-to-maturity securities” category in the balance sheet, in the amount of R$40.9 billion, corresponding to 9.1% of total securities and derivative financial instruments held in June 2018.

6.3) International Financial Reporting Standards (IFRS)

We disclosed the complete financial statements in accordance with the International Financial Reporting Standards (IFRS) at the same date of this publication, pursuant to CVM/SEP Circular Letter No. 01/13. The complete financial statements are available on the Investor Relations website of Itaú Unibanco (www.itau.com.br/investor-relations > Financial Information).

7 Information and Acknowledgments

The information presented in this material is available on the Investor Relations’ website of Itaú Unibanco (www.itau.com.br/investor-relations > Financial Information) and on the websites of CVM and of the Securities and Exchange Commission (SEC). Our results may also be accessed on mobile devices and tablets, and through our “Itaú RI” (app), respectively.

We thank our employees for their dedication and skills, which have been essential to reaching consistent and differentiated results, and our stockholders and clients for their trust (Approved at the Board of Directors' Meeting of July 30, 2018).

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 60

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
Ana Lúcia de Mattos Barretto Villela (1)
Fábio Colletti Barbosa
Gustavo Jorge Laboissière Loyola
João Moreira Salles
José Galló	Executive Vice-Presidents
Marco Ambrogio Crespi Bonomi	André Sapoznik
Pedro Luiz Bodin de Moraes	Caio Ibrahim David
Ricardo Villela Marino	Claudia Politanski
AUDIT COMMITTEE	Executive Officers
Chairman	Alexsandro Broedel Lopes (*)
Gustavo Jorge Laboissière Loyola	Fernando Barçante Tostes Malta
	Leila Cristiane Barboza Braga de Melo
	Paulo Sergio Miron
Members
Antonio Carlos Barbosa de Oliveira
Antonio Francisco de Lima Neto
Diego Fresco Gutierrez	Officers
Maria Helena dos Santos Fernandes de Santana	Álvaro Felipe Rizzi Rodrigues
Rogério Paulo Calderón Peres	Andre Balestrin Cestare
	Emerson Macedo Bortoloto
	Gilberto Frussa
FISCAL COUNCIL	José Virgilio Vita Neto
Chairman	Matias Granata
José Caruso Cruz Henriques	Renato Barbosa do Nascimento
	Rodrigo Luis Rosa Couto
	Sergio Mychkis Goldstein
Members	Tatiana Grecco
Alkimar Ribeiro Moura	Tom Gouvêa Gerth
Carlos Roberto de Albuquerque Sá
	(*)  Group Executive Finance Director and Head of Investor Relations
	(1) elected at the A/ESM of 4/25/2018, in phase of approval by BACEN.

Accountant

Arnaldo Alves dos Santos

CRC - 1SP - 210.058/O-3

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 61

ITAÚ UNIBANCO S.A.

Director-Generals
Eduardo Mazzilli de Vassimon	Officers (continued)
Márcio de Andrade Schettini	Fernando Julião de Souza Amaral
	Fernando Mattar Beyruti
	Flávio Delfino Júnior
	Flavio Ribeiro Iglesias
Executive Vice-Presidents	Francisco Vieira Cordeiro Neto
Alberto Fernandes	Gabriel Guedes Pinto Teixeira
André Sapoznik	Gabriela Rodrigues Ferreira
Caio Ibrahim David	Gilberto Frussa
Claudia Politanski	Gustavo Trovisco Lopes
	João Antonio Dantas Bezerra Leite
	Jorge Luiz Viegas Ramalho
	José de Castro Araújo Rudge Filho
	José Virgilio Vita Neto
	Laila Regina de Oliveira Pena de Antonio
Executive Officers	Leon Gottlieb
Alexsandro Broedel Lopes	Lineu Carlos Ferraz de Andrade
André Luis Texeira Rodrigues	Livia Martines Chanes
Carlos Eduardo Monico	Luís Fernando Staub
Christian George Egan	Luís Tadeu Mantovani Sassi
Fernando Barçante Tostes Malta	Luiz Felipe Monteiro Arcuri Trevisan
Fernando Marsella Chacon Ruiz	Luiz Fernando Butori Reis Santos
Flávio Augusto Aguiar de Souza	Luiz Severiano Ribeiro
João Marcos Pequeno de Biase	Manoela Varanda
Leila Cristiane Barboza Braga de Melo	Marcello Siniscalchi
Luís Eduardo Gross Siqueira Cunha	Marcio Luis Domingues da Silva
Luiz Eduardo Loureiro Veloso	Marco Antonio Sudano
Marcelo Kopel	Mário Lúcio Gurgel Pires
Marcos Antônio Vaz de Magalhães	Mario Magalhães Carvalho Mesquita
Ricardo Ribeiro Mandacaru Guerra	Matias Granata
Sergio Guillinet Fajerman	Milena de Castilho Lefon Martins
Wagner Bettini Sanches	Pedro Barros Barreto Fernandes
	Renato Cesar Mansur
	Ricardo Nuno Delgado Gonçalves
Officers	Ricardo Urquijo Lazcano
Adriana Maria dos Santos	Rodnei Bernardino de Souza
Adriano Cabral Volpini	Rodrigo Jorge Dantas de Oliveira
Adriano Maciel Pedroti	Rodrigo Luís Rosa Couto
Alessandro Anastasi	Rodrigo Rodrigues Baia
Álvaro Felipe Rizzi Rodrigues	Rogerio Narle Elmais
Ana Lúcia Gomes De Sá Drumond Pardo	Rogerio Vasconcelos Costa
Andre Balestrin Cestare	Sergio Mychkis Goldstein
André Carvalho Whyte Gailey	Tatiana Grecco
André Henrique Caldeira Daré	Thales Ferreira Silva
Andrea Carpes Blanco	Thiago Luiz Charnet Ellero
Andréa Matteucci Pinotti	Valéria Aparecida Marretto
Atilio Luiz Magila Albiero Junior	Vanessa Lopes Reisner
Badi Maani Shaikhzadeh
Bruno Machado Ferreira
Carlos Eduardo Mori Peyser
Carlos Henrique Donegá Aidar
Carlos Rodrigo Formigari (*)
Carlos Orestes Vanzo
Cesar Ming Pereira da Silva
Cesar Padovan
Cícero Marcus de Araújo
Cintia Carbonieri Fleury de Camargo
Claudio César Sanches
Cláudio José Coutinho Arromatte
Cristiane Magalhães Teixeira Portella
Cristiano Guimarães Duarte
Cristiano Rogério Cagne
Eduardo Cardoso Armonia
Eduardo Corsetti
Eduardo Esteban Mato Amorin
Eduardo Hiroyuki Miyaki
Eduardo Queiroz Tracanella
Emerson Savi Junqueira
Emilio Pedro Borsari Filho
Eric André Altafim
Estevão Carcioffi Lazanha
Fabiana Pascon Bastos
Fabiano Meira Dourado Nunes
Felipe de Souza Wey
Felipe Weil Wilberg
Fernando Della Torre Chagas

(*) Elected at the ESM of 06/05/2018, awaiting approval from BACEN.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 62

BANCO ITAÚ BBA S.A.

BOARD OF EXECUTIVE OFFICERS

Chief Executive Officer

Eduardo Mazzilli de Vassimon

Executive Vice-President

Alberto Fernandes

Executive Officers

Christian George Egan

Luís Eduardo Gross Siqueira Cunha

Officers

Adriano Cabral Volpini

André Luís Teixeira Rodrigues (*)

Badi Maani Shaikhzadeh (*)

Carlos Eduardo Mori Peyser

Carlos Henrique Donegá Aidar

Cristiano Guimarães Duarte

Cristiano Rogério Cagne

Eduardo Hiroyuki Miyaki

Eric André Altafim

Felipe Weil Wilberg

Flávio Delfino Júnior

Gabriel Guedes Pinto Teixeira

Gilberto Frussa

Ricardo Nuno Delgado Gonçalves (*)

Roderick Sinclair Greenlees

Rodrigo Luís Rosa Couto

Sergio Mychkis Goldstein

Vanessa Lopes Reisner

(*) Elected at the ESM of 04/30/2018, awaiting approval from BACEN.

ITAÚ SEGUROS S.A.

Chief Executive Officer

Luiz Eduardo Loureiro Veloso

Officers

Adriano Cabral Volpini

Badi Maani Shaikhzadeh

Carlos Henrique Donegá Aidar

Eduardo Hiroyuki Miyaki

Luiz Fernando Butori Reis Santos

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 63

ITAÚ UNIBANCO HOLDING S.A.

Consolidated Balance Sheet (Note 2a)

(In thousands of Reais)

Assets	Note	06/30/2018			06/30/2017
Current assets			1,092,054,413			1,034,263,560
Cash and cash equivalents			25,401,913			22,699,562
Interbank investments	4b and 6		276,207,374			286,781,880
Money market			249,976,996			256,532,891
Money market – Assets Guaranteeing Technical Provisions - SUSEP	11b		3,471,309			2,983,076
Interbank deposits			22,759,069			27,265,913
Securities and derivative financial instruments	4c, 4d and 7		320,190,798			279,896,808
Own portfolio			79,590,639			92,097,133
Subject to repurchase commitments			29,742,056			4,664,488
Pledged in guarantee			6,408,235			5,657,884
Securities under resale agreements with free movement			500,925			4,158,979
Deposited with the Central Bank			7,453,239			3,857,989
Derivative financial instruments			16,408,910			10,224,870
Assets guaranteeing technical provisions - PGBL / VGBL fund quotas	11b		176,994,586			155,598,087
Assets guaranteeing technical provisions – other securities	11b		3,092,208			3,637,378
Interbank accounts			119,546,512			117,801,570
Pending settlement			34,354,460			29,006,118
Central Bank deposits			84,799,879			88,607,045
National Housing System (SFH)			5,984			6,399
Correspondents			24,255			34,783
Interbank onlending			361,934			147,225
Interbranch accounts			269,659			49,322
Loan, lease and other credit operations	8		254,611,505			232,872,402
Operations with credit granting characteristics	4e		270,540,664			248,946,296
(Allowance for loan losses)	4f		(15,929,159	)		(16,073,894	)
Other receivables			93,615,822			91,841,218
Foreign exchange portfolio	9		46,453,775			43,789,110
Income receivable			2,990,811			2,685,533
Receivables from insurance and reinsurance operations	4m I and 11b		922,794			1,210,884
Negotiation and intermediation of securities			10,495,079			6,735,979
Deferred tax assets	14b I		20,391,583			25,663,704
Escrow deposits - Civil, Labor, Tax and Social lawsuits	12b and 12d		1,537,642			1,443,353
Sundry	13a		10,824,138			10,312,655
Other assets	4g		2,210,830			2,320,798
Assets held for sale			1,334,116			981,544
(Valuation allowance)			(602,402	)		(382,953	)
Unearned reinsurance premiums	4m I		8,410			15,117
Prepaid expenses	4g and 13b		1,470,706			1,707,090
Long term receivables			422,630,457			387,741,773
Interbank investments	4b and 6		1,257,351			1,550,712
Money market			287,706			103,479
Interbank deposits			969,645			1,447,233
Securities and derivative financial instruments	4c, 4d and 7		129,271,168			109,696,361
Own portfolio			45,862,109			65,773,971
Subject to repurchase commitments			24,018,759			5,276,261
Pledged in guarantee			7,881,665			7,150,657
Securities under resale agreements with free movement			30,975,783			14,848,615
Deposited with the Central Bank			755,160			-
Derivative financial instruments			11,323,327			8,834,093
Assets guaranteeing technical provisions – other securities	11b		8,454,365			7,812,764
Interbank accounts			46,515			4,661
Pending settlement			42,348			-
National Housing System (SFH)			4,167			4,661
Loan, lease and other credit operations	8		229,589,891			211,469,562
Operations with credit granting characteristics	4e		247,969,060			230,928,600
(Allowance for loan losses)	4f		(18,379,169	)		(19,459,038	)
Other receivables			61,955,724			64,501,141
Foreign exchange portfolio	9		15,855,054			17,082,571
Receivables from insurance and reinsurance operations	4m I and 11b		338,192			10,363
Deferred tax assets	14b I		25,764,140			27,492,026
Escrow deposits - Civil, Labor, Tax and Social lawsuits	12b and 12d		11,932,920			12,058,756
Sundry	13a		8,065,418			7,857,425
Other assets - Prepaid Expenses	4g and 13b		509,808			519,336
Permanent assets			27,999,220			26,329,890
Investments	4h, 15a Il and III		5,373,124			5,025,152
Investments in affiliates and jointly controlled entities			5,057,337			4,498,937
Other investments			524,635			735,065
(Allowance for losses)			(208,848	)		(208,850	)
Real estate in use	4i and 15b l		6,280,373			6,512,631
Real estate in use			4,329,796			4,276,598
Other fixed assets			13,619,430			12,634,230
(Accumulated depreciation)			(11,668,853	)		(10,398,197	)
Goodwill	4j and 15b ll		1,369,556			1,296,024
Intangible assets	4k and 15b lll		14,976,167			13,496,083
Acquisition of rights to credit payroll			1,132,761			1,004,035
Other intangible assets			22,426,049			18,078,917
(Accumulated amortization)			(8,582,643	)		(5,586,869	)
Total assets			1,542,684,090			1,448,335,223

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 64

ITAÚ UNIBANCO HOLDING S.A.

Consolidated Balance Sheet (Note 2a)

(In thousands of Reais)

Liabilities	Note	06/30/2018			06/30/2017
Current liabilities			805,374,848			766,145,395
Deposits	4b and 10b		283,825,616			250,728,184
Demand deposits			70,645,868			63,988,668
Savings deposits			127,341,701			109,517,027
Interbank deposits			2,790,566			2,453,451
Time deposits			83,044,833			74,766,918
Other deposits			2,648			2,120
Deposits received under securities repurchase agreements	4b and 10c		241,472,806			250,431,555
Own portfolio			74,556,877			53,042,847
Third-party portfolio			155,282,912			182,994,666
Free portfolio			11,633,017			14,394,042
Funds from acceptances and issuance of securities	4b and 10d		44,385,379			47,673,595
Real estate, mortgage, credit and similar notes			34,513,491			31,649,889
Foreign borrowing through securities			6,436,483			15,406,585
Structured operations certificates			3,435,405			617,121
Interbank accounts			37,469,550			30,145,278
Pending settlement			35,803,171			28,282,580
Correspondents			1,666,379			1,862,698
Interbranch accounts			5,401,054			5,980,393
Third-party funds in transit			5,376,457			5,966,688
Internal transfer of funds			24,597			13,705
Borrowing and onlending	4b and 10e		39,738,844			41,733,361
Borrowing			33,012,084			32,774,406
Onlending			6,726,760			8,958,955
Derivative financial instruments	4d and 7f		17,948,408			8,288,681
Technical provision for insurance, pension plan and capitalization	4m II and 11a		3,292,827			3,443,876
Other liabilities			131,840,364			127,720,472
Collection and payment of taxes and contributions			4,543,617			3,978,817
Foreign exchange portfolio	9		46,002,233			44,416,348
Social and statutory	16b II		4,382,012			4,376,639
Tax and social security contributions	4n, 4o and 14c		5,429,673			5,195,177
Negotiation and intermediation of securities			7,904,693			6,550,095
Subordinated debt	10f		5,072,214			11,848,641
Provisions for contingent liabilities	12b		4,776,845			4,417,473
Sundry	13c		53,729,077			46,937,282
Long term liabilities			599,633,186			549,825,905
Deposits	4b and 10b		142,769,809			101,599,208
Interbank deposits			52,454			232,940
Time deposits			142,717,355			101,366,268
Deposits received under securities repurchase agreements	4b and 10c		74,081,096			88,691,431
Own portfolio			12,728,076			46,892,335
Free portfolio			61,353,020			41,799,096
Funds from acceptances and issuance of securities	4b and 10d		70,623,052			60,402,532
Real estate, mortgage, credit and similar notes			32,633,622			30,518,385
Foreign borrowing through securities			37,031,786			26,282,543
Structured Operations Certificates			957,644			3,601,604
Borrowing and onlending	4b and 10e		22,133,636			27,796,898
Borrowing			8,639,624			9,562,626
Onlending			13,494,012			18,234,272
Derivative financial instruments	4d and 7f		13,706,211			12,438,355
Technical provision for insurance, pension plan and capitalization	4m II and 11a		188,471,714			166,303,539
Other liabilities			87,847,668			92,593,942
Foreign exchange portfolio	9		15,961,051			17,055,453
Tax and social security contributions	4n, 4o and 14c		9,170,197			17,081,720
Subordinated debt	10f		41,189,311			40,255,569
Provisions for contingent liabilities	12b		9,909,063			12,236,521
Debt instruments eligible as capital	10f		7,663,805			-
Sundry	13c		3,954,241			5,964,679
Deferred income	4p		2,678,023			2,180,916
Non-controlling interests	16f		13,240,322			11,803,551
Stockholders' equity	16		121,757,711			118,379,456
Capital			97,148,000			97,148,000
Capital reserves			1,586,364			1,352,881
Revenue reserves			28,892,966			25,613,491
Asset valuation adjustment	4c, 4d and 16e		(3,891,887	)		(3,163,851	)
(Treasury shares)			(1,977,732	)		(2,571,065	)
Total liabilities and stockholders' equity			1,542,684,090			1,448,335,223

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 65

ITAÚ UNIBANCO HOLDING S.A.

Consolidated Statement of Income (Note 2a)

(In thousands of Reais)

		01/01 to			01/01 to
	Note	06/30/2018			06/30/2017
Income related to financial operations			70,065,244			79,029,038
Loan, lease and other credit operations			37,372,466			38,047,421
Securities and derivative financial instruments			24,092,995			28,440,838
Financial income related to insurance, pension plan and capitalization operations	11c		4,357,779			8,181,962
Foreign exchange operations			1,711,284			529,889
Compulsory deposits			2,530,720			3,828,928
Expenses related to financial operations			(44,055,926	)		(45,940,928	)
Money market			(32,950,970	)		(35,157,612	)
Financial expenses on technical provisions for insurance, pension plan and capitalization	11c		(4,074,058	)		(7,845,060	)
Borrowing and onlending	10e		(7,030,898	)		(2,938,256	)
Income related to financial operations before loan and losses			26,009,318			33,088,110
Result of allowance for loan losses	8		(5,842,830	)		(8,581,656	)
Expenses for allowance for loan losses			(7,545,575	)		(10,485,647	)
Income related to recovery of credits written off as loss			1,702,745			1,903,991
Gross income related to financial operations			20,166,488			24,506,454
Other operating revenues (expenses)			(7,235,784	)		(7,474,230	)
Banking service fees	13d		12,601,341			11,552,022
Income related to bank charges	13e		6,239,084			5,744,511
Result from insurance, pension plan and capitalization operations	11c		1,872,137			1,715,799
Personnel expenses	13f		(11,331,252	)		(10,781,694	)
Other administrative expenses	13g		(9,561,475	)		(8,928,605	)
Tax expenses	4p and 14a II		(2,976,027	)		(3,432,328	)
Equity in earnings of affiliates, jointly controlled entities and other investments	15a II and lll		279,812			288,446
Other operating revenues	13h		453,748			546,588
Other operating expenses	13i		(4,813,152	)		(4,178,969	)
Operating income			12,930,704			17,032,224
Non-operating income			19,879			(178,498	)
Income before taxes on income and profit sharing			12,950,583			16,853,726
Income tax and social contribution	4p and 14a I		(173,800	)		(4,529,382	)
Due on operations for the period			(4,304,805	)		(3,321,420	)
Related to temporary differences			4,131,005			(1,207,962	)
Profit sharing – Management Members - Statutory			(104,253	)		(97,885	)
Non-controlling interests	16f		(148,122	)		(160,004	)
Net income			12,524,408			12,066,455
Weighted average of the number of outstanding shares	16a		6,480,105,394			6,510,663,755
Net income per share – R$			1.93			1.85
Book value per share - R$ (outstanding at 06/30)			18.80			18.22
Supplementary information
Exclusion of non recurring effects			276,724			278,090
Net income without non recurring effects			12,801,132			12,344,545
Net income per share – R$			1.98			1.90

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 66

ITAÚ UNIBANCO HOLDING S.A.

Consolidated Statement of Cash Flows

(In thousands of Reais)

		01/01 to			01/01 to
	Note	06/30/2018			06/30/2017
Adjusted net income			22,382,432			37,481,871
Net income			12,524,408			12,066,455
Adjustments to net income:			9,858,024			25,415,416
Granted options recognized and share-based payment – variable compensation			(520,538	)		(212,827	)
Adjustment to market value of securities and derivative financial instruments (assets / liabilities)			321,438			2,662,220
Effects of changes in exchange rates on cash and cash equivalents			(2,283,954	)		866,175
Allowance for loan losses	8c		7,545,575			10,485,647
Interest and foreign exchange expenses related to operations with subordinated debt			7,335,550			2,697,701
Financial expenses on technical provisions for pension plan and capitalization			4,074,058			7,845,060
Depreciation and amortization	15b		2,056,924			1,862,665
Interest expenses related to provision for contingent and legal liabilities	12b		505,540			761,599
Provision for contingent and legal liabilities	12b		1,084,122			1,719,069
Interest income related to escrow deposits	12b		(82,839	)		(174,206	)
Deferred taxes (excluding hedge tax effects)			3,342,573			2,429,601
Equity in earnings of affiliates, jointly controlled entities and other investments	15a ll and III		(279,812	)		(288,446	)
Interest and foreign exchange income related to available-for-sale securities			(9,377,621	)		(4,576,904	)
Interest and foreign exchange income related to held-to-maturity securities			(3,155,722	)		(717,473	)
(Gain) loss on sale of available-for-sale financial assets			(319,774	)		(257,189	)
(Gain) loss on sale of investments			(88,145	)		1,297
(Gain) loss on sale of foreclosed assets			140,547			237,593
(Gain) loss on sale of fixed assets			15,596			(5,807	)
Non-controlling interests			148,122			160,004
Other			(603,616	)		(80,363	)
Change in assets and liabilities			(15,498,475	)		(54,879,510	)
(Increase) decrease in assets			(26,393,789	)		(67,247,664	)
Interbank investments			(12,099,444	)		(34,755,296	)
Securities and derivative financial instruments (assets / liabilities)			262,398			(20,099,579	)
Compulsory deposits with the Central Bank of Brazil			14,037,062			(2,906,583	)
Interbank and interbranch accounts (assets / liabilities)			2,637,081			(1,336,067	)
Loan, lease and other credit operations			(33,730,535	)		(1,361,167	)
Other receivables and other assets			4,402,714			(2,981,580	)
Foreign exchange portfolio and negotiation and intermediation of securities (assets / liabilities)			(1,903,065	)		(3,807,392	)
(Decrease) increase in liabilities			10,895,314			12,368,155
Deposits			23,657,518			22,913,398
Deposits received under securities repurchase agreements			(8,356,104	)		(26,914,851	)
Funds for issuance of securities			7,427,407			14,365,285
Borrowing and onlending			(1,568,560	)		(6,083,672	)
Technical provision for insurance, pension plan and capitalization			3,917,521			5,347,124
Collection and payment of taxes and contributions			4,237,898			3,701,259
Other liabilities			(16,074,319	)		1,882,496
Deferred income			244,553			134,973
Payment of income tax and social contribution			(2,590,600	)		(2,977,857	)
Net cash provided by (used in) operating activities			6,883,957			(17,397,639	)
Interest on capital / dividends received from affiliated companies			373,427			337,485
Funds received from sale of available-for-sale securities			(7,638,818	)		11,449,005
Funds received from redemption of held-to-maturity securities			11,666,626			2,216,099
Disposal of assets not for own use			64,385			(68,805	)
Disposal of investments			94,636			(1,223	)
Sale of fixed assets			47,417			28,767
Termination of intangible asset agreements			1,458			18,329
Purchase of available-for-sale securities			7,970,396			(6,715,709	)
Purchase of held-to-maturity securities			(533,446	)		(95,580	)
Purchase of investments	2c		(15,974	)		(1,302	)
Disposal (Purchase) of fixed assets	15b		(516,772	)		(376,785	)
Disposal (Purchase) of intangible assets	15b		(642,572	)		(555,472	)
Net cash provided by (used in) investment activities			10,870,763			6,234,809
Increase in subordinated debt			2,891,850			-
Decrease in subordinated debt			(8,997,945	)		(8,013,566	)
Change in non-controlling interests	16f		1,174,193			169,389
Granting of stock options			1,114,213			569,745
Purchase of treasury shares			(510,308	)		(1,282,092	)
Dividends and interest on capital paid to non-controlling interests			(95,727	)		(150,794	)
Dividends and interest on capital paid			(14,851,252	)		(7,567,167	)
Net cash provided by (used in) financing activities			(19,274,976	)		(16,274,485	)
Net increase (decrease) in cash and cash equivalents			(1,520,256	)		(27,437,315	)
Cash and cash equivalents at the beginning of the period			71,235,353			96,048,488
Effects of changes in exchange rates on cash and cash equivalents			2,283,954			(866,175	)
Cash and cash equivalents at the end of the period	4a and 5		71,999,051			67,744,998

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 67

ITAÚ UNIBANCO HOLDING S.A.

Consolidated Statement of Added Value

(In thousands of Reais)

		01/01 to					01/01 to
	Note	06/30/2018					06/30/2017
Income			85,408,603					89,827,804
Financial operations			70,065,244					79,029,038
Banking services			18,840,425					17,296,533
Result from insurance, pension plan and capitalization operations			1,872,137					1,715,799
Result from loan losses	8		(5,842,830	)				(8,581,656	)
Other			473,627					368,090
Expenses			(48,869,078	)				(50,119,897	)
Financial operations			(44,055,926	)				(45,940,928	)
Other			(4,813,152	)				(4,178,969	)
Inputs purchased from third parties			(7,492,439	)				(7,087,383	)
Materials, energy and others	13g		(155,929	)				(155,800	)
Third-party services	13g		(2,115,733	)				(2,056,554	)
Other			(5,220,777	)				(4,875,029	)
Data processing and telecommunications	13g		(2,063,418	)				(2,012,074	)
Advertising, promotions and publication	13g		(653,483	)				(507,839	)
Installations			(820,166	)				(783,808	)
Transportation	13g		(167,430	)				(166,626	)
Security	13g		(380,232	)				(363,730	)
Travel expenses	13g		(107,217	)				(97,228	)
Other			(1,028,831	)				(943,724	)
Gross added value			29,047,086					32,620,524
Depreciation and amortization	13g		(1,276,260	)				(1,096,681	)
Net added value produced by the company			27,770,826					31,523,843
Added value received through transfer	15a II and lll		279,812					288,446
Total added value to be distributed			28,050,638					31,812,289
Distribution of added value			28,050,638					31,812,289
Personnel			10,138,868		36.1	%		9,748,891		30.6	%
Compensation			7,739,410		27.6	%		7,557,502		23.8	%
Benefits			1,934,365		6.9	%		1,766,701		5.6	%
FGTS – government severance pay fund			465,093		1.7	%		424,688		1.3	%
Taxes, fees and contributions			4,446,464		15.9	%		9,092,398		28.6	%
Federal			3,728,468		13.3	%		8,495,137		26.7	%
State			269		0.0	%		1,079		0.0	%
Municipal			717,727		2.6	%		596,182		1.9	%
Return on third parties’ assets - Rent			792,776		2.8	%		744,541		2.3	%
Return on own assets			12,672,530		45.2	%		12,226,459		38.4	%
Dividends and interest on capital			5,434,711		19.4	%		5,466,640		9.1	%
Retained earnings (loss) for the period			7,089,697		25.3	%		6,599,815		28.8	%
Minority interest in retained earnings			148,122		0.5	%		160,004		0.5	%

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 68

ITAÚ UNIBANCO HOLDING S.A.

Balance Sheet

(In thousands of Reais)

Assets	Note	06/30/2018			06/30/2017
Current assets			12,151,492			10,677,104
Cash and cash equivalents			636,018			587,416
Interbank investments	4b and 6		86,198			4,260,439
Money market			86,198			787,370
Interbank deposits			-			3,473,069
Securities and derivative financial instruments	4c, 4d and 7		10,069,637			4,318,328
Own portfolio			10,004,677			4,313,074
Pledged in guarantee			64,960			5,254
Other receivables			1,348,317			1,501,279
Income receivable	15a I		28,725			2,649
Deferred tax assets	14b I		459,441			798,832
Escrow deposits - Civil, Labor, Tax and Social lawsuits			340			379
Sundry	13a		859,811			699,419
Other assets – prepaid expenses	4g		11,322			9,642
Long term receivables			75,601,863			67,929,291
Interbank investments – interbank deposits	4b and 6		70,034,925			65,542,925
Securities and derivative financial instruments	4c, 4d and 7		2,072,092			1,465
Own portfolio			-			1,465
Derivative Financial Instruments			2,072,092			-
Other receivables			3,494,846			2,384,901
Deferred tax assets	14b I		1,648,859			808,951
Escrow deposits - Civil, Labor, Tax and Social lawsuits			17,019			16,621
Sundry	13a		1,828,968			1,559,329
Permanent assets			105,166,362			92,382,896
Investments - Investments in subsidiaries	4h and 15a I		105,166,115			92,382,858
Real estate in use	4i		247			38
Total assets			192,919,717			170,989,291
Liabilities
Current liabilities			24,130,937			15,871,088
Deposits	4b and 10b		19,363,501			8,292,948
Demand deposits			13,510,406			-
Interbank deposits			5,853,095			8,292,948
Funds from acceptance and issuance of securities	4b and 10d		31,420			3,530,996
Derivative Financial Instruments	4d and 7f		2,008,975			1,248,265
Other liabilities			2,727,041			2,798,879
Social and statutory	16b II		2,209,928			2,540,604
Tax and social security contributions	4n, 4p and 14c		416,843			227,323
Provisions for contingent liabilities			-			89
Sundry			100,270			30,863
Long term liabilities			46,167,136			34,438,945
Deposits - Interbank deposits	4b and 10b		7,509,763			4,974,201
Funds from acceptance and issuance of securities	4b and 10d		77,070			-
Derivative Financial Instruments	4d and 7f		506			3,072,824
Other liabilities			38,579,797			26,391,920
Tax and social security contributions	4n, 4p and 14c		144,242			81,177
Subordinated debt	10f		30,551,819			26,100,387
Provisions for contingent liabilities			199,807			190,277
Debt instruments eligible as capital	10f		7,663,805			-
Sundry			20,124			20,079
Stockholders' equity	16		122,621,644			120,679,258
Capital			97,148,000			97,148,000
Capital reserves			1,586,364			1,352,881
Revenue reserves			27,063,438			27,263,502
Asset valuation adjustment	4c and 4d		(1,198,426	)		(2,514,060	)
(Treasury shares)			(1,977,732	)		(2,571,065	)
Total liabilities and stockholders' equity			192,919,717			170,989,291

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 69

ITAÚ UNIBANCO HOLDING S.A.

Statement of Income

(In thousands of Reais)

		01/01 to			01/01 to
	Note	06/30/2018			06/30/2017
Income related to financial operations			5,852,064			2,440,859
Securities and derivative financial instruments			5,852,064			2,440,859
Expenses related to financial operations			(5,128,109	)		(1,192,501	)
Money market	10d		(5,128,109	)		(1,192,501	)
Gross income related to financial operations			723,955			1,248,358
Other operating revenues (expenses)			7,617,120			8,037,686
Personnel expenses			(58,759	)		(82,651	)
Other administrative expenses			(71,540	)		(41,572	)
Tax expenses	14a II		(145,436	)		(186,799	)
Equity in earnings of subsidiaries	15a I		7,915,675			8,372,223
Other operating revenues (expenses)			(22,820	)		(23,515	)
Operating income			8,341,075			9,286,044
Non-operating income			11,052			15,815
Income before taxes on income and profit sharing			8,352,127			9,301,859
Income tax and social contribution	4p		1,594,574			1,459,157
Due on operations for the period			(167,805	)		66,191
Related to temporary differences			1,762,379			1,392,966
Profit sharing – Management Members - Statutory			(861	)		(17,900	)
Net income			9,945,840			10,743,116
Weighted average of the number of outstanding shares	16a		6,480,105,394			6,510,663,755
Net income per share – R$			1.53			1.65
Book value per share - R$ (outstanding at 06/30)			18.94			18.57
Supplementary information
Exclusion of non recurring effects	2a and 22k		276,724			278,090
Net income without non recurring effects			10,222,564			11,021,206
Net income per share – R$			1.58			1.69

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 70

ITAÚ UNIBANCO HOLDING S.A.

Statement of Changes in Stockholders’ Equity (Note 16)

(In thousands of Reais)

			Capital						Asset valuation			Retained			(Treasury
	Capital		reserves			Revenue reserves			adjustment			earnings			shares)			Total
Balance at 01/01/2017		97,148,000		1,589,343			24,687,292			(2,975,797	)					(1,882,353	)		118,566,485
Purchase of treasury shares		-		-			-			-			-			(1,282,092	)		(1,282,092	)
Granting of stock options		-		(23,635	)		-			-			-			593,380			569,745
Granting of options recognized		-		(46,256	)		-			-			-			-			(46,256	)
Share-based payment – variable compensation		-		(166,571	)		-			-			-			-			(166,571	)
Payment of interest on capital on 03/03/2017 – declared after 12/31/2016 - R$ 0.6591 per share		-		-			(5,047,692	)		-			-			-			(5,047,692	)
Financial guarantees provided - CMN Resolution nº 4,512 (Note 8c)		-		-			-			-			(220,902	)		-			(220,902	)
Asset valuation adjustments:
Change in adjustment to market value		-		-			-			116,553			-			-			116,553
Remeasurements in liabilities of post-employment benefits		-		-			-			(66,856	)		-			-			(66,856	)
Foreign exchange variation on investments abroad/ Hedge of net investment in foreign operations		-		-			-			412,040			-			-			412,040
Net income		-		-			-			-			10,743,116			-			10,743,116
Appropriations:
Legal reserve		-		-			537,156			-			(537,156	)		-			-
Statutory reserves		-		-			4,518,418			-			(4,518,418	)		-			-
Dividends and interest on capital		-		-			2,568,328			-			(5,466,640	)		-			(2,898,312	)
Balance at 06/30/2017		97,148,000		1,352,881			27,263,502			(2,514,060	)		-			(2,571,065	)		120,679,258
Changes in the period		-		(236,462	)		2,576,210			461,737			-			(688,712	)		2,112,773
Balance at 01/01/2018		97,148,000		1,733,611			33,806,424			(1,437,328	)		-			(2,742,767	)		128,507,940
Purchase of treasury shares		-		-			-			-			-			(510,308	)		(510,308	)
Granting of stock options		-		373,291			-			-			-			740,922			1,114,213
Cancellation of Shares – Meeting of the Board of Directors at February 22, 2018		-		-			(534,421	)		-			-			534,421			-
Granting of options recognized		-		(364,654	)		-			-			-			-			(364,654	)
Share-based payment – variable compensation		-		(155,884	)		-			-			-			-			(155,884	)
Payment of interest on capital on 03/07/2018 – declared after 12/31/2017 - R$ 2.1126 per share		-		-			(13,672,862	)		-			-			-			(13,672,862	)
Unclaimed dividends		-		-			-			-			2,175			-			2,175
Asset valuation adjustments:
Change in adjustment to market value		-		-			-			(1,359,843	)		-			-			(1,359,843	)
Remeasurements in liabilities of post-employment benefits		-		-			-			(3,301	)		-			-			(3,301	)
Foreign exchange variation on investments abroad / Hedge of net investment in foreign operations		-		-			-			1,602,046			-			-			1,602,046
Net income		-		-			-			-			9,945,840			-			9,945,840
Appropriations:
Legal reserve		-		-			497,292			-			(497,292	)		-			-
Statutory reserves		-		-			4,016,012			-			(4,016,012	)		-			-
Dividends and interest on capital		-		-			2,950,993			-			(5,434,711	)		-			(2,483,718	)
Balance at 06/30/2018		97,148,000		1,586,364			27,063,438			(1,198,426	)		-			(1,977,732	)		122,621,644
Changes in the period		-		(147,247	)		(6,742,986	)		238,902			-			765,035			(5,886,296	)

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 71

ITAÚ UNIBANCO HOLDING S.A.

Statement of Cash Flows

(In thousands of Reais)

		01/01 to			01/01 to
	Note	06/30/2018			06/30/2017
Adjusted net income			4,956,612			1,911,337
Net income			9,945,840			10,743,116
Adjustments to net income:			(4,989,228	)		(8,831,779	)
Granted options recognized and share-based payment – variable compensation			(520,538	)		(212,827	)
Interest and foreign exchange expense related to operations with subordinated debt			5,177,555			1,126,933
Deferred taxes			(1,762,379	)		(1,392,966	)
Equity in earnings of subsidiaries	15a I		(7,915,675	)		(8,372,223	)
Amortization of goodwill			25,747			25,747
Effects of changes in exchange rates on cash and cash equivalents			6,050			(6,450	)
Other			12			7
Change in assets and liabilities			25,774,873			(1,761,373	)
(Increase) decrease in interbank investments			12,531,341			(4,293,117	)
(Increase) decrease in securities and derivative financial instruments (assets / liabilities)			5,954,780			(3,766,629	)
(Increase) decrease in other receivables and other assets			321,956			7,266,607
Increase (decrease) in deposits			3,954,419			155,905
(Decrease) increase in other liabilities			2,993,691			(1,163,233	)
Payment of income tax and social contribution			18,686			39,094
Net cash provided by (used in) operating activities			30,731,485			149,964
Interest on capital / dividends received			2,124,963			5,225,455
(Purchase) sale of investments			(14,499,995	)		416,806
(Purchase) sale of fixed assets			(212	)		-
Net cash provided by (used in) investment activities			(12,375,244	)		5,642,261
Decrease in subordinated debt			(730,795	)		(729,561	)
(Decrease) increase in funds for issuance of securities			(3,392,899	)		99,922
Granting of stock options			1,114,213			569,745
Purchase of treasury shares			(510,308	)		(1,282,092	)
Dividends and interest on capital paid			(14,851,252	)		(7,567,167	)
Net cash provided by (used in) financing activities			(18,371,041	)		(8,909,153	)
Net increase (decrease) in cash and cash equivalents			(14,800	)		(3,116,928	)
Cash and cash equivalents at the beginning of the period			743,066			4,485,264
Effects of changes in exchange rates on cash and cash equivalents			(6,050	)		6,450
Cash and cash equivalents at the end of the period	4a and 5		722,216			1,374,786

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 72

ITAÚ UNIBANCO HOLDING S.A.

Statement of Added Value

(In thousands of Reais)

		01/01 to			01/01 to
	Note	06/30/2018			06/30/2017
Income			7,661,181			3,938,430
Financial operations			5,852,064			2,440,859
Other			1,809,117			1,497,571
Expenses			(5,143,016	)		(1,218,419	)
Financial operations			(5,128,109	)		(1,192,501	)
Other			(14,907	)		(25,918	)
Inputs purchased from third parties			(71,165	)		(41,197	)
Third-party services			(9,444	)		(16,237	)
Advertising, promotions and publication			(22,197	)		(15,222	)
Expenses for financial system services			(21,824	)		(3,324	)
Other			(17,700	)		(6,414	)
Gross added value			2,447,000			2,678,814
Deprecitation and amortization			(25,758	)		(25,755	)
Net added value produced by the company			2,421,242			2,653,059
Added value received through transfer	15a I		7,915,675			8,372,223
Equity income			7,915,675			8,372,223
Total added value to be distributed			10,336,917			11,025,282
Distribution of added value			10,336,917			11,025,282
Personnel			30,815			82,273
Compensation			29,170			80,823
Benefits			1,463			1,266
FGTS – government severance pay fund			182			184
Taxes, fees and contributions			359,887			199,518
Federal			359,367			199,475
Municipal			520			43
Return on third parties’ assets - rent			375			375
Return on own assets			9,945,840			10,743,116
Dividends and interest on capital			5,434,711			5,466,640
Retained earnings (loss) for the period			4,511,129			5,276,476

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 73

ITAÚ UNIBANCO HOLDING S.A.

Notes to the Financial Statements

Period from January 1 to June 30, 2018 and 2017

(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 in all types of banking activities, through its commercial, investment, real estate loan, finance and investment credit, and lease portfolios and 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. – Complete Financial Statements – June 30, 2018 74

Note 2 – Presentation and consolidation of the financial statements

a) Presentation

The financial statements of ITAÚ UNIBANCO HOLDING and of its subsidiaries (ITAÚ UNIBANCO HOLDING CONSOLIDATED) have been prepared in accordance with the accounting principles established by the Brazilian Corporate Law, including the amendments introduced by Laws nº. 11,638, of December 28, 2007, and nº. 11,941, of May 27, 2009 and in conformity, when applicable, with instructions issued by the National Monetary Council (CMN), Central Bank of Brazil (BACEN), the Brazilian Securities and Exchange Commission (CVM), the National Council of Private Insurance (CNSP), the Superintendence of Private Insurance (SUSEP) and the National Superintendence of Supplementary Pension – (PREVIC),which include the use of estimates deemed necessary to calculate the accounting provisions and the valuation of financial assets.

In order to enable the analysis of the net income, the heading “Net income without non recurring effects” is presented within the Consolidated Statement of Income, and this effect is shown under the heading “Exclusion of non recurring effects” (Note 22k).

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 Consolidated Balance Sheet under Current Assets, regardless of their maturity dates.

Lease Operations are presented at present value in the Consolidated Balance Sheet, being that the related income and expenses, which represent the financial results of these operations, are presented, grouped together, under Loan, Lease and Other Credit 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 reclassification of expenses and income, in order exclusively to represent the impact of variations and differences in rates on the balance sheet accounts denominated in foreign currencies.

b) Consolidation

As set forth in paragraph 1, article 2, of BACEN Circular nº. 2,804, of February 11, 1998, the financial statements of ITAÚ UNIBANCO HOLDING CONSOLIDATED include the consolidation of its foreign branches and subsidiaries.

Intercompany transactions, intercompany balances and intercompany results have been eliminated on consolidation. The investment funds of which ITAÚ UNIBANCO HOLDING CONSOLIDATED 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 4t).

The difference in Net Income and Stockholders’ Equity between ITAÚ UNIBANCO HOLDING and ITAÚ UNIBANCO HOLDING CONSOLIDATED (Note 16d) results from the adoption of different criteria for the amortization of goodwill originating from purchases of investments, from the recording of transactions with minority stockholders where there is no change of control (Note 4r), and in the record of exchange variations on investments abroad, and hedges of these investments where the functional currency is different from that of the parent company, net of the respective deferred tax assets.

In ITAÚ UNIBANCO HOLDING, the goodwill recorded in subsidiaries, mainly acquisition by minority stockholders of REDE, is amortized based on the expected future profitability and appraisal reports, or upon realization of the investment, according to the rules and guidance of CMN and BACEN.

In ITAÚ UNIBANCO HOLDING CONSOLIDATED, from January 1st, 2010, the goodwill originating from the purchase of investments is no longer fully amortized as part of the consolidated financial statements (Note 4j). By December 31, 2009, the goodwill generated had been fully amortized in the periods in which investments were made.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 75

The consolidated financial statements cover ITAÚ UNIBANCO HOLDING and its direct and indirect subsidiaries. We present below the main companies which together represent over 95% of total consolidated assets:

					Interest in voting						Interest in total
			Country of		capital at						capital at
		Functional currency	Incorporation	Activity	06/30/2018			06/30/2017			06/30/2018			06/30/2017
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	%
Cia. Itaú de Capitalização			Brazil	Capitalization		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	%
Itauseg Seguradora S.A.			Brazil	Insurance		99.99	%		99.99	%		99.99	%		99.99	%
Itaú Corretora de Valores S.A.			Brazil	Broker		100.00	%		100.00	%		100.00	%		100.00	%
Itaú Seguros S.A.			Brazil	Insurance		100.00	%		100.00	%		100.00	%		100.00	%
Itaú Unibanco S.A.			Brazil	Financial institution		100.00	%		100.00	%		100.00	%		100.00	%
Itaú Vida e Previdência S.A.			Brazil	Pension Plan		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. – Complete Financial Statements – June 30, 2018 76

c) Business development

Citibank’s Retail Operations

On October 08, 2016, ITAÚ UNIBANCO HOLDING CONSOLIDATED 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 1st, 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 S.A.

On January 21, 2016, ITAÚ UNIBANCO HOLDING CONSOLIDATED, 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.

Itaú CorpBanca

On January 29, 2014, ITAÚ UNIBANCO HOLDING, through its subsidiary Banco Itaú Chile S.A. (BIC), entered into a Transaction Agreement with CorpBanca (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.

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’s 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 CONSOLIDATED and 33.13% for CORP GROUP.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 77

The ITAÚ CORPBANCA is controlled as of April 1st, 2016 by ITAÚ UNIBANCO HOLDING CONSOLIDATED. On the same date, ITAU UNIBANCO HOLDING entered into a shareholders’ agreement with CORP GROUP, which sets forth, among others, the right of ITAÚ UNIBANCO HOLDING 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 will be entitled to appoint the majority of members elected by this block.

ITAÚ UNIBANCO HOLDING CONSOLIDATED, through its subsidiary ITB Holding Brasil Participações Ltda., indirectly acquired the following additional interests in the ITAU 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

• On September 14, 2017 – 1,800,000,000 shares (0.35%) for the amount of R$ 55,624, then holding 36.06%.

Said acquisitions gave rise to a repurchase option to CORP GROUP with a 5-year term counted as from each exercised option, being the first one until June 13, 2021 and the second one until August 4, 2022, pursuant to the shareholders’ agreement entered into between ITAÚ UNIBANCO HOLDING CONSOLIDATED and CORP GROUP and affiliates, on April 1st, 2016.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 78

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 nº 3,646.

From January 1, 2018 to December 31, 2018, the minimum capital ratio required is 8.625%, 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	2017			2018			2019 (2)
Common Equity Tier I		4.5	%		4.5	%		4.5	%
Tier I		6.0	%		6.0	%		6.0	%
Total capital		9.25	%		8.625	%		8.0	%
Additional Common Equity Tier I (ACP)		1.50	%		2.375	%		3.5	%
ACPconservation		1.25	%		1.875	%		2.5	%
ACPcountercyclical (1)		0	%		0	%		0	%
ACPsystemic		0.25	%		0.5	%		1.0	%
Common Equity Tier I + ACP		6.0	%		6.875	%		8.0	%
Total capital + ACP		10.75	%		11.0	%		11.5	%
Prudential adjustment deductions		80	%		100	%		100	%

(1) 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.

(2) Petition valid after of January 1st, 2019.

Additionally, in March 2015, Circular nº 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 nº 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. – Complete Financial Statements – June 30, 2018 79

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	06/30/2018			06/30/2017
Stockholders’ equity of Itaú Unibanco Holding S.A. (Consolidated)		121,757,711			118,379,456
Non-controlling interests		13,166,959			11,745,788
Changes in Subsidiaries´ Interests in Capital Transactions		809,572			2,150,240
Consolidated stockholders’ equity (BACEN)		135,734,242			132,275,484
Common Equity Tier I prudential adjustments		(25,276,903	)		(18,459,368	)
Common Equity Tier I		110,457,339			113,816,116
Instruments Eligible to Comprise Additional Tier		7,663,805			0
Additional Tier I Prudential Adjustments		82,021			49,446
Additional Tier I Capital		7,745,826			49,446
Tier I (Common Equity Tier I + Additional Tier I Capital)		118,203,165			113,865,562
Instruments Eligible to Comprise Tier II		15,778,051			19,722,563
Tier II prudential adjustments		91,133			65,928
Tier II		15,869,184			19,788,491
Reference Equity (Tier I + Tier II)		134,072,349			133,654,053

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. – Complete Financial Statements – June 30, 2018 80

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

	06/30/2018 (1)		06/30/2017
Risk exposures
Exposure Weighted by Credit Risk (RWACPAD)		685,245,315		642,616,355
a) Per Weighting Factor (FPR):
FPR at 2%		128,452		203,693
FPR at 4%		247,503		-
FPR at 10%		314,633		-
FPR at 20%		7,337,930		7,005,351
FPR at 35%		16,621,540		13,114,680
FPR at 50%		48,365,652		44,900,790
FPR at 75%		150,817,311		137,414,645
FPR at 85%		72,244,199		88,141,327
FPR at 100%		331,648,267		305,162,634
FPR at 250%		41,421,502		32,718,795
FPR at 300%		-		4,407,893
FPR up to 1250%(2)		2,067,571		3,547,039
Derivatives - Changes in the Counterparty Credit Quality		4,766,036		5,999,508
Default Funds(3)		3,071		-
Securities (4)		9,261,648		-
b) Per Type:		685,245,315		642,616,355
Marketable securities		37,929,878		43,523,940
Loan operations – Retail		117,128,373		109,075,216
Loan operations – Non-retail		256,661,940		237,793,998
Joint Liabilities - Retail		149,219		186,221
Joint Liabilities - Non-Retail		45,261,996		44,901,854
Loan commitments – Retail		33,499,411		28,147,213
Loan commitments – Non-retail		10,870,987		8,977,310
Derivatives – Future potential gain (5)		4,294,222		5,669,189
Agency Transition		2,912,141		-
Other exposures		176,537,148		164,341,414

(1) As from the 4th quarter of 2017, retail business in Brazil of Citibank started to be fully consolidated in the financial statement of Itaú Unibanco.

(2) Considers the application of “F”» factor required by article 29 of BACEN Circular 3.644.

(3) As from the 1st quarter of 2018, balances related to Default Funds are being weighted in accordance with the calculation established in Art. 20-A of Circular 3.644 (amended by Circular 3.849), replacing FPR of 1250%.

(4) As from the 1st quarter of 2018, part of the balances related to Securitization are being weighted in accordance with the calculation established in Circular 3.848.

(5) Balances of Derivatives – Future Potential Gain are distributed into their respective FPRs.

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

Composition of Market Risk-Weighted Assets (RWA_MINT)

	06/30/2018(1)			06/30/2017(2)
Market Risk Weighted Assets - Standard Aproach (RWAMPAD)		31,268,579			30,499,541
Operations subject to interest rate variation		28,039,607			28,682,155
Fixed rate denominated in reais		3,469,107			4,373,818
Foreign exchange coupons		18,613,852			17,706,588
Price index coupon		5,956,647			6,601,746
Interest rate coupon		1			3
Operations subject to commodity price variation		854,249			331,241
Operations subject to stock price variation		355,444			272,856
Operations subject to risk exposures in gold, foreign currency and foreign		2,019,279			1,213,289
Minimum Market Risk Weighted Assets - Standard Aproach (RWAMPAD) (1) (2) (a)		25,014,863			27,449,587
Market Risk Weighted Assets calculated based on internal methodology (b)		18,593,453			22,630,423
Reduction of Market Risk Weighted Assets due to Internal Models Aproach (IMA)		(6,253,716	)		(3,049,954	)
Market Risk Weighted Assets (RWAMINT) - maximum of (a) and (b)		25,014,863			27,449,587

(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.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 81

At June 30, 2018, RWA_MINT totaled R$ 25,014,863, which corresponds to 80% of RWA_MPAD, higher than the capital calculated at internal models, which totaled R$ 18,593,453.

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

	06/30/2018		06/30/2017
Operational Risk-Weighted Assets (RWAOPAD)		70,467,968		54,417,146
Retail		12,789,549		11,252,291
Commercial		26,375,036		24,549,209
Corporate finance		2,799,191		2,581,300
Negotiation and sales		10,013,515		4,135,005
Payments and settlements		8,195,799		3,667,021
Financial agent services		4,279,591		3,729,326
Asset management		5,994,084		4,487,685
Retail brokerage		21,203		15,309

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, the institution 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)	06/30/2018		06/30/2017
Tier I		118,203,165		113,865,562
Common Equity Tier I		110,457,339		113,816,116
Additional Tier I Capital		7,745,826		49,446
Tier II		15,869,184		19,788,491
Deductions		-		-
Reference Equity		134,072,349		133,654,053
Minimum Referential Equity Required		67,337,802		67,014,686
Surplus Capital in relation to the Minimum Referential Equity Required		66,734,547		66,639,367
Additional Common Equity Tier I Required (ACPRequired)		18,542,293		10,867,246
Reference equity calculated for covering the interest rate risk of operations not classified in the trading portfolio (RBAN)		2,387,642		2,366,093

The table below shows the Basel and Fixed Asset Ratios:

	06/30/2018			06/30/2017
Basel Ratio		17.2	%		18.4	%
Tier I		15.1	%		15.7	%
Common Equity Tier I		14.1	%		15.7	%
Additional Tier I Capital		1.0	%		0.0	%
Tier II		2.0	%		2.7	%
Fixed Asset Ratio		21.4	%		24.0	%
Surplus Capital in Relation to Fixed Assets		38,331,944			34,772,638

f) Capital for insurance activity

In December 2017, the National Council of Private Insurance (CNSP) issued CNSP Resolution nº. 321 and subsequent changes reported at Resolutions 343 and 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. – Complete Financial Statements – June 30, 2018 82

Note 4 – Summary of the main accounting practices

a) Cash and cash equivalents - For the purposes 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 for the purposes of active and frequent trading. 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, which the bank has the financial condition and intend, or is required to hold in the portfolio to maturity, are recorded at the cost of acquisition, or market value, whenever these are transferred from another category. The securities are adjusted using the accrual method through maturity, and are not adjusted to market value.

Gains and losses on available-for-sale securities, when realized, are recognized on 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 causes, are recorded in the results as realized losses.

d) Derivative financial instruments - These are classified on the date of their acquisition, according to whether or not management intends to use them either as a hedge, according to BACEN Circular nº. 3,082, of January 30, 2002. Transactions involving financial instruments, carried out at the client’s request, on 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 closely related with those of the items being protected at the beginning and throughout the duration of the contract, and which are found to be effective reducing the risk related to the exposure being protected against, are classified as hedges, 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 amounts 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 is recorded directly in the statement of income;

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 83

· 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 in accordance with the rules determined by CMN Resolution nº. 2,682 of December 21, 1999, which are as follows are:

· Provisions are recorded from the date on which 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 occurs 360 days after the credits have matured or after 540 days for operations that mature after a period of 36 months.

The criterion adopted for recognition of a provision for Financial Guarantees pledged was based on the Expected Loss model.

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 a provision, according to current regulations, unearned reinsurance premiums (Note 4m I); and prepaid expenses, corresponding to disbursements, the benefits of which will be felt in future exercises.

From January 1st, 2015, ITAÚ UNIBANCO HOLDING CONSOLIDATED has adopted the option provided 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 1st, 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.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 84

k) Intangible assets – Corresponds to non-monetary assets identified as intangible, purchased or developed by ITAÚ UNIBANCO HOLDING CONSOLIDATED, 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.

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) Insurance, pension plan and capitalization operations - Insurance premiums, accepted coinsurances and selling expenses are accounted for by issuing an insurance policy or in accordance with the insurance effectiveness term, through the recognition and reversal of the provision for unearned premiums and deferred selling expenses. Interest arising from insurance premiums installments is accounted for as incurred. Revenues from social security contributions, gross revenue from premium bonds and respective technical provisions are recognized upon receipt.

I - Credits from operations and other assets related to insurance and reinsurance operations:

· Insurance premiums receivable - Refer to installments of insurance premiums receivable, current and past due, in accordance with insurance policies issued;

· Reinsurance recoverable amounts – Refer to claims paid to the insured party while recovery of these paid amounts is pending from the Reinsurer, installments of unsettled claims and incurred but not reported claims - Reinsurance, classified in assets in accordance with the criteria established by CNSP and SUSEP legislation in force;

· Unearned reinsurance premiums – Recognized to determine the portion of unearned reinsurance premiums, calculated pro rata die, and for risks of policies not issued computed based on estimates, based on the actuarial technical study and in compliance with the criteria established by CNSP and SUSEP legislation in force.

II - The technical provisions for insurance, pension plan and capitalization are recognized in accordance with the technical notes approved by SUSEP and the criteria established by the current legislation.

II.I- Insurance and pension plan:

· Provision for unearned premiums – This provision is recognized, based on insurance premiums, for the coverage of amounts payable related to claims and expenses to be incurred, throughout their terms to maturity, in connection with the risks assumed at the calculation base date. The calculation is performed on the level of policies or endorsement of agreements in force, on a pro rata die basis. The provision includes an estimate for effective and not issued risks;

· Provision for unsettled claims – This provision is recognized for the coverage of amounts payable related to lump-sum payments and income overdue from claims reported up to the calculation base date, but not yet paid. The provision covers administrative and legal claims, gross of accepted coinsurance operations and reinsurance operations and net of ceded coinsurance operations. The provision should include, whenever required, IBNER (claims incurred but not sufficiently reported) for the aggregate development of claims reported but not paid, which amounts may be changed throughout the process up to final settlement;

· Provision for claims incurred and not reported – This provision is recognized for the coverage of expected unsettled amounts related to claims incurred but not reported up to the calculation base date, gross of accepted coinsurance operations and reinsurance operations, and net of ceded coinsurance operations;

· Mathematical provisions for benefits to be granted - Recognized for the coverage of commitments assumed to participants or policyholders, based on the assumptions set forth in the contract, while the event that gave rise to the benefit and/or indemnity has not occurred. The provision is calculated in accordance with the methodology approved in the actuarial technical note to the product;

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 85

· Mathematical provisions for granted benefits - Recognized after the event triggering the benefit occurs, for the coverage of the commitments assumed to the participants or insured parties, based on the assumptions established in the agreement. The provision is calculated in accordance with the methodologies approved in the technical actuarial note on the product;

· Provision for financial surplus – Recognized to ensure the amounts intended for the distribution of a financial surplus, in accordance with the regulations in force, in the event that it is stated in the agreement. Corresponds to the financial income exceeding the minimum return guaranteed in the product;

· Supplemental Coverage Reserve - Recognized when technical reserves are found to be insufficient, as shown by the Liability Adequacy Test, which follows specific provisions in the prevailing regulation. ITAÚ UNIBANCO HOLDING CONSOLIDATED deducts the portion corresponding to the difference between the fair value and the carrying amount, at the base date, from securities pledged as collateral of technical reserves, classified in “Held-to-maturity securities”, up to the limit of the amount determined;

· Provision for redemptions and other amounts to be regularize – Includes amounts related to redemptions to regularize, returns on premiums or funds, transfers requested but, for any reason, not yet transferred to the insurance company or open private pension entity beneficiary, and where premiums have been received but not quoted;

· Provision for related expenses - Recognized for the coverage of expected amounts related to expenses on benefits and indemnities, due to events which have occurred and will occur.

II.II - Capitalization:

· Mathematical provision for capitalization – Recognized until the event triggering the benefit occurs, and comprised of the portion of the amounts collected for capitalization. It includes monetary restatement and interest, from the beginning of the validity date;

· Provision for redemption – Recognized from the date of the event triggering the redemption of the certificate and/or the event triggering the distribution of the bonus until the date of financial settlement, or the date on which the evidence of payment of the obligation is received;

· Provision for raffles unrealized – Comprises the portion of the amounts collected for raffles for each tickets, which have been funded but, at the recognition date, have not yet been realized;

· Provision for raffles payable – Recognized from the date when the raffle is drawn until the date of financial settlement, or the date when the evidence of payment of the obligation is received, or in conformity with other cases provided by law;

· Supplementary provision for raffles – Recognized to supplement the provision for raffles unrealized, and is used for coverage of possible shortfall related to the expected amount of raffles to be drawn;

· Provision for administrative expenses - Recognized for the coverage of the expected amounts of administrative expenses for the capitalization plans.

n) 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 where there is evidence of a high likelihood 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 through offsetting 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.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 86

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 challenge, recognized at the full amount under discussion.

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

o) 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 1st, 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.

p) Taxes - these provisions are calculated in accordance with current legislation at the rates shown below, using the respective 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%.

q) 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.

r) 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.

s) 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 is 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.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 87

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 these assumptions. Gains and losses are fully recognized in Equity Valuation adjustments.

Pension plans - defined contribution

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

Other post-employment benefit obligations

Certain companies that merged into ITAÚ UNIBANCO HOLDING CONSOLIDATED over the past few years were sponsors of post-employment healthcare benefit plans. ITAÚ UNIBANCO HOLDING CONSOLIDATED is contractually committed to maintaining these benefits over specific periods, as well as the benefits granted based on judicial rulings.

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 Equity asset valuation adjustment in the period in which they occur.

t) Foreign currency translation

I- Functional and presentation currency

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

The assets and liabilities of subsidiaries are translated as follows:

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

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

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 different 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, 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 CONSOLIDATED 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. – Complete Financial Statements – June 30, 2018 88

Note 5 - Cash and cash equivalents

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

	06/30/2018		06/30/2017
Cash and cash equivalents		25,401,913		22,699,562
Interbank deposits		3,207,000		20,207,861
Securities purchased under agreements to resell – Funded position		43,390,138		24,837,575
Total		71,999,051		67,744,998

In ITAÚ UNIBANCO HOLDING it is composed of the following:

	06/30/2018		06/30/2017
Cash and cash equivalents		636,018		587,416
Securities purchased under agreements to resell – Funded position		86,198		787,370
Total		722,216		1,374,786

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 89

Note 6 - Interbank investments

	06/30/2018												06/30/2017
	0 - 30		31 - 180		181 - 365		Over 365		Total		%		Total		%
Money market		138,585,973		84,986,310		26,404,713		287,706		250,264,702		90.1		256,636,370		89.0
Funded position (1)		34,472,252		11,053,597		3,302,486		287,706		49,116,041		17.7		44,281,054		15.4
Financed position		102,766,322		52,310,410		2,908,611		-		157,985,343		56.8		179,557,030		62.2
With free movement		24,197,999		31,088,395		2,908,611		-		58,195,005		20.9		13,799,360		4.8
Without free movement		78,568,323		21,222,015		-		-		99,790,338		35.9		165,757,670		57.4
Short position		1,347,399		21,622,303		20,193,616		-		43,163,318		15.6		32,798,286		11.4
Money market – Assets Guaranteeing Technical Provisions - SUSEP (Note 11b)		3,263,036		208,273		-		-		3,471,309		1.3		2,983,076		1.0
Interbank deposits (2)		16,120,903		4,428,881		2,209,285		969,645		23,728,714		8.6		28,713,146		10.0
Total		157,969,912		89,623,464		28,613,998		1,257,351		277,464,725		100.0		288,332,592		100.0
% per maturity term		56.9		32.3		10.3		0.5		100.0
Total – 06/30/2017		223,500,238		62,070,896		1,210,746		1,550,712		288,332,592
% per maturity term		77.6		21.5		0.4		0.5		100.0

(1) Includes R$ 3,684,112 (R$ 3,574,712 at 06/30/2017) 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$ 11,983,045 related to Compulsory Deposits with Central Banks of other countries.

In ITAÚ UNIBANCO HOLDING the portfolio is composed of Money market – Funded position falling due in up to 30 days amounting to R$ 86,198 (R$ 787,370 at 06/30/2017), Interbank deposits with maturity of 181 to 365 days amounting (R$ 3,473,069 at 06/30/2017) and over 365 days amounting to R$ 70,034,925 (R$ 65,542,925 at 06/30/2017).

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 90

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

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

a) Summary per maturity

	06/30/2018																																06/30/2017
				Adjustment to market value reflected in:
	Cost			Results			Stockholders’ equity			Market value			%		0 - 30			31 - 90			91 - 180			181 - 365			366 - 720			Over 720 days			Market value
Government securities - domestic		156,085,009			(536,866	)		(523,381	)		155,024,762			34.5		743,225			10,039,169			944,740			8,396,579			11,444,597			123,456,452			133,736,414
Financial treasury bills		34,937,535			(703	)		(18	)		34,936,814			7.8		-			1,539,668			-			932,256			1,114,927			31,349,963			34,538,031
National treasury bills		25,586,536			(218,774	)		45,466			25,413,228			5.7		727,157			-			920,708			1,244,111			8,019,904			14,501,348			28,793,901
National treasury notes		60,233,669			(419,296	)		(71,974	)		59,742,399			13.3		10,178			8,494,283			24,011			3,449,877			138,869			47,625,181			40,290,484
National treasury/securitization		186,510			(230	)		18,007			204,287			0.0		54			92			21			74			173			203,873			226,520
Brazilian external debt bonds		35,140,759			102,137			(514,862	)		34,728,034			7.7		5,836			5,126			-			2,770,261			2,170,724			29,776,087			29,887,478
Government securities - abroad		30,682,826			16,072			(103,942	)		30,594,956			6.8		2,988,504			1,868,144			4,549,836			4,012,585			6,758,977			10,416,910			23,280,420
Argentina		483,230			16,659			(697	)		499,192			0.1		100,379			173,280			120,561			35,038			1,741			68,193			1,516,305
Chile		9,807,363			(101	)		(12,435	)		9,794,827			2.2		1,045,836			712,247			36,760			35,467			1,980,027			5,984,490			5,980,831
Colombia		7,855,384			(155	)		9,043			7,864,272			1.7		44,225			555,671			230,833			656,072			2,632,034			3,745,437			3,761,311
Korea		1,442,735			-			-			1,442,735			0.3		-			-			1,442,735			-			-			-			2,954,496
Denmark		492,413			-			-			492,413			0.1		-			-			492,413			-			-			-			2,281,906
Spain		3,081,582			-			(1	)		3,081,581			0.7		863,110			-			671,476			316,525			1,230,470			-			2,940,948
United States		2,148,500			33			(23,765	)		2,124,768			0.5		366,314			-			-			913,037			401,067			444,350			1,664,761
Mexico		2,735,591			(75	)		(658	)		2,734,858			0.6		421,124			375,436			1,048,748			856,971			25			32,554			9,489
Paraguay		1,661,457			(211	)		(74,539	)		1,586,707			0.4		13,018			13,167			395,512			734,197			425,116			5,697			1,709,521
Peru		12,091			(7	)		-			12,084			0.0		-			-			-			-			-			12,084			-
Uruguay		962,217			(71	)		(890	)		961,256			0.2		134,498			38,343			110,798			465,278			88,466			123,873			460,130
Other		263			-			-			263			0.0		-			-			-			-			31			232			722
Corporate securities		60,851,238			(504,562	)		(1,231,251	)		59,115,425			13.1		7,044,237			2,179,955			2,801,188			5,395,622			10,128,823			31,565,600			57,919,285
Shares		4,112,205			(468,488	)		32,307			3,676,024			0.8		3,676,024			-			-			-			-			-			2,510,454
Rural product note		3,912,565			-			(23,566	)		3,888,999			0.9		163,590			312,222			221,654			545,903			294,088			2,351,542			1,526,962
Bank deposit certificates		651,409			(67	)		(18	)		651,324			0.1		316,848			221,548			41,127			69,205			-			2,596			1,097,829
Securitized real estate loans		13,355,593			149			(7,502	)		13,348,240			3.0		371			-			38,498			455,410			133,661			12,720,300			15,613,744
Fund quotas		2,059,481			(15,754	)		-			2,043,727			0.5		2,043,727			-			-			-			-			-			1,351,109
Credit rights		273,474			-			-			273,474			0.1		273,474			-			-			-			-			-			20,677
Fixed income		1,073,487			(24,983	)		-			1,048,504			0.2		1,048,504			-			-			-			-			-			1,147,475
Variable income		712,520			9,229			-			721,749			0.2		721,749			-			-			-			-			-			182,957
Debentures		24,280,026			(2,424	)		(1,182,733	)		23,094,869			5.1		90,312			56,541			360,511			1,888,636			7,207,462			13,491,407			21,820,394
Eurobonds and others		6,931,321			(17,928	)		(61,136	)		6,852,257			1.5		239,705			780,491			757,830			1,722,767			1,265,102			2,086,362			7,215,463
Financial bills		2,699,034			(312	)		(318	)		2,698,404			0.6		280,751			331,349			788,921			512,708			557,357			227,318			3,707,232
Promissory notes		1,040,012			-			8,584			1,048,596			0.2		-			156,387			159,444			48,874			620,612			63,279			2,165,138
Other		1,809,592			262			3,131			1,812,985			0.4		232,909			321,417			433,203			152,119			50,541			622,796			910,960
PGBL / VGBL fund quotas (1)		176,994,586			-			-			176,994,586			39.4		176,994,586			-			-			-			-			-			155,598,087
Subtotal - securities		424,613,659			(1,025,356	)		(1,858,574	)		421,729,729			93.8		187,770,552			14,087,268			8,295,764			17,804,786			28,332,397			165,438,962			370,534,206
Trading securities		280,978,898			(1,025,356	)		-			279,953,542			62.3		182,893,174			10,269,662			1,874,370			9,092,818			6,190,734			69,632,784			243,442,280
Available-for-sale securities		102,756,018			-			(1,858,574	)		100,897,444			22.4		4,599,914			3,507,383			5,811,481			7,895,458			20,914,528			58,168,680			87,999,735
Held-to-maturity securities (2)		40,878,743			-			-			40,878,743			9.1		277,464			310,223			609,913			816,510			1,227,135			37,637,498			39,092,191
Derivative financial instruments		18,299,714			9,432,523			-			27,732,237			6.2		7,762,577			2,603,134			1,834,277			4,208,922			2,984,993			8,338,334			19,058,963
Total securities and derivative financial instruments		442,913,373			8,407,167			(1,858,574	)		449,461,966			100.0		195,533,129			16,690,402			10,130,041			22,013,708			31,317,390			173,777,296			389,593,169
Derivative financial instruments (liabilities)		(24,082,950	)		(7,571,669	)		-			(31,654,619	)		100.0		(6,982,091	)		(2,556,351	)		(2,720,870	)		(5,689,096	)		(5,244,925	)		(8,461,286	)		(20,727,036	)

(1) The PGBL and VGBL plans securities portfolios, the ownership and embedded risks of which are the customer’s responsibility, are recorded as securities – trading securities, with a counter-entry to long term liabilities in Pension Plan Technical Provisions account (Note 11a);

(2) Unrecorded adjustment to market value in the amount of R$ 817,813 (R$ 1,267,924 at 06/30/2017), according to Note 7e.

During the period ended June 30, 2018, ITAÚ UNIBANCO HOLDING recognized R$ 796,356 of impairment losses, of which R$ 676,803 of available-for-sale financial assets and R$ 119,553 of held-to-maturity assets. Net reversal loss totaled R$ 56,160 recorded in the statement of income in the heading “Securities and Derivative Financial Instruments”.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 91

b) Summary by portfolio

	06/30/2018
			Restricted to
	Own portfolio		Repurchase agreements		Free portfolio		Pledged guarantees (*)		Central Bank		Derivative financial instruments		Assets guaranteeing technical provisions (Note 11b)		Total
Government securities - domestic		56,123,082		45,479,048		31,200,753		4,637,458		8,208,399		-		9,376,022		155,024,762
Financial treasury bills		25,010,091		5,248,075		-		3,652,792		210,691		-		815,165		34,936,814
National treasury bills		7,274,532		18,052,598		-		86,098		-		-		-		25,413,228
National treasury notes		20,540,846		22,178,375		-		464,613		7,997,708		-		8,560,857		59,742,399
National treasury / Securitization		204,287		-		-		-		-		-		-		204,287
Brazilian external debt bonds		3,093,326		-		31,200,753		433,955		-		-		-		34,728,034
Government securities - abroad		24,652,092		176,583		-		5,766,281		-		-		-		30,594,956
Argentina		440,231		-		-		58,961		-		-		-		499,192
Chile		9,597,573		169,805		-		27,449		-		-		-		9,794,827
Colombia		4,234,888		-		-		3,629,384		-		-		-		7,864,272
Korea		788,205		-		-		654,530		-		-		-		1,442,735
Denmark		147,724		-		-		344,689		-		-		-		492,413
Spain		2,353,697		-		-		727,884		-		-		-		3,081,581
United States		1,808,918		-		-		315,850		-		-		-		2,124,768
Mexico		2,734,858		-		-		-		-		-		-		2,734,858
Paraguay		1,573,691		6,778		-		6,238		-		-		-		1,586,707
Peru		12,084		-		-		-		-		-		-		12,084
Uruguay		959,960		-		-		1,296		-		-		-		961,256
Other		263		-		-		-		-		-		-		263
Corporate securities		44,677,574		8,105,184		275,955		3,886,161		-		-		2,170,551		59,115,425
Shares		3,676,024		-		-		-		-		-		-		3,676,024
Rural product note		3,888,999		-		-		-		-		-		-		3,888,999
Bank deposit certificates		468,364		-		-		588		-		-		182,372		651,324
Securitized real estate loans		13,348,240		-		-		-		-		-		-		13,348,240
Fund quotas		1,820,652		-		-		106,099		-		-		116,976		2,043,727
Credit rights		273,474		-		-		-		-		-		-		273,474
Fixed income		825,429		-		-		106,099		-		-		116,976		1,048,504
Variable income		721,749		-		-		-		-		-		-		721,749
Debentures		10,884,366		8,105,184		-		3,758,452		-		-		346,867		23,094,869
Eurobonds and other		6,555,280		-		275,955		21,022		-		-		-		6,852,257
Financial bills		1,214,447		-		-		-		-		-		1,483,957		2,698,404
Promissory notes		1,048,596		-		-		-		-		-		-		1,048,596
Other		1,772,606		-		-		-		-		-		40,379		1,812,985
PGBL / VGBL fund quotas		-		-		-		-		-		-		176,994,586		176,994,586
Subtotal - securities		125,452,748		53,760,815		31,476,708		14,289,900		8,208,399		-		188,541,159		421,729,729
Trading securities		58,994,155		28,603,011		462,151		4,460,684		7,453,239		-		179,980,302		279,953,542
Available-for-sale securities		51,377,494		21,464,519		11,886,387		9,829,211		755,160		-		5,584,673		100,897,444
Held-to-maturity securities		15,081,099		3,693,285		19,128,170		5		-		-		2,976,184		40,878,743
Derivative financial instruments		-		-		-		-		-		27,732,237		-		27,732,237
Total securities and derivative financial instruments (assets)		125,452,748		53,760,815		31,476,708		14,289,900		8,208,399		27,732,237		188,541,159		449,461,966
Total securities and derivative financial instruments (assets) – 06/30/2017		157,871,104		9,940,749		19,007,594		12,808,541		3,857,989		19,058,963		167,048,229		389,593,169

(*) Represent securities deposited with Contingent Liabilities (Note 12d), Stock Exchanges and the Clearing House for the Custody and Financial Settlement of Securities.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 92

c) Trading securities

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

	06/30/2018																					06/30/2017
			Adjustment
	Cost		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		92,415,059		(536,866	)		91,878,193		32.8		743,225		9,676,963		772,494		8,222,465		5,180,274		67,282,772		75,570,124
Financial treasury bills		34,708,990		(703	)		34,708,287		12.5		-		1,539,668		-		932,256		902,541		31,333,822		33,986,609
National treasury bills		14,626,689		(218,774	)		14,407,915		5.1		727,157		-		748,494		1,244,111		4,103,114		7,585,039		13,622,592
National treasury notes		39,736,788		(419,296	)		39,317,492		14.0		10,178		8,132,077		23,979		3,294,293		138,869		27,718,096		21,185,106
National treasury / Securitization		798		(230	)		568		0.0		54		92		21		74		173		154		1,072
Brazilian external debt bonds		3,341,794		102,137			3,443,931		1.2		5,836		5,126		-		2,751,731		35,577		645,661		6,774,745
Government securities - abroad		1,274,960		16,072			1,291,032		0.5		136,766		153,878		136,141		266,217		191,981		406,049		3,408,727
Argentina		454,625		16,659			471,284		0.2		100,379		145,372		120,561		35,038		1,741		68,193		1,516,082
Chile		257,877		(101	)		257,776		0.1		1,606		-		-		2,247		67,437		186,486		185,160
Colombia		233,868		(155	)		233,713		0.1		46		-		3,409		134,570		281		95,407		1,530,076
United States		116,134		33			116,167		0.0		-		-		-		-		116,167		-		79,595
Mexico		32,654		(75	)		32,579		0.0		-		-		-		-		25		32,554		9,489
Paraguay		5,908		(211	)		5,697		0.0		-		-		-		-		-		5,697		-
Peru		12,091		(7	)		12,084		0.0		-		-		-		-		-		12,084		-
Uruguay		161,793		(71	)		161,722		0.1		34,735		8,506		12,171		94,362		6,330		5,618		87,814
Other		10		-			10		0.0		-		-		-		-		-		10		511
Corporate securities		10,294,293		(504,562	)		9,789,731		3.5		5,018,597		438,821		965,735		604,136		818,479		1,943,963		8,865,342
Shares		3,697,810		(468,488	)		3,229,322		1.2		3,229,322		-		-		-		-		-		1,938,036
Bank deposit certificates		312,731		(67	)		312,664		0.1		46,150		209,062		15,787		41,406		-		259		507,988
Securitized real estate loans		34,354		149			34,503		0.0		-		-		-		-		-		34,503		34,203
Fund quotas		1,740,227		(15,754	)		1,724,473		0.7		1,724,473		-		-		-		-		-		1,163,432
Credit rights		273,474		-			273,474		0.1		273,474		-		-		-		-		-		20,677
Fixed income		754,233		(24,983	)		729,250		0.3		729,250		-		-		-		-		-		959,798
Variable income		712,520		9,229			721,749		0.3		721,749		-		-		-		-		-		182,957
Debentures		1,510,939		(2,424	)		1,508,515		0.5		8,809		1,908		93,562		100,062		194,943		1,109,231		1,305,133
Eurobonds and other		813,193		(17,928	)		795,265		0.3		-		94		159,771		58,862		42,461		534,077		758,270
Financial bills		2,090,066		(312	)		2,089,754		0.7		9,843		227,757		694,892		399,410		530,534		227,318		3,066,717
Others		94,973		262			95,235		0.0		-		-		1,723		4,396		50,541		38,575		91,563
PGBL / VGBL fund quotas		176,994,586		-			176,994,586		63.2		176,994,586		-		-		-		-		-		155,598,087
Total		280,978,898		(1,025,356	)		279,953,542		100.0		182,893,174		10,269,662		1,874,370		9,092,818		6,190,734		69,632,784		243,442,280
% per maturity term											65.3		3.7		0.7		3.2		2.2		24.9
Total – 06/30/2017		243,033,049		409,231			243,442,280		100.0		163,273,377		1,380,716		1,589,514		5,830,431		16,251,609		55,116,633
% per maturity term											67.0		0.6		0.7		2.4		6.7		22.6

At 06/30/2018, ITAÚ UNIBANCO HOLDING’s portfolio is composed of Fund quotas fixed income R$ 5,633 without maturity (R$ 5,254 at 06/30/2017), Financial treasury bills income R$ 3,638,001 (R$ 4,313,074 at 06/30/2017) over 365 days and National treasury bills income R$ 6,423,326 over 365 days.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 93

d) Available-for-sale securities

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

	06/30/2018																					06/30/2017
			Adjustments to
	Cost		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		36,118,873		(523,381	)		35,595,492		35.3		-		362,206		172,246		174,114		5,170,880		29,716,046		33,675,974
Financial treasury bills		228,545		(18	)		228,527		0.2		-		-		-		-		212,386		16,141		551,422
National treasury bills		7,252,358		45,466			7,297,824		7.2		-		-		172,214		-		3,916,790		3,208,820		6,480,937
National treasury notes		15,782,831		(71,974	)		15,710,857		15.7		-		362,206		32		155,584		-		15,193,035		14,543,756
National treasury / Securitization		185,712		18,007			203,719		0.2		-		-		-		-		-		203,719		225,448
Brazilian external debt bonds		12,669,427		(514,862	)		12,154,565		12.0		-		-		-		18,530		1,041,704		11,094,331		11,874,411
Government securities - abroad		28,969,487		(103,942	)		28,865,545		28.7		2,807,559		1,714,266		4,247,819		3,532,991		6,566,965		9,995,945		19,430,722
Argentina		28,605		(697	)		27,908		0.0		-		27,908		-		-		-		-		223
Chile		9,549,486		(12,435	)		9,537,051		9.5		1,044,230		712,247		36,760		33,220		1,912,590		5,798,004		5,795,671
Colombia		7,198,084		9,043			7,207,127		7.1		-		555,671		61,548		308,125		2,631,753		3,650,030		1,803,018
Korea		1,442,735		-			1,442,735		1.4		-		-		1,442,735		-		-		-		2,954,496
Denmark		492,413		-			492,413		0.5		-		-		492,413		-		-		-		2,281,906
Spain		3,081,582		(1	)		3,081,581		3.1		863,110		-		671,476		316,525		1,230,470		-		2,940,948
United States		2,032,366		(23,765	)		2,008,601		2.0		366,314		-		-		913,037		284,900		444,350		1,585,166
Mexico		2,702,937		(658	)		2,702,279		2.7		421,124		375,436		1,048,748		856,971		-		-		-
Paraguay		1,655,549		(74,539	)		1,581,010		1.6		13,018		13,167		395,512		734,197		425,116		-		1,709,521
Uruguay		785,508		(890	)		784,618		0.8		99,763		29,837		98,627		370,916		82,136		103,339		359,586
Other		222		-			222		0.0		-		-		-		-		-		222		187
Corporate securities		37,667,658		(1,231,251	)		36,436,407		36.0		1,792,355		1,430,911		1,391,416		4,188,353		9,176,683		18,456,689		34,893,039
Shares		414,395		32,307			446,702		0.4		446,702		-		-		-		-		-		572,418
Rural product note		3,912,565		(23,566	)		3,888,999		3.9		163,590		312,222		221,654		545,903		294,088		2,351,542		1,526,962
Bank deposit certificate		338,673		(18	)		338,655		0.3		270,693		12,486		25,340		27,799		-		2,337		589,837
Securitized real estate loans		1,539,461		(7,502	)		1,531,959		1.5		-		-		-		-		-		1,531,959		1,992,006
Fund quotas		319,254		-			319,254		0.3		319,254		-		-		-		-		-		187,677
Debentures		22,762,426		(1,182,733	)		21,579,693		21.4		81,503		54,633		266,949		1,788,574		7,012,519		12,375,515		20,505,332
Eurobonds and other		6,115,080		(61,136	)		6,053,944		6.0		239,705		780,397		598,059		1,663,905		1,222,641		1,549,237		6,443,349
Financial bills		608,968		(318	)		608,650		0.6		270,908		103,592		94,029		113,298		26,823		-		640,515
Promissory notes		1,040,012		8,584			1,048,596		1.0		-		156,387		159,444		48,874		620,612		63,279		2,165,138
Other		616,824		3,131			619,955		0.6		-		11,194		25,941		-		-		582,820		269,805
Total		102,756,018		(1,858,574	)		100,897,444		100.0		4,599,914		3,507,383		5,811,481		7,895,458		20,914,528		58,168,680		87,999,735
% per maturity term											4.6		3.5		5.8		7.8		20.7		57.6
Total – 06/30/2017		88,286,658		(286,923	)		87,999,735		100.0		2,630,325		1,900,406		4,562,011		7,049,680		15,718,072		56,139,241
% per maturity term											3.0		2.2		5.2		8.0		17.9		63.7

At June 30, 2018, at ITAÚ UNIBANCO HOLDING the portfolio is composed of Eurobonds, in the amount of R$ 2,677 (R$ 1,465 at 06/30/2017) from 181 to 365 days.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 94

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 06/30/2018, not considered in results, is an impairment loss of R$ 393,189 (R$ 455,561 at 06/30/2017).

	06/30/2018																		06/30/2017
	Carrying value		%		0 - 30		31 - 90		91 - 180		181 - 365		366 - 720		Over 720 days		Market value		Carrying value		Market value
Government securities - domestic (1)		27,551,077		67.5		-		-		-		-		1,093,443		26,457,634		27,845,438		24,490,316		25,450,030
National treasury bills		3,707,489		9.1		-		-		-		-		-		3,707,489		3,688,010		8,690,372		8,828,914
National treasury notes		4,714,050		11.5		-		-		-		-		-		4,714,050		5,321,097		4,561,622		5,083,963
Brazilian external debt bonds		19,129,538		46.9		-		-		-		-		1,093,443		18,036,095		18,836,331		11,238,322		11,537,153
Government securities - abroad		438,379		1.0		44,179		-		165,876		213,377		31		14,916		435,423		440,971		446,545
Colombia		423,432		1.0		44,179		-		165,876		213,377		-		-		414,610		428,217		427,957
Uruguay		14,916		-		-		-		-		-		-		14,916		20,812		12,730		18,586
Other		31		-		-		-		-		-		31		-		1		24		2
Corporate securities		12,889,287		31.5		233,285		310,223		444,037		603,133		133,661		11,164,948		13,415,695		14,160,904		14,463,540
Bank deposit certificate		5		-		5		-		-		-		-		-		5		4		4
Securitized real estate loans		11,781,778		28.8		371		-		38,498		455,410		133,661		11,153,838		12,308,186		13,587,535		13,890,254
Debentures		6,661		0.0		-		-		-		-		-		6,661		6,661		9,929		9,929
Eurobonds and other		3,048		-		-		-		-		-		-		3,048		3,048		13,844		13,761
Other		1,097,795		2.7		232,909		310,223		405,539		147,723		-		1,401		1,097,795		549,592		549,592
Total (2)		40,878,743		100.0		277,464		310,223		609,913		816,510		1,227,135		37,637,498		41,696,556		39,092,191		40,360,115
% per maturity term						0.7		0.8		1.5		2.0		3.0		92.0
Total – 06/30/2017		39,092,191		100.0		359,109		378,088		342,519		9,007,520		2,779,776		26,225,179
% per maturity term						0.9		1.0		0.9		23.0		7.1		67.1

(1) Includes investments of Itaú Vida e Previdência S.A. in the amount of R$ 2,836,499 (R$ 2,734,569 at 06/30/2017).

(2) In order to reflect the current risk management strategy, in the period ended 06/30/2018, ITAÚ UNIBANCO HOLDING CONSOLIDATED changed the classification of Government Securities – Brazil, being R$ 3,707,489 for Available-for-Trading Securities and R$ 8,678,270 for Available-for-Sale Securities.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 95

f) 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 CONSOLIDATED 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 CONSOLIDATED 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 06/30/2018, 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$ 12,556,112 (R$ 7,101,927 at 06/30/2017) and was basically composed of government securities.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 96

I - Derivatives by counterparty

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

	06/30/2018																				06/30/2017
	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		-		-		-		0.0		-		-		-		-		-		-		132,025
Swaps - adjustment receivable		4,046,541		6,718,984		10,765,525		38.8		100,523		336,053		186,282		1,174,325		1,535,906		7,432,436		8,915,351
Option premiums		3,630,641		1,871,974		5,502,615		19.8		734,260		744,104		822,764		1,680,735		1,094,306		426,446		3,145,700
Forwards (onshore)		5,868,942		4,817		5,873,759		21.2		5,187,676		397,021		135,705		152,635		722		-		4,012,171
Credit derivatives - Financial institutions		81,900		63,803		145,703		0.6		-		538		2,744		2,576		8,967		130,878		254,233
NDF - Non Deliverable Forward		4,498,578		183,240		4,681,818		16.9		1,316,791		1,120,774		676,017		1,179,491		321,594		67,151		2,399,228
Target flow of swap - Companies		5,809		62,363		68,172		0.2		1,311		-		-		10,608		-		56,253		29,038
Other derivative financial instruments		167,303		527,342		694,645		2.5		422,016		4,644		10,765		8,552		23,498		225,170		171,217
Total		18,299,714		9,432,523		27,732,237		100.0		7,762,577		2,603,134		1,834,277		4,208,922		2,984,993		8,338,334		19,058,963
% per maturity term										28.0		9.4		6.6		15.2		10.8		30.0
Total - 06/30/2017		15,209,597		3,849,366		19,058,963		100.0		5,503,712		1,066,179		1,498,565		2,156,414		2,134,892		6,699,201
% per maturity term										28.9		5.6		7.9		11.3		11.2		35.1

	06/30/2018																													06/30/2017
	Cost			Adjustments to market value (in results / stockholders' equity)			Market value			%		0 - 30			31 - 90			91 - 180			181 - 365			366 - 720			Over 720 days			Market value
Liabilities
Swaps - difference payable		(10,804,253	)		(5,688,714	)		(16,492,967	)		52.1		(186,879	)		(817,003	)		(1,234,281	)		(2,700,860	)		(4,079,827	)		(7,474,117	)		(12,373,366	)
Option premiums		(3,230,848	)		(1,717,753	)		(4,948,601	)		15.6		(853,931	)		(519,510	)		(762,340	)		(1,680,535	)		(817,362	)		(314,923	)		(2,360,210	)
Forwards (onshore)		(4,849,078	)		(6,192	)		(4,855,270	)		15.4		(4,853,711	)		(859	)		(667	)		(33	)		-			-			(3,025,675	)
Credit derivatives - Financial institutions		(111,514	)		(27,663	)		(139,177	)		0.5		-			(76	)		(52	)		(716	)		(4,372	)		(133,961	)		(183,822	)
NDF - Non Deliverable Forward		(5,003,652	)		(39,591	)		(5,043,243	)		15.9		(1,084,655	)		(1,214,378	)		(702,222	)		(1,284,154	)		(333,955	)		(423,879	)		(2,443,370	)
Target flow of swap		(70,724	)		(4,951	)		(75,675	)		0.2		(2,093	)		-			-			(16,360	)		-			(57,222	)		(281,397	)
Other derivative financial instruments		(12,881	)		(86,805	)		(99,686	)		0.3		(822	)		(4,525	)		(21,308	)		(6,438	)		(9,409	)		(57,184	)		(59,196	)
Total		(24,082,950	)		(7,571,669	)		(31,654,619	)		100.0		(6,982,091	)		(2,556,351	)		(2,720,870	)		(5,689,096	)		(5,244,925	)		(8,461,286	)		(20,727,036	)
% per maturity term													22.1			8.1			8.5			18.0			16.6			26.7
Total - 06/30/2017		(18,656,954	)		(2,070,082	)		(20,727,036	)		100.0		(4,195,008	)		(1,062,378	)		(1,348,488	)		(1,682,807	)		(4,194,863	)		(8,243,492	)
% per maturity term													20.2			5.1			6.5			8.1			20.3			39.8

The result of derivative financial instruments in the period totals R$ (1,861,146) ( R$ 2,038,190 em 06/30/2017).

At ITAÚ UNIBANCO HOLDING, the market values related to Swap contract positions involving Interest totaled R$ (2,009,481) (R$ (4,320,123) at June 30, 2017), in liability position distributed R$ (2,008,975) (R$ (18,849) at June 30, 2017) from 31 to 180 days (R$ (1,248,265) at June 30, 2017) from 181 to 365 days R$ (506) (R$ (3,071,858) at June 30, 2017) and over 365 days, involving Foreign Currency, totaled R$ 1,993,510, in asset position distributed over 365 days. The market values related to the Derivative contract positions, involving Shares, totaled R$ 78,582 (R$ (966) at June 30, 2017), in the asset position distributed over 365 days.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 97

II - Derivatives by index

					Balance sheet
					account receivable /			Adjustment to market
	Memorandum account /				(received) (payable) /			value (in results /
	Notional amount				Paid			stockholders' equity)			Market value
	06/30/2018		06/30/2017		06/30/2018			06/30/2018			06/30/2018			06/30/2017
Futures contracts		671,074,317		548,051,363		-			-			-			132,025
Purchase commitments		372,323,889		207,923,439		-			-			-			295,765
Shares		13,466,518		11,336,915		-			-			-			4,451
Commodities		266,233		103,858		-			-			-			241
Interest		317,816,393		161,292,247		-			-			-			106,336
Foreign currency		40,774,745		35,190,419		-			-			-			184,737
Commitments to sell		298,750,428		340,127,924		-			-			-			(163,740	)
Shares		16,446,368		11,599,654		-			-			-			(4,558	)
Commodities		236,359		213,058		-			-			-			(377	)
Interest		246,859,271		275,561,264		-			-			-			(136,857	)
Foreign currency		35,208,430		52,753,948		-			-			-			(21,948	)
Swap contracts						(6,757,712	)		1,030,270			(5,727,442	)		(3,458,015	)
Asset position		970,903,815		733,881,980		4,046,541			6,718,984			10,765,525			8,915,351
Shares		403,887		350,435		-			-			-			737
Commodities		12,168		-		130			72			202			-
Interest		960,541,727		721,074,484		2,789,652			6,629,336			9,418,988			7,742,229
Foreign currency		9,946,033		12,457,061		1,256,759			89,576			1,346,335			1,172,385
Liability position		970,903,815		733,881,980		(10,804,253	)		(5,688,714	)		(16,492,967	)		(12,373,366	)
Shares		475,503		350,817		(7,027	)		802			(6,225	)		(531	)
Commodities		-		1,183		-			-			-			(3	)
Interest		944,262,101		713,401,307		(7,811,701	)		(5,904,331	)		(13,716,032	)		(11,585,539	)
Foreign currency		26,166,211		20,128,673		(2,985,525	)		214,815			(2,770,710	)		(787,293	)
Option contracts		2,221,819,217		751,071,797		399,793			154,221			554,014			785,490
Purchase commitments - long position		362,985,533		167,230,688		1,870,531			2,106,987			3,977,518			972,995
Shares		9,683,327		6,852,258		327,800			540,289			868,089			493,194
Commodities		867,016		516,978		21,758			(1,194	)		20,564			16,200
Interest		297,081,954		108,949,075		235,128			76,519			311,647			65,601
Foreign currency		55,353,236		50,912,377		1,285,845			1,491,373			2,777,218			398,000
Commitments to sell - long position		777,115,628		208,434,061		1,760,110			(235,013	)		1,525,097			2,172,705
Shares		11,741,534		8,214,818		380,505			229,973			610,478			346,329
Commodities		914,246		292,843		23,839			(4,908	)		18,931			8,133
Interest		728,821,739		167,485,433		444,079			178,026			622,105			204,489
Foreign currency		35,638,109		32,440,967		911,687			(638,104	)		273,583			1,613,754
Purchase commitments - short position		219,044,960		154,669,645		(1,498,918	)		(1,880,045	)		(3,378,963	)		(892,445	)
Shares		9,048,340		5,423,675		(165,875	)		(477,069	)		(642,944	)		(321,219	)
Commodities		1,124,701		363,959		(33,401	)		916			(32,485	)		(10,092	)
Interest		157,778,141		98,084,287		(157,825	)		(34,414	)		(192,239	)		(30,085	)
Foreign currency		51,093,778		50,797,724		(1,141,817	)		(1,369,478	)		(2,511,295	)		(531,049	)
Commitments to sell - short position		862,673,096		220,737,403		(1,731,930	)		162,292			(1,569,638	)		(1,467,765	)
Shares		10,621,948		7,486,287		(282,351	)		(204,817	)		(487,168	)		(319,019	)
Commodities		516,606		309,507		(13,431	)		3,561			(9,870	)		(19,932	)
Interest		817,429,970		183,008,668		(567,753	)		(205,813	)		(773,566	)		(192,270	)
Foreign currency		34,104,572		29,932,941		(868,395	)		569,361			(299,034	)		(936,544	)
Forward contracts		29,554,774		8,046,240		1,019,864			(1,375	)		1,018,489			986,496
Purchases receivable		1,342,046		1,024,876		1,353,772			424			1,354,196			1,025,341
Shares		26,485		105,228		26,485			(534	)		25,951			103,987
Interest		1,315,561		919,648		1,327,287			958			1,328,245			921,354
Purchases payable		-		-		(1,327,290	)		-			(1,327,290	)		(926,492	)
Shares		-		-		(2	)		-			(2	)		(5,441	)
Interest		-		-		(1,327,288	)		-			(1,327,288	)		(921,051	)
Sales receivable		8,040,730		4,553,714		4,515,170			4,393			4,519,563			2,986,830
Shares		8,040,730		2,487,269		1,003,650			4,393			1,008,043			894,261
Interest		-		2,066,445		3,511,520			-			3,511,520			2,092,569
Sales deliverable		20,171,998		2,467,650		(3,521,788	)		(6,192	)		(3,527,980	)		(2,099,183	)
Shares		16,730,361		2,467,650		(10,268	)		(1,554	)		(11,822	)		(5,662	)
Interest		3,441,637		-		(3,511,520	)		(4,638	)		(3,516,158	)		(2,093,521	)
Credit derivatives		8,251,235		13,047,596		(29,614	)		36,140			6,526			70,411
Asset position		4,363,192		7,800,633		81,900			63,803			145,703			254,233
Shares		1,834,019		1,489,051		27,855			72,548			100,403			51,837
Interest		2,317,104		293,107		47,684			(10,776	)		36,908			997
Foreign currency		212,069		6,018,475		6,361			2,031			8,392			201,399
Liability position		3,888,043		5,246,963		(111,514	)		(27,663	)		(139,177	)		(183,822	)
Shares		1,206,680		446,335		(40,906	)		(29,468	)		(70,374	)		(11,158	)
Interest		2,469,294		159,389		(63,883	)		3,528			(60,355	)		(5,561	)
Foreign currency		212,069		4,641,239		(6,725	)		(1,723	)		(8,448	)		(167,103	)
NDF - Non Deliverable Forward		239,273,806		259,294,196		(505,074	)		143,649			(361,425	)		(44,142	)
Asset position		117,353,667		126,981,834		4,498,578			183,240			4,681,818			2,399,228
Commodities		196,804		127,260		14,306			1,982			16,288			16,097
Foreign currency		117,156,863		126,854,574		4,484,272			181,258			4,665,530			2,383,131
Liability position		121,920,139		132,312,362		(5,003,652	)		(39,591	)		(5,043,243	)		(2,443,370	)
Commodities		124,914		184,397		(12,878	)		2,469			(10,409	)		(33,402	)
Foreign currency		121,795,225		132,127,965		(4,990,774	)		(42,060	)		(5,032,834	)		(2,409,968	)
Target flow of swap		954,484		1,214,580		(64,915	)		57,412			(7,503	)		(252,359	)
Asset position		126,904		754,580		5,809			62,363			68,172			29,038
Interest		-		-		-			56,253			56,253			-
Foreign currency		126,904		754,580		5,809			6,110			11,919			29,038
Liability position		827,580		460,000		(70,724	)		(4,951	)		(75,675	)		(281,397	)
Interest		442,000		460,000		(16,144	)		(2,309	)		(18,453	)		(281,397	)
Foreign currency		385,580		-		(54,580	)		(2,642	)		(57,222	)		-
Other derivative financial instruments		5,051,444		4,609,325		154,422			440,537			594,959			112,021
Asset position		3,555,013		2,718,729		167,303			527,342			694,645			171,217
Shares		443,905		676,768		21,630			11,776			33,406			55,671
Interest		3,078,014		1,941,897		147,871			78,323			226,194			110,953
Foreign currency		33,094		100,064		(2,198	)		437,243			435,045			4,593
Liability position		1,496,431		1,890,596		(12,881	)		(86,805	)		(99,686	)		(59,196	)
Shares		1,311,168		1,553,150		(11,710	)		(55,652	)		(67,362	)		(56,137	)
Interest		85,681		293,133		(1,568	)		(7,661	)		(9,229	)		(2,128	)
Foreign currency		99,582		44,313		397			(23,492	)		(23,095	)		(931	)
				ASSET		18,299,714			9,432,523			27,732,237			19,058,963
				LIABILITY		(24,082,950	)		(7,571,669	)		(31,654,619	)		(20,727,036	)
				TOTAL		(5,783,236	)		1,860,854			(3,922,382	)		(1,668,073	)

Derivatives contracts mature as follows (in days)
Memorandum account / notional amount	0 - 30		31 - 180		181 - 365		Over 365		06/30/2018		06/30/2017
Futures		152,810,432		301,400,988		101,498,726		115,364,171		671,074,317		548,051,363
Swaps		25,069,549		121,877,796		177,465,818		646,490,652		970,903,815		733,881,980
Options		268,067,418		972,511,023		775,619,970		205,620,806		2,221,819,217		751,071,797
Forwards (onshore)		12,133,390		16,880,527		540,052		805		29,554,774		8,046,240
Credit derivatives		-		1,733,460		615,270		5,902,505		8,251,235		13,047,596
NDF - Non Deliverable Forward		78,003,008		92,982,864		52,360,065		15,927,869		239,273,806		259,294,196
Target flow of swap		23,212		-		214,692		716,580		954,484		1,214,580
Other derivative financial instruments		6,584		917,388		434,462		3,693,010		5,051,444		4,609,325

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 98

III - Derivatives by notional amount

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

	06/30/2018
	Futures		Swaps		Options		Forwards (onshore)		Credit derivatives		NDF - Non Deliverable Forward		Target flow of swap		Other derivative financial instruments
B3		497,378,682		23,704,361		2,072,067,148		24,787,304		-		55,407,637		-		-
Over-the-counter market		173,695,635		947,199,454		149,752,069		4,767,470		8,251,235		183,866,169		954,484		5,051,444
Financial institutions		173,265,327		698,833,026		111,298,286		10,212		8,251,235		119,057,962		-		2,358,697
Companies		430,308		138,241,710		38,220,987		4,757,258		-		64,480,293		954,484		2,692,747
Individuals		-		110,124,718		232,796		-		-		327,914		-		-
Total		671,074,317		970,903,815		2,221,819,217		29,554,774		8,251,235		239,273,806		954,484		5,051,444
Total – 06/30/2017		548,051,363		733,881,980		751,071,797		8,046,240		13,047,596		259,294,196		1,214,580		4,609,325

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 99

IV - Credit derivatives

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

	06/30/2018								06/30/2017
	Notional amount			Notional amount of credit					Notional amount of			Notional amount of credit
	of credit			protection purchased with					credit protection			protection purchased with
	protection sold			identical underlying amount		Net position			sold			identical underlying amount		Net position
Credit swaps		(6,941,034	)		1,310,201		(5,630,833	)		(7,837,834	)		5,209,762		(2,628,072	)
Total		(6,941,034	)		1,310,201		(5,630,833	)		(7,837,834	)		5,209,762		(2,628,072	)

The effect on the reference equity (Note 3) was R$ 107,845 (R$ 65,943 at 06/30/2017).

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 100

V - Hedge accounting

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 hedge accounting structures are established:

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

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

	06/30/2018							06/30/2017
	Hedge Instrument					Hedge assets		Hedge Instruments					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		24,808,215		(2,971,700	)		25,756,957		71,522,389		(3,639,747	)		69,964,363
Hedge of syndicated loan		-		-			-		2,646,560		(8,824	)		2,646,560
Hedge of highly probable forecast transactions		113,997		4,237			113,997		260,747		1,213			260,702
Hedge of assets transactions		8,312,193		247,827			8,064,241		22,775,621		616,271			22,159,018
Hedge of Asset-backed Securities under Repurchase Agreements		36,454,413		169,588			35,779,721		16,247,558		255,675			16,035,159
Hedge of UF - denominated assets		13,274,417		(47,851	)		13,274,417		13,337,682		9,888			13,337,682
Hedge of funding		3,193,658		(9,753	)		3,193,658		4,883,252		(23,685	)		4,883,252
Hedge of loan operations		283,872		5,690			283,872		1,037,457		20,376			1,037,457
Total				(2,601,962	)						(2,768,833	)

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

Gains or losses related to the accounting hedge of cash flows that we expect to recognize in the following 12 months amount to R$ (1,627,142) (R$ (921,116) at 06/30/2017).In the period ended 06/30/2018, the amount of R$ (142,574) was recognized in result.

To hedge future cash flows of highly probable forecast transactions, arising from futures contracts in foreign currency, against exposure to future exchange rate, ITAÚ UNIBANCO HOLDING CONSOLIDATED negotiated DDI Futures contracts and Dollar Purchase Options on B3; NDF (Non Deliverable Forward) contracts and currency swaps 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 / TPM / UF / Selic), ITAÚ UNIBANCO HOLDING CONSOLIDATED negotiated DI futures contracts on B3, interest rate swap and Euro-Dollar Futures on Chicago Stock Exchange.

II) Market risk – The hedging strategies against market risk of ITAÚ UNIBANCO HOLDING CONSOLIDATED consist of hedge of exposure to variation in market risk, in interest receipts, which are attributable to changes in interest rates related to recognized assets and liabilities.

	06/30/2018
	Hedge instrument					Hedge assets
Strategies	Nominal value		Adjustment to market value (*)			Book value		Adjustment to market value (*)
Hedge of loan operations		17,770,429		(55,950	)		17,770,429		55,368
Hedge of available-for-sale securities		943,800		(38,913	)		943,800		34,314
Hedge of funding		165,297,050		(30,663	)		165,297,050		27,653
Total				(125,526	)				117,335

	06/30/2017
	Hedge instrument					Hedge assets
Strategies	Nominal value		Adjustment to market value (*)			Book value		Adjustment to market value (*)
Hedge of loan operations		3,291,118		(94,568	)		3,291,118		94,925
Hedge of available-for-sale securities		472,410		(32,305	)		472,410		33,769
Hedge of syndicated loan		795,064		(1,534	)		795,064		1,667
Hedge of funding		11,081,876		(36,833	)		11,081,876		22,037
Total				(165,240	)				152,398

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

To protect against market risk variation upon receipt and payment of interest, ITAÚ UNIBANCO HOLDING CONSOLIDATED uses interest rate swap contracts. Hedge items refer to prefixed assets and liabilities denominated in Chilean Unit of Account – CLF, and denominated in Euros and dollars, issued by subsidiaries in Chile, London and Colombia, respectively, maturing 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. – Complete Financial Statements – June 30, 2018 101

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

	06/30/2018							06/30/2017
	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 net investment in foreign operations (*)		27,806,294		(6,242,064	)		14,743,782		21,624,382		(2,607,677	)		12,397,245
Total				(6,242,064	)						(2,607,677	)

(*) 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 CONSOLIDATED uses DDI Futures contracts traded on B3, Financial Assets and Forward contracts or NDF contracts entered into by our subsidiaries abroad.

Receipts (payments) of interest flows are expected to occur and will affect the statement of income upon the total or partial disposal of investments.

IV) We present below the maturity terms of cash flow hedge, market risk hedge strategies and Hedge of net investiment in foreign operations:

	06/30/2018
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		15,415,657		2,544,101		5,022,835		111,575		1,705,507		8,540		-		24,808,215
Hedge of highly probable anticipated transactions		97,712		16,285		-		-		-		-		-		113,997
Hedge of loans		7,011,873		-		1,300,320		-		-		-		-		8,312,193
Hedge of assets denominated in UF		11,227,126		1,988,810		-		58,481		-		-		-		13,274,417
Hedge of  funding (Cash flow)		1,870,363		508,937		475,486		29,570		-		309,302		-		3,193,658
Hedge of loan operations (Cash flow)		-		29,570		23,656		201,076		29,570		-		-		283,872
Hedge of loan operations (Market risk)		165,658		285,671		799,380		1,977,559		1,211,989		12,089,418		1,240,754		17,770,429
Hedge of funding (Market risk)		140,427		13,431,383		1,690,997		963,702		4,130,709		75,906,660		69,033,172		165,297,050
Hedge of available-for-sale securities		-		369,600		265,320		-		-		308,880		-		943,800
Asset-backed securities under repurchase agreements		25,164,137		6,513,152		1,527,057		-		3,250,067		-		-		36,454,413
Hedge of net investment in foreign operations (*)		27,806,294		-		-		-		-		-		-		27,806,294
Total		88,899,247		25,687,509		11,105,051		3,341,963		10,327,842		88,622,800		70,273,926		298,258,338

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

	06/30/2017
Strategies	0-1 year		1-2 years		2-3 years		3-4 years		4-5 years		5-10 years		Over 10 years		Total
Hedge of deposits and securities purchased under agreements to resell		33,456,257		15,136,015		7,822,144		13,299,196		131,878		1,676,899		-		71,522,389
Hedge of syndicated loan		2,646,560		-		-		-		-		-		-		2,646,560
Hedge of highly probable anticipated transactions		148,733		98,041		13,973		-		-		-		-		260,747
Hedge of loans		15,223,711		6,389,914		-		1,161,996		-		-		-		22,775,621
Hedge of assets denominated in UF		11,821,078		332,514		1,160,150		-		23,940		-		-		13,337,682
Hedge of  funding (Cash flow)		1,420,582		798,579		396,047		879,384		556,661		831,999		-		4,883,252
Hedge of loan operations (Cash flow)		-		-		24,940		19,952		169,592		822,973		-		1,037,457
Hedge of loan operations (Market risk)		433,131		200,203		146,269		25,631		633,355		293,508		1,559,021		3,291,118
Hedge of loan operations (Market risk)		-		795,064		-		-		-		-		-		795,064
Hedge of funding (Market risk)		3,522,024		100,207		4,098,364		346,590		8,760		1,157,155		1,848,776		11,081,876
Hedge of available-for-sale securities		-		-		-		218,286		-		254,124		-		472,410
Asset-backed securities under repurchase agreements		28,182		10,988,574		4,581,168		649,634		-		-		-		16,247,558
Hedge of net investment in foreign operations (*)		21,624,382		-		-		-		-		-		-		21,624,382
Total		90,324,640		34,839,111		18,243,055		16,600,669		1,524,186		5,036,658		3,407,797		169,976,116

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 102

g) Sensitivity analysis (trading and banking portfolios)

In compliance with CVM Instruction nº. 475, ITAÚ UNIBANCO HOLDING CONSOLIDATED carried out a sensitivity analysis by market risk factors considered relevant. The biggest losses arising, by risk factor, in each scenario, were stated together with their impact on the results, net of tax effects, by providing an overview of ITAÚ UNIBANCO HOLDING CONSOLIDATED’s exposure under exceptional scenarios.

The sensitivity analyses of the banking and the trading portfolio shown in this report are an evaluation of a static position of the portfolio exposure and, therefore, do not consider 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 to significant losses. In addition, the study's sole purpose is to disclose the exposure to risk and the respective protective actions, taking into account the fair value of financial instruments, irrespective of the accounting practices adopted by ITAÚ UNIBANCO HOLDING CONSOLIDATED.

Trading portfolio	Exposures	06/30/2018 (*)
		Scenarios
Risk factors	Risk of variations in:	I			II			III
Interest Rate	Fixed Income Interest Rates in Reais		(549	)		(276,240	)		(585,888	)
Foreign Exchange Linked	Foreign Exchange Linked Interest Rates		(691	)		(70,823	)		(142,145	)
Foreign Exchange Rates	Prices of Foreign Currencies		(338	)		233,788			725,087
Price Index Linked	Interest of Inflation coupon		(320	)		(23,775	)		(49,037	)
TR	TR Linked Interest Rates		-			-			(1	)
Equities	Prices of Equities		160			16,658			9,836
Other	Exposures that do not fall under the definitions above		98			(1,781	)		(3,876	)
Total			(1,640	)		(122,173	)		(46,024	)

(*) Amounts net of tax effects.

Trading and Banking portfolios	Exposures	06/30/2018 (*)
		Scenarios
Risk factors	Risk of variations in:	I			II			III
Interest Rate	Fixed Income Interest Rates in Reais		(7,868	)		(1,781,322	)		(3,533,213	)
Foreign Exchange Linked	Foreign Exchange Linked Interest Rates		(2,468	)		(287,358	)		(554,990	)
Foreign Exchange Rates	Prices of Foreign Currencies		(1,975	)		218,368			700,642
Price Index Linked	Interest of Inflation coupon		(2,106	)		(211,797	)		(405,437	)
TR	TR Linked Interest Rates		366			(92,078	)		(220,552	)
Equities	Prices of Equities		2,953			(51,628	)		(126,736	)
Other	Exposures that do not fall under the definitions above		113			(6,990	)		(13,409	)
Total			(10,985	)		(2,212,805	)		(4,153,695	)

(*) Amounts net of tax effects.

The following scenarios are used to measure the sensitivity:

· Scenario I: Addition of 1 base point in interest fixed rates, 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, for both growth and decline, considering the highest possible 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, for both growth and decline, considering the highest possible resulting losses per risk factor.

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 103

Note 8 - Loan, lease and other credit operations

a) Composition of the portfolio with credit granting characteristics

I – By type of operations and risk level

	06/30/2018																				06/30/2017
Risk levels	AA		A		B		C		D		E		F		G		H		Total		Total
Loan operations		221,746,686		106,499,844		44,714,558		22,211,746		10,066,576		4,544,202		6,435,747		6,470,999		9,805,856		432,496,214		404,484,689
Loans and discounted trade receivables		91,115,450		87,162,485		33,789,512		18,652,117		8,511,947		3,362,210		4,661,325		4,354,965		8,874,520		260,484,531		236,559,000
Financing		56,856,516		12,190,022		8,351,040		2,601,010		898,938		603,165		968,528		1,783,825		549,368		84,802,412		85,300,030
Farming and agribusiness financing		7,110,912		873,573		401,928		41,473		98,889		72,167		4,034		2,100		21,960		8,627,036		10,789,960
Real estate financing		66,663,808		6,273,764		2,172,078		917,146		556,802		506,660		801,860		330,109		360,008		78,582,235		71,835,699
Lease operations		1,855,060		4,278,919		1,233,271		294,170		214,175		103,914		169,515		39,815		148,525		8,337,364		7,936,095
Credit card operations		268,544		61,291,272		2,881,818		2,527,663		974,209		566,811		660,501		520,032		2,792,830		72,483,680		61,924,467
Advance on exchange contracts (1)		2,273,560		1,194,717		382,309		66,537		91,128		29,329		61,762		56,962		-		4,156,304		4,291,948
Other sundry receivables (2)		12,862		447,946		3,306		17,471		3,200		939		40,877		8,398		501,163		1,036,162		1,237,697
Total operations with credit granting characteristics		226,156,712		173,712,698		49,215,262		25,117,587		11,349,288		5,245,195		7,368,402		7,096,206		13,248,374		518,509,724		479,874,896
Financial Guarantees Provided (3)																				70,119,982		72,474,849
Total with Financial Guarantees Provided		226,156,712		173,712,698		49,215,262		25,117,587		11,349,288		5,245,195		7,368,402		7,096,206		13,248,374		588,629,706		552,349,745
Total – 06/30/2017		204,780,738		162,001,051		46,542,241		20,485,131		11,384,023		8,134,903		7,747,679		4,728,943		14,070,187		479,874,896

(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. – Complete Financial Statements – June 30, 2018 104

II – By maturity and risk level

	06/30/2018																													06/30/2017
	AA		A			B			C			D			E			F			G			H			Total			Total
												Overdue Operations (1) (2)
Falling due installments		-		-			1,956,075			1,836,807			1,392,957			1,231,262			1,375,577			1,119,314			3,913,946			12,825,938			13,615,912
01 to 30		-		-			87,255			79,137			56,343			44,889			44,019			78,355			158,496			548,494			530,622
31 to 60		-		-			54,967			59,793			43,260			37,010			45,280			77,806			126,863			444,979			464,678
61 to 90		-		-			52,694			57,074			42,611			34,275			37,270			30,258			247,384			501,566			451,005
91 to 180		-		-			143,916			154,873			126,613			120,937			122,964			95,905			360,501			1,125,709			1,200,986
181 to 365		-		-			239,454			286,267			230,906			183,937			197,114			164,135			644,139			1,945,952			2,145,528
Over 365		-		-			1,377,789			1,199,663			893,224			810,214			928,930			672,855			2,376,563			8,259,238			8,823,093
Overdue installments		-		-			1,181,084			1,037,698			1,099,858			967,885			1,289,994			1,246,901			5,919,120			12,742,540			12,586,936
01 to 14		-		-			24,963			45,450			44,210			20,675			19,374			15,078			65,171			234,921			223,492
15 to 30		-		-			934,540			149,344			92,288			74,641			62,581			82,974			128,676			1,525,044			1,489,420
31 to 60		-		-			221,581			714,718			187,029			116,036			193,365			84,157			273,187			1,790,073			1,992,295
61 to 90		-		-			-			92,047			699,652			156,271			159,177			98,006			280,307			1,485,460			1,530,884
91 to 180		-		-			-			36,139			76,679			509,102			800,712			883,187			1,157,696			3,463,515			3,263,245
181 to 365		-		-			-			-			-			91,160			54,785			83,499			3,818,259			4,047,703			3,996,176
Over 365		-		-			-			-			-			-			-			-			195,824			195,824			91,424
Subtotal		-		-			3,137,159			2,874,505			2,492,815			2,199,147			2,665,571			2,366,215			9,833,066			25,568,478			26,202,848
Specific allowance		-		-			(31,372	)		(86,235	)		(249,282	)		(659,744	)		(1,332,785	)		(1,656,350	)		(9,833,066	)		(13,848,834	)		(14,385,370	)
Subtotal - 06/30/2017		-		-			2,890,132			2,986,301			2,584,470			2,343,863			2,640,623			2,574,992			10,182,467			26,202,848
	Non-overdue operations
Falling due installments		225,352,429		172,156,097			45,685,634			21,713,856			8,687,561			2,997,504			4,637,831			4,653,775			3,367,407			489,252,094			450,450,182
01 to 30		17,426,409		38,818,779			6,157,341			3,305,806			1,230,857			447,671			346,536			197,577			468,637			68,399,613			61,847,928
31 to 60		18,265,215		16,427,951			3,443,273			1,058,692			539,148			152,214			101,708			61,784			181,129			40,231,114			35,656,139
61 to 90		8,480,060		11,150,873			2,662,973			860,521			286,952			165,342			95,955			66,012			292,734			24,061,422			23,570,710
91 to 180		22,180,608		20,986,146			5,197,903			1,655,360			793,514			328,174			261,954			1,153,049			298,043			52,854,751			49,580,939
181 to 365		28,686,544		22,397,945			7,753,737			2,555,824			942,067			344,938			373,393			397,743			543,181			63,995,372			57,688,959
Over 365		130,313,593		62,374,403			20,470,407			12,277,653			4,895,023			1,559,165			3,458,285			2,777,610			1,583,683			239,709,822			222,105,507
Overdue up to 14 days		804,283		1,556,601			392,469			529,226			168,912			48,544			65,000			76,216			47,901			3,689,152			3,221,866
Subtotal		226,156,712		173,712,698			46,078,103			22,243,082			8,856,473			3,046,048			4,702,831			4,729,991			3,415,308			492,941,246			453,672,048
Generic allowance		-		(868,563	)		(460,781	)		(667,293	)		(885,647	)		(913,814	)		(2,351,416	)		(3,310,994	)		(3,415,308	)		(12,873,816	)		(12,337,772	)
Subtotal - 06/30/2017		204,780,738		162,001,051			43,652,109			17,498,830			8,799,553			5,791,040			5,107,056			2,153,951			3,887,720			453,672,048
Grand total		226,156,712		173,712,698			49,215,262			25,117,587			11,349,288			5,245,195			7,368,402			7,096,206			13,248,374			518,509,724			479,874,896
Existing allowance		-		(868,563	)		(492,153	)		(753,528	)		(1,134,929	)		(3,347,620	)		(7,367,665	)		(7,095,496	)		(13,248,374	)		(36,118,342	)		(37,417,334	)
Minimum allowance required		-		(868,563	)		(492,153	)		(753,528	)		(1,134,929	)		(1,573,558	)		(3,684,201	)		(4,967,344	)		(13,248,374	)		(26,722,650	)		(26,723,142	)
Additional allowance included
Financial Guarantees Provided		-		-			-			-			-			(1,774,062	)		(3,683,464	)		(2,128,152	)		-			(9,395,692	)		(10,694,192	)
Financial Guarantees Provided		-		-			-			-			-			-			-			-			-			(1,810,014	)		(1,884,402	)
Additional allowance (3)		-		-			-			-			-			(1,774,062	)		(3,683,464	)		(2,128,152	)		-			(7,585,678	)		(8,809,790	)
Existing allowance		-		(868,563	)		(492,153	)		(753,528	)		(1,134,929	)		(5,157,634	)		(7,367,665	)		(7,095,496	)		(13,248,374	)		(36,118,342	)		(37,417,334	)
Provision - delay(4)		-		-			(31,372	)		(75,278	)		(174,218	)		(398,526	)		(756,922	)		(1,085,352	)		(7,477,574	)		(9,999,242	)		(10,325,085	)
Provision - aggravated(5)		-		(14,605	)		(11,544	)		(92,271	)		(431,276	)		(783,118	)		(2,206,540	)		(2,094,955	)		(4,390,189	)		(10,024,498	)		(9,934,448	)
Provision - potencial(3)		-		(853,958	)		(449,237	)		(585,979	)		(529,435	)		(3,975,990	)		(4,404,203	)		(3,915,189	)		(1,380,611	)		(16,094,602	)		(17,157,801	)
Grand total - 06/30/2017		204,780,738		162,001,051			46,542,241			20,485,131			11,384,023			8,134,903			7,747,679			4,728,943			14,070,187			479,874,896
Existing allowance		-		(810,005	)		(465,422	)		(614,555	)		(1,138,402	)		(5,958,986	)		(7,746,905	)		(4,728,470	)		(14,070,187	)		(37,417,334	)
Minimum allowance required		-		(810,005	)		(465,422	)		(614,555	)		(1,138,402	)		(2,440,471	)		(3,873,840	)		(3,310,260	)		(14,070,187	)		(26,723,142	)
Additional allowance included
Financial Guarantees Provided		-		-			-			-			-			(3,518,515	)		(3,873,065	)		(1,418,210	)		-			(10,694,192	)
Financial Guarantees Provided (6)		-		-			-			-			-			-			-			-			-			(1,884,402	)
Additional allowance (3)		-		-			-			-			-			(3,518,515	)		(3,873,065	)		(1,418,210	)		-			(8,809,790	)
Existing allowance		-		(810,005	)		(465,422	)		(614,555	)		(1,138,402	)		(7,843,388	)		(7,746,905	)		(4,728,470	)		(14,070,187	)		(37,417,334	)
Provision - delay(4)		-		-			(28,901	)		(79,788	)		(184,299	)		(409,256	)		(810,533	)		(1,223,751	)		(7,588,557	)		(10,325,085	)
Provision - aggravated(5)		-		(17,013	)		(11,648	)		(97,625	)		(305,802	)		(943,985	)		(1,976,988	)		(1,363,358	)		(5,218,029	)		(9,934,448	)
Provision - potencial(3)		-		(792,992	)		(424,873	)		(437,142	)		(648,301	)		(6,490,147	)		(4,959,384	)		(2,141,361	)		(1,263,601	)		(17,157,801	)

(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$ 17,975,644 (R$ 18,644,587 at 06/30/2017);

(3) Related to expected and potential loss;

(4) Provisions for delay, as required by BACEN, related to the minimum provision required for overdue operations, in accordance with CMN Resolution nº. 2,682/1999;

(5) Provisions for credits with aggravation of risk above the minimum required by BACEN for overdue operations and also provisions for credits that were renegotiated;

(6) 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.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 105

III – By business sector

	06/30/2018		%			06/30/2017		%
Public Sector		2,652,568		0.5	%		1,970,206		0.4	%
Energy		1,085,585		0.2	%		71,781		0.0	%
Petrochemical and chemical		1,195,596		0.2	%		1,416,094		0.3	%
Sundry		371,387		0.1	%		482,331		0.1	%
Private sector		515,857,156		99.5	%		477,904,690		99.6	%
Companies		260,302,646		50.2	%		249,100,368		51.9	%
Sugar and alcohol		6,172,873		1.2	%		8,151,380		1.7	%
Agribusiness and fertilizers		16,409,452		3.2	%		15,179,066		3.2	%
Food and beverage		13,368,818		2.6	%		11,804,061		2.5	%
Banks and other financial institutions		7,887,734		1.5	%		9,114,671		1.9	%
Capital assets		4,240,696		0.8	%		4,476,083		0.9	%
Pulp and paper		2,054,249		0.4	%		2,952,890		0.6	%
Publishing and printing		953,158		0.2	%		937,044		0.2	%
Electronic and IT		4,123,746		0.8	%		4,011,082		0.8	%
Packaging		2,330,797		0.4	%		1,992,121		0.4	%
Energy and sewage		9,032,661		1.7	%		8,112,235		1.7	%
Education		2,136,741		0.4	%		1,943,787		0.4	%
Pharmaceuticals and cosmetics		5,270,024		1.0	%		4,237,505		0.9	%
Real estate agents		19,532,251		3.8	%		21,128,203		4.4	%
Entertainment and tourism		4,629,420		0.9	%		4,190,248		0.9	%
Wood and furniture		2,799,838		0.5	%		2,364,178		0.5	%
Construction materials		4,687,740		0.9	%		4,706,099		1.0	%
Steel and metallurgy		7,710,391		1.5	%		7,515,630		1.6	%
Media		591,580		0.1	%		621,549		0.1	%
Mining		6,019,960		1.3	%		5,319,105		1.1	%
Infrastructure work		9,418,459		1.8	%		8,915,140		1.9	%
Oil and gas (*)		5,232,806		1.0	%		4,458,685		0.9	%
Petrochemical and chemical		7,957,060		1.5	%		7,743,870		1.6	%
Health care		2,409,620		0.5	%		2,272,948		0.5	%
Insurance, reinsurance and pension plans		33,672		0.0	%		49,140		0.0	%
Telecommucations		2,137,602		0.4	%		1,570,090		0.3	%
Third sector		2,142,326		0.4	%		2,795,810		0.6	%
Trading		1,982,400		0.4	%		1,317,732		0.3	%
Transportation		14,636,402		2.8	%		13,014,878		2.7	%
Domestic appliances		1,791,026		0.3	%		1,715,457		0.4	%
Vehicles and autoparts		11,327,611		2.2	%		13,635,706		2.8	%
Clothing and shoes		4,613,300		0.9	%		4,194,936		0.9	%
Commerce - sundry		16,109,941		3.1	%		14,083,139		2.9	%
Industry - sundry		8,861,766		1.7	%		7,402,257		1.5	%
Sundry services		37,933,951		7.3	%		33,634,026		7.0	%
Sundry		13,762,575		2.7	%		13,539,617		2.8	%
Individuals		255,554,510		49.3	%		228,804,322		47.7	%
Credit cards		71,528,025		13.8	%		61,035,962		12.7	%
Real estate financing		68,050,763		13.1	%		59,678,532		12.4	%
Consumer loans / overdraft		100,545,004		19.4	%		92,875,546		19.4	%
Vehicles		15,430,718		3.0	%		15,214,282		3.2	%
Grand total		518,509,724		100.0	%		479,874,896		100.0	%

(*) Comprises trade of fuel.

IV - Financial guarantees provided by type

	06/30/2018					06/30/2017
Type of guarantees	Portfolio		Provision			Portfolio		Provision
Endorsements or sureties pledged in legal and administrative tax proceedings		34,987,221		(942,083	)		36,343,398		(854,690	)
Sundry bank guarantees		23,126,333		(690,630	)		24,373,193		(841,492	)
Other financial guarantees provided		6,035,350		(106,513	)		4,518,126		(110,046	)
Tied to the distribution of marketable securities via a Public Offering		1,259,330		(5,883	)		2,713,120		(1,137	)
Restricted to bids, auctions, service provision or execution of works		3,843,912		(55,896	)		3,715,888		(70,566	)
Restricted to supply of goods		674,027		(7,482	)		566,529		(5,654	)
Restricted to international trade of goods		193,809		(1,527	)		244,595		(817	)
Total		70,119,982		(1,810,014	)		72,474,849		(1,884,402	)

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 106

b) Credit concentration

	06/30/2018				06/30/2017
Loan, lease and other credit operations (*)	Risk		% of total		Risk		% of total
Largest debtor		5,501,637		0.9		4,770,679		0.9
10 largest debtors		31,603,416		5.4		30,035,211		5.4
20 largest debtors		48,118,355		8.2		47,742,002		8.6
50 largest debtors		74,084,111		12.6		77,607,529		14.1
100 largest debtors		100,498,166		17.1		103,633,970		18.8

(*) Amounts include financial guarantees provided.

	06/30/2018				06/30/2017
Loan, lease and other credit operations and securities of companies and financial institutions (*)	Risk		% of total		Risk		% of total
Largest debtor		7,761,378		1.2		6,620,682		1.1
10 largest debtors		42,937,624		6.4		41,074,823		6.5
20 largest debtors		67,516,521		10.0		66,190,097		10.5
50 largest debtors		108,966,699		16.2		109,056,704		17.4
100 largest debtors		144,135,923		21.4		143,656,716		22.9

(*) Amounts include financial guarantees provided.

c) Changes in allowance for loan losses and Provision for Financial Guarantees Pledged

	01/01 to			01/01 to
	06/30/2018			06/30/2017
Opening balance		(37,309,465	)		(37,431,102	)
Adjustments arising from the first-time adoption of Resolution nº. 4,512/16.		-			(401,640	)
Net increase for the period		(7,545,575	)		(10,485,647	)
Required by Resolution nº. 2,682/99		(8,260,039	)		(10,632,744	)
Required by Resolution nº. 4,512/16		139,630			(37,317	)
Additional allowance (1)		574,834			184,414
Others		-			6,707
Write-Off		9,493,450			10,818,949
Exchange variation		(756,752	)		75,399
Closing balance (2)		(36,118,342	)		(37,417,334	)
Required by Resolution nº. 2,682/99		(26,722,650	)		(26,723,142	)
Specific allowance (3)		(13,848,834	)		(14,385,370	)
Generic allowance (4)		(12,873,816	)		(12,337,772	)
Additional allowance included Provision for Financial Guarantees Provided		(9,395,692	)		(10,694,192	)
Provision for Financial Guarantees Provided (5)		(1,810,014	)		(1,884,402	)
Additional allowance (1)		(7,585,678	)		(8,809,790	)
Existing allowance		(36,118,342	)		(37,417,334	)
Provision delay		(9,999,242	)		(10,325,085	)
Provision aggravated		(10,024,498	)		(9,934,448	)
Provision potential		(16,094,602	)		(17,157,801	)

(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$ (356,297) (R$ (344,140) at 06/30/2017);

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

At 06/30/2018, the balance of the allowance in relation to the loan portfolio is equivalent to 7.0% (7.8% at 06/30/2017).

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 107

d) Recovery and renegotiation of credits

	06/30/2018									06/30/2017
	Portfolio (1)			Allowance for Loan Losses			%			Portfolio (1)			Allowance for Loan Losses			%
Total renegotiated loans		27,457,500			(10,958,849	)		39.9	%		26,385,631			(10,872,877	)		41.2	%
(-) Renegotiated loans overdue up to 30 days(2)		(9,946,871	)		2,321,790			23.3	%		(8,499,416	)		1,887,425			22.2	%
Renegotiated loans overdue over 30 days(2)		17,510,629			(8,637,059	)		49.3	%		17,886,215			(8,985,452	)		50.2	%

(1) The amounts related to renegotiated loans up to 30 days of the Lease Portfolio are: R$ 125,951 (R$ 153,077 at June 30, 2017);

(2) Delays determined upon renegotiation.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 108

e) Restricted operations on assets

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

	06/30/2018										01/01 to 06/30/2018			06/30/2017		01/01 to 06/30/2017
	0 - 30		31 - 180		181 - 365		Over 365 days		Total		Income (expenses)			Total		Income (expenses)
Restricted operations on assets
Loan operations		18,563		84,125		407,091		9,126,140		9,635,919		848,038			2,522,782		165,674
Liabilities - restricted operations on assets
Foreign borrowing through securities		18,563		84,125		-		9,434,379		9,537,067		(855,542	)		2,522,766		(165,889	)
Net revenue from restricted operations												(7,504	)				(215	)

At 06/30/2018 and 06/30/2017 there were no balances in default.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 109

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

I - Credit assignments (transfers of receivables) carried out through December 2011 were recorded in accordance with the current regulations, together at that time with income recognition at the time of the assignment, regardless of the risks and benefits being retained or not, the amount of whereby the bank assumes joint obligations, at 06/30/2018 where the entity substantially retained the related risks and benefits, is R$ 95,438 (R$ 120,188 at 06/30/2017), composed of real estate financing of R$ 87,205 (R$ 110,468 at 06/30/2017) and farming financing of R$ 8,233 (R$ 9,720 at 06/30/2017).

ll - Beginning in January 2012, as provided for by CMN Resolution nº. 3,533/08, of January 31, 2008 and supplementary regulation, accounting records take into consideration the retention or non-retention of risks and benefits on sales or transfers of financial assets.

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

	06/30/2018								06/30/2017
Nature of operation	Assets				Liabilities (1)				Assets				Liabilities (1)
	Book value		Fair value		Book value		Fair value		Book value		Fair value		Book value		Fair value
Mortgage Loan		2,103,033		2,018,831		2,096,250		2,012,048		2,623,983		2,645,438		2,621,809		2,643,264
Working capital		2,505,204		2,505,204		2,437,154		2,437,154		2,708,888		2,708,888		2,708,888		2,708,888
Vehicles (2)		-		-		1,803		1,803		-		-		3,146		3,146
Companies - loan (2)		-		-		3,351		3,351		-		-		5,843		5,843
Total		4,608,237		4,524,035		4,538,558		4,454,356		5,332,871		5,354,326		5,339,686		5,361,141

(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$ 133,991 (R$ 29,901 from January 1 to June 30, 2017).

Sales or transfers of financial assets of the active portfolio, with no retention of risks and benefits the amount R$ 730,330 (R$ 222,194 at June 30 2017 ) with effect on the result R$ 12,291 (R$ 7,407 from January 1 to June 30, 2017), net of the Allowance for Loan Losses, were not carried out in this quarter.

During the period, 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$ 7,008,214 (R$ 10,556,672 at 06/30/2017) fully written down to losses, was realized for the amount of R$ 53,875 (R$ 141,565 at 06/30/2017) 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 the first semester of 2018 the amount R$ 140,714.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 110

Note 9 - Foreign exchange portfolio

	06/30/2018			06/30/2017
Assets - other receivables		62,308,829			60,871,681
Exchange purchase pending settlement – foreign currency		34,334,823			31,797,596
Bills of exchange and term documents – foreign currency		6,446			17,318
Exchange sale rights – local currency		28,394,208			29,630,518
(Advances received) – local currency		(426,648	)		(573,751	)
Liabilities – other liabilities (Note 2a)		61,963,284			61,471,801
Exchange sales pending settlement – foreign currency		28,185,191			30,200,253
Liabilities from purchase of foreign currency – local currency		33,570,465			31,093,434
Other		207,628			178,114
Memorandum accounts		1,820,101			1,371,365
Outstanding import credits – foreign currency		802,993			817,797
Confirmed export credits – foreign currency		1,017,108			553,568

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 111

Note 10 – Funding, borrowing and onlending

a) Summary

	06/30/2018												06/30/2017
	0-30		31-180		181-365		Over 365 days		Total		%		Total		%
Deposits		226,914,326		35,683,256		21,228,034		142,769,809		426,595,425		43.9		352,327,392		38.3
Deposits received under securities repurchase agreements		215,280,308		11,339,012		14,853,486		74,081,096		315,553,902		32.4		339,122,986		36.8
Funds from acceptance and issuance of securities		5,925,540		23,721,309		14,738,530		70,623,052		115,008,431		11.8		108,076,127		11.7
Borrowing and onlending		5,452,463		19,842,257		14,444,124		22,133,636		61,872,480		6.4		69,530,259		7.5
Subordinated debt		217,176		4,537,909		317,129		48,853,116		53,925,330		5.5		52,104,210		5.7
Total		453,789,813		95,123,743		65,581,303		358,460,709		972,955,568		100.0		921,160,974		100.0
% per maturity term		46.7		9.8		6.7		36.8		100.0
Total – 06/30/2017		411,976,401		104,245,267		86,193,668		318,745,638		921,160,974
% per maturity term		44.7		11.3		9.4		34.6		100.0

b) Deposits

	06/30/2018												06/30/2017
	0-30		31-180		181-365		Over 365 days		Total		%		Total		%
Demand deposits		70,645,868		-		-		-		70,645,868		16.6		63,988,668		18.2
Savings accounts		127,341,701		-		-		-		127,341,701		29.9		109,517,027		31.1
Interbank		1,158,164		871,973		760,429		52,454		2,843,020		0.7		2,686,391		0.7
Time deposits		27,765,945		34,811,283		20,467,605		142,717,355		225,762,188		52.8		176,133,186		50.0
Other deposits		2,648		-		-		-		2,648		0.0		2,120		0.0
Total		226,914,326		35,683,256		21,228,034		142,769,809		426,595,425		100.0		352,327,392		100.0
% per maturity term		53.1		8.4		5.0		33.5		100.0
Total – 06/30/2017		199,129,508		32,134,298		19,464,378		101,599,208		352,327,392
% per maturity term		56.5		9.1		5.5		28.9		100.0

In ITAÚ UNIBANCO HOLDING, the portfolio is composed of Interbank Deposits with maturity within 31 to 180 days amouting to R$ 5,853,095 (R$ 8,292,948 at 06/30/2017), and over 365 days amounting to R$ 7,509,763 (R$ 4,974,201 at 06/30/2017), totaling R$ 13,362,858 (R$ 13,267,149 at 06/30/2017) and Demand deposits with maturity within 0 to 30 days amouting to R$ 13,510,406.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 112

c) Deposits received under securities repurchase agreements

	06/30/2018												06/30/2017
	0 - 30		31 - 180		181 - 365		Over 365 days		Total		%		Total		%
Own portfolio		52,481,222		10,232,051		11,843,604		12,728,076		87,284,953		27.7		99,935,182		29.4
Government securities		44,617,147		453,512		9,519		4,315		45,084,493		14.3		4,843,631		1.4
Corporate Securities		6,448,583		-		-		-		6,448,583		2.0		4,835,162		1.4
Own issue		1,406,567		9,753,423		11,673,920		12,557,883		35,391,793		11.2		89,814,295		26.5
Foreign		8,925		25,116		160,165		165,878		360,084		0.2		442,094		0.1
Third-party portfolio		155,245,579		37,333		-		-		155,282,912		49.2		182,994,666		54.0
Free portfolio		7,553,507		1,069,628		3,009,882		61,353,020		72,986,037		23.1		56,193,138		16.6
Total		215,280,308		11,339,012		14,853,486		74,081,096		315,553,902		100.0		339,122,986		100.0
% per maturity term		68.2		3.6		4.7		23.5		100.0
Total – 06/30/2017		201,409,981		18,883,793		30,137,781		88,691,431		339,122,986
% per maturity term		59.3		5.6		8.9		26.2		100.0

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 113

d) Funds from acceptance and issuance of securities

	06/30/2018												06/30/2017
	0-30		31-180		181-365		Over 365 days		Total		%		Total		%
Funds from bills:		5,017,138		19,735,183		9,761,170		32,633,622		67,147,113		58.4		62,168,274		57.5
Financial		1,935,011		7,024,259		5,194,206		20,702,109		34,855,585		30.3		27,157,017		25.1
Real estate		1,678,509		8,067,833		1,647,217		3,436,770		14,830,329		12.9		18,871,894		17.5
Bills of credit related to agribusiness		1,403,618		4,643,091		2,919,747		8,494,743		17,461,199		15.2		16,139,363		14.9
Foreign securities		851,794		2,448,338		3,136,351		37,031,786		43,468,269		37.8		41,689,128		38.6
Non-trade related – issued abroad		851,794		2,448,338		3,136,351		37,031,786		43,468,269		37.8		41,689,128		38.6
Brazil risk note programme		14,248		343,707		274,987		2,064,917		2,697,859		2.3		6,264,289		5.9
Structure note issued		74,512		910,367		722,902		4,125,359		5,833,140		5.1		5,346,421		4.9
Bonds		635,831		383,672		559,115		25,327,562		26,906,180		23.4		24,358,680		22.5
Fixed rate notes		92,184		516,698		1,446,636		2,867,739		4,923,257		4.3		3,091,975		2.9
Eurobonds		-		399		-		11,364		11,763		0.0		16,699		0.0
Mortgage notes		14,515		17,397		30,692		275,871		338,475		0.3		361,870		0.3
Other		20,504		276,098		102,019		2,358,974		2,757,595		2.4		2,249,194		2.1
Structured Operations Certificates (*)		56,608		1,537,788		1,841,009		957,644		4,393,049		3.8		4,218,725		3.9
Total		5,925,540		23,721,309		14,738,530		70,623,052		115,008,431		100.0		108,076,127		100.0
% per maturity term		6.3		21.6		17.1		55.0		100.0
06/30/2017		5,474,292		23,731,381		18,467,922		60,402,532		108,076,127
% per maturity term		5.1		22.0		17.0		55.9		100.0

(*) As of 06/30/2018, the market value of the funding from Structured Operations Certificates issued is R$ 4,546,092 (R$ 4,418,309 of 06/30/2017) according to BACEN Circular Letter nº. 3,623.

ITAÚ UNIBANCO HOLDING’s portfolio is composed of Brazil Risk Note Programme with maturities of 31 days to 180 days amount of R$ 31,420 (R$ 50,822 at 06/30/2017) with maturities of 181 to 365 days amount of R$ (R$ 3,480,174 at 06/30/2017) and over 365 days amounting to R$ 77,070, totaling R$ 108,490 (R$ 3,530,996 at 06/30/2017).

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 114

e) Borrowing and onlending

	06/30/2018												06/30/2017
	0-30		31-180		181-365		Over 365 days		Total		%		Total		%
Borrowing		4,645,926		16,931,752		11,434,406		8,639,624		41,651,708		67.3		42,337,032		60.9
Domestic		1,157,883		-		-		1,664		1,159,547		1.9		1,677,360		2.4
Foreign (*)		3,488,043		16,931,752		11,434,406		8,637,960		40,492,161		65.4		40,659,672		58.5
Onlending		806,537		2,910,505		3,009,718		13,494,012		20,220,772		32.7		27,193,227		39.1
Domestic – official institutions		806,537		2,910,505		3,009,718		13,494,012		20,220,772		32.7		27,193,227		39.1
BNDES		370,331		1,246,311		1,276,586		6,511,920		9,405,148		15.2		12,513,627		18.0
FINAME		435,186		1,634,517		1,700,993		6,498,891		10,269,587		16.6		14,036,943		20.2
Other		1,020		29,677		32,139		483,201		546,037		0.9		642,657		0.9
Total		5,452,463		19,842,257		14,444,124		22,133,636		61,872,480		100.0		69,530,259		100.0
% per maturity term		8.8		32.1		23.3		35.8		100.0
Total – 06/30/2017		4,958,866		21,219,920		15,554,575		27,796,898		69,530,259
% per maturity term		7.1		30.5		22.4		40.0		100.0

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 115

f) Subordinated debt, including perpetual ones

	06/30/2018															06/30/2017
	0-30		31-180		181-365		Over 365 days			Total			%			Total			%
Financial treasury bills		217,176		4,537,909		186,540		4,491,675			9,433,300			17.5			20,579,884			39.5
Euronotes		-		-		-		30,565,142			30,565,142			56.7			26,148,134			50.2
Bonds		-		-		130,589		6,147,168			6,277,757			11.6			5,423,939			10.4
Debt instruments eligible as capital		-		-		-		7,663,805			7,663,805			14.2			-			0.0
(-) Transaction costs incurred (Note 4b)		-		-		-		(14,674	)		(14,674	)		(0.0	)		(47,747	)		(0.1	)
Grand total (*)		217,176		4,537,909		317,129		48,853,116			53,925,330			100.0			52,104,210			100.0
% per maturity term		0.4		8.4		0.6		90.6			100.0
Total – 06/30/2017		1,003,754		8,275,875		2,569,012		40,255,569			52,104,210
% per maturity term		1.9		15.9		4.9		77.3			100.0

(*) According to current legislation, the accounting balance of subordinated debt as of June 2018 was used for the calculation of reference equity as of December, 2012, totaling R$ 39,580,813.

Perpetual subordinate notes / Supplementary Capital (AT1), issued on December 12, 2017 and March 19, 2018, were approved by BACEN, increasing by 0.9 p.p. the Tier I Capital index of Itaú Unibanco.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 116

Description

Name of security / currency	Principal amount (original currency)		Issue	Maturity	Return p.a.	Account balance
Subordinated financial bills - BRL
		2,939,227	2012	2018	108% to 113% of CDI		3,400,833
		34,645			IPCA + 4.4% to 6.58%		64,454
		1,254,700			100% of CDI + 1.01% to 1.05%		1,271,667
		10,000			10.56%		18,130
		2,000	2011	2019	109% to 109.7% of CDI		4,120
		1,000	2012	2019	110% of CDI		2,025
		12,000			11.96%		24,752
		100,500			IPCA + 4.7% to 6.3%		177,913
		1,000	2012	2020	111% of CDI		2,039
		20,000			IPCA + 6% to 6.17%		42,256
		6,000	2011	2021	109.25% to 110.5% of CDI		12,713
		2,306,500	2012	2022	IPCA + 5.15% to 5.83%		4,384,168
		20,000			IGPM + 4.63%		28,230
					Total		9,433,300
Subordinated euronotes - USD
		1,000,000	2010	2020	6.2%		3,898,606
		1,000,000		2021	5.75%		3,965,858
		750,000	2011	2021	5.75% to 6.2%		2,903,349
		550,000	2012	2021	6.2%		2,120,690
		2,625,000		2022	5.5% to 5.65%		10,301,739
		1,870,000		2023	5.13%		7,243,593
		20,000	2017		6.12%		77,365
		10,000	2018		6.5%		39,268
Subordinated bonds - CLP					Total		30,550,468
		11,048,394	2008	2022	7.4% to 7.99%		121,111
		32,720,912		2033	3.5% to 4.5%		237,558
		110,390,929		2033	4.8%		953,749
		98,151,772	2009	2035	4.8%		867,783
		2,000		2019	10.8%		2,713
		94,500		2019	IPC + 2%		127,876
		11,311,860	2010	2032	4.4%		83,920
		24,928,312		2035	3.9%		193,059
		125,191,110		2036	4.4%		918,458
		87,087,720		2038	3.9%		668,953
		68,060,124		2040	4.1%		515,043
		33,935,580		2042	4.4%		251,128
		104,000	2013	2023	IPC + 2%		138,726
		146,000		2028	IPC + 2%		194,781
		510,107	2014	2024	LIB		675,791
		47,307,480		2034	3.8%		327,108
Debt instruments eligible as capital - USD					Total		6,277,757
		1,230,000	2017		6.12%		4,757,965
		740,000	2018		6.5%		2,905,840
					Total		7,663,805
Total							53,925,330

ITAÚ UNIBANCO HOLDING’s portfolio is composed of Subordinated Euronotes with maturities over 365 days amounting to R$ 30,551,819 (R$ 26,100,387 at 06/30/2017) and Debt Instruments Eligible as Capital over 365 days amounting to R$ 7,663,805.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 117

Note 11 - Insurance, pension plan and capitalization operations

a) Composition of the technical provisions

	Insurance				Pension plan				Capitalization				Total
	06/30/2018		06/30/2017		06/30/2018		06/30/2017		06/30/2018		06/30/2017		06/30/2018		06/30/2017
Unearned premiums		1,993,421		1,951,410		13,885		16,396		-		-		2,007,306		1,967,806
Mathematical provision of benefits to be granted and benefits granted		189,427		74,968		184,036,424		161,679,285		-		-		184,225,851		161,754,253
Redemptions and other unsettled amounts		11,791		11,014		300,084		230,862		-		-		311,875		241,876
Financial surplus		1,877		1,838		588,854		611,225		-		-		590,731		613,063
Unsettled claims		545,894		542,564		43,820		28,436		-		-		589,714		571,000
Claims / events incurred but not reported		352,322		359,469		25,759		27,558		-		-		378,081		387,027
Administrative and related expenses		27,742		28,989		99,408		77,619		9,397		13,175		136,547		119,783
Mathematical provision for capitalization and redemptions		-		-		-		-		3,309,479		3,179,220		3,309,479		3,179,220
Raffles payable and to be held		-		-		-		-		16,665		21,941		16,665		21,941
Other provisions(1)		133,804		553,432		64,286		337,759		202		255		198,292		891,446
Total (2)		3,256,278		3,523,684		185,172,520		163,009,140		3,335,743		3,214,591		191,764,541		169,747,415

(1) It considers mostly the Supplemental Coverage Provision, regulated by SUSEP Circular nº. 517, of July 30, 2015;

(2) This table covers the amendments established by SUSEP Circular nº. 517, of July 30, 2015, also for comparison purposes.

The total of Technical Provisions represents the amount of obligations after the Liability Adequacy Test is carried out.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 118

b) Assets guaranteeing technical provisions - SUSEP

	Insurance				Pension plan						Capitalization				Total
	06/30/2018		06/30/2017		06/30/2018			06/30/2017			06/30/2018		06/30/2017		06/30/2018			06/30/2017
Interbank investments – money market		837,561		698,786		806,111			905,642			1,827,637		1,378,648		3,471,309			2,983,076
Securities and derivative financial instruments		1,420,328		1,879,326		185,448,482			163,166,889			1,672,349		2,002,014		188,541,159			167,048,229
PGBL / VGBL fund quotas (1)		-		-		176,994,586			155,598,087			-		-		176,994,586			155,598,087
Government securities - domestic		-		-		155,027,584			131,940,190			-		-		155,027,584			131,940,190
National treasury bills		-		-		41,164,945			43,487,052			-		-		41,164,945			43,487,052
National treasury notes		-		-		54,036,730			37,886,532			-		-		54,036,730			37,886,532
Financial treasury bills		-		-		45,866,191			33,109,824			-		-		45,866,191			33,109,824
Repurchase agreements		-		-		13,959,718			17,456,782			-		-		13,959,718			17,456,782
Financial Treasury Bills		-		-		635,682			162,332			-		-		635,682			162,332
National Treasury Bills		-		-		8,536,405			16,566,779			-		-		8,536,405			16,566,779
National Treasury Notes		-		-		4,787,631			727,671			-		-		4,787,631			727,671
Corporate securities		-		-		22,038,600			23,280,901			-		-		22,038,600			23,280,901
Bank deposit certificates		-		-		806,945			1,510,560			-		-		806,945			1,510,560
Debentures		-		-		1,442,858			968,423			-		-		1,442,858			968,423
Shares		-		-		2,050,234			1,030,856			-		-		2,050,234			1,030,856
Promissory notes		-		-		233,359			25,635			-		-		233,359			25,635
Financial treasury bills		-		-		17,475,913			18,102,988			-		-		17,475,913			18,102,988
Others		-		-		-			75,175			-		-		-			75,175
Repurchase agreements - Debentures		-		-		29,291			1,567,264			-		-		29,291			1,567,264
PGBL / VGBL fund quotas		-		-		436,513			1,057,336			-		-		436,513			1,057,336
Derivative financial instruments		-		-		(655,812	)		(398,831	)		-		-		(655,812	)		(398,831	)
Loans for shares		-		-		59,563			(1,037	)		-		-		59,563			(1,037	)
Accounts receivable / (payable)		-		-		88,138			(280,472	)		-		-		88,138			(280,472	)
Other assets		1,420,328		1,879,326		8,453,896			7,568,802			1,672,349		2,002,014		11,546,573			11,450,142
Government		711,826		872,031		8,265,013			7,505,529			399,183		291,576		9,376,022			8,669,136
Private		708,502		1,007,295		188,883			63,273			1,273,166		1,710,438		2,170,551			2,781,006
Receivables from insurance and reinsurance operations (2)		1,072,508		1,089,255		-			-			-		-		1,072,508			1,089,255
Credit rights		940,719		905,409		-			-			-		-		940,719			905,409
Commercial – extended guarantee		88,866		139,992		-			-			-		-		88,866			139,992
Reinsurance		42,923		43,854		-			-			-		-		42,923			43,854
Total		3,330,397		3,667,367		186,254,593			164,072,531			3,499,986		3,380,662		193,084,976			171,120,560

(1) The PGBL and VGBL plans securities portfolios, the ownership and embedded risks of which are the customer’s responsibility, are recorded as securities – trading securities, with a counter-entry to lliabilities in Pension plan technical provision accounts (Note 11a);

(2) Recorded under Other receivables and Other assets.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 119

c) Financial and operating income

	Insurance																		Pension plan																		Capitalization						Total
	01/01 to 06/30/2018									01/01 to 06/30/2017									01/01 to 06/30/2018									01/01 to 06/30/2017									01/01 to			01/01 to			01/01 to			01/01 to
	Direct			Reinsurance			Withheld			Direct			Reinsurance			Withheld			Direct			Reinsurance			Withheld			Direct			Reinsurance			Withheld			06/30/2018			06/30/2017			06/30/2018			06/30/2017
Financial income related to insurance, pension plan and capitalization operations		49,471			-			49,471			114,231			-			114,231			218,981			-			218,981			125,346			-			125,346			15,269			97,325			283,721			336,902
Financial income		59,720			-			59,720			120,752			-			120,752			4,196,173			-			4,196,173			7,865,873			-			7,865,873			101,886			195,337			4,357,779			8,181,962
Financial expenses		(10,249	)		-			(10,249	)		(6,521	)		-			(6,521	)		(3,977,192	)		-			(3,977,192	)		(7,740,527	)		-			(7,740,527	)		(86,617	)		(98,012	)		(4,074,058	)		(7,845,060	)
Operating income related to insurance, pension plan and capitalization operations		1,302,545			17,178			1,319,723			1,428,602			987			1,429,589			307,035			(2,029	)		305,006			(7,996	)		(1,585	)		(9,581	)		247,408			295,791			1,872,137			1,715,799
Premiums and contributions		2,122,892			(3,470	)		2,119,422			1,985,845			(24,536	)		1,961,309			10,026,837			(2,029	)		10,024,808			11,274,122			(1,585	)		11,272,537			1,338,934			1,426,866			13,483,164			14,660,712
Changes in technical provisions		(122,537	)		1,617			(120,920	)		214,758			2,730			217,488			(9,689,086	)		-			(9,689,086	)		(11,240,361	)		-			(11,240,361	)		1,971			2,543			(9,808,035	)		(11,020,330	)
Expenses for claims, benefits, redemptions and raffles		(633,405	)		18,988			(614,417	)		(604,256	)		22,743			(581,513	)		(28,319	)		-			(28,319	)		(38,277	)		-			(38,277	)		(1,093,769	)		(1,133,869	)		(1,736,505	)		(1,753,659	)
Selling expenses		(32,249	)		43			(32,206	)		(146,035	)		50			(145,985	)		(1,841	)		-			(1,841	)		(2,116	)		-			(2,116	)		(2,255	)		(2,394	)		(36,302	)		(150,495	)
Other operating revenues and expenses		(32,156	)		-			(32,156	)		(21,710	)		-			(21,710	)		(556	)		-			(556	)		(1,364	)		-			(1,364	)		2,527			2,645			(30,185	)		(20,429	)
Total income related to insurance, pension plan and capitalization operations		1,352,016			17,178			1,369,194			1,542,833			987			1,543,820			526,016			(2,029	)		523,987			117,350			(1,585	)		115,765			262,677			393,116			2,155,858			2,052,701

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 120

Note 12 – Contingent assets and liabilities and legal liabilities – tax and social security

ITAÚ UNIBANCO HOLDING, 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 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 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 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.

In December 2017, through mediation of the Federal Attorney’s Office (AGU) and supervision of the Central Bank of Brazil (BCB), savers (represented by two civil associations, FEBRAPO and IDEC) and FEBRABAN entered into an instrument of agreement aiming at resolving lawsuits related to economic plans, and Itaú has already adhered to its terms. Said agreement was approved on March 1, 2018, by the Plenary Session of the Federal Supreme Court (STF) and, savers may adhere to their terms for a 24-month period, counted as from May 5, 2018 with the subsequent conclusion of lawsuits.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 121

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$ 3,990,175 (R$ 3,730,816 at 06/30/2017), in this amount there are no values resulting from interests in joint ventures.

- 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$ 115,753 (R$ 53,716 at 06/30/2017).

- 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.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 122

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

													01/01 to
	01/01 to 06/30/2018												06/30/2017
	Civil			Labor			Other			Total			Total
Opening balance		5,299,650			7,282,610			150,685			12,732,945			12,663,668
Effect of change in consolidation criteria		-			-			-			-			(1,392	)
(-) Contingencies guaranteed by indemnity clauses (Note 4n I)		(243,221	)		(997,546	)		-			(1,240,767	)		(1,321,770	)
Subtotal		5,056,429			6,285,064			150,685			11,492,178			11,340,506
Monetary restatement/charges		60,543			252,818			-			313,361			375,881
Changes in the period reflected in results (Notes 13f and 13i)		137,184			741,624			260,641			1,139,449			1,669,843
Increase (*)		371,791			837,391			260,942			1,470,124			2,021,468
Reversal		(234,607	)		(95,767	)		(301	)		(330,675	)		(351,625	)
Payment		(578,322	)		(1,229,428	)		-			(1,807,750	)		(1,900,605	)
Subtotal		4,675,834			6,050,078			411,326			11,137,238			11,485,625
(+) Contingencies guaranteed by indemnity clauses (Note 4n I)		208,538			983,065			-			1,191,603			1,315,571
Closing balance		4,884,372			7,033,143			411,326			12,328,841			12,801,196
Closing balance at 06/30/2017		5,224,787			7,330,715			245,694			12,801,196
Escrow deposits at 06/30/2018		1,538,500			2,250,278			-			3,788,778
Escrow deposits at 06/30/2017		1,528,605			2,288,401			-			3,817,006

(*) Civil provisions include the provision for economic plans amounting to R$ (176,116) (R$ 72,824 from 01/01 to 06/30/2017) (Note 22k).

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 123

- Tax and social security lawsuits

ITAÚ UNIBANCO HOLDING 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 06/30/2018									06/30/2017
	Legal
Provisions	obligation			Contingencies			Total			Total
Opening balance		4,736,215			2,266,944			7,003,159			8,245,149
(-) Contingencies guaranteed by indemnity clauses (Note 4n I)		-			(66,190	)		(66,190	)		(68,734	)
Subtotal		4,736,215			2,200,754			6,936,969			8,176,415
Monetary restatement / charges		67,582			124,597			192,179			385,718
Changes in the period reflected in results		(35,324	)		(20,003	)		(55,327	)		49,226
Increase		91,161			153,761			244,922			254,020
Reversal		(126,485	)		(173,764	)		(300,249	)		(204,794	)
Payment		(262,563	)		(14,973	)		(277,536	)		(12,569	)
Subtotal		4,505,910			2,290,375			6,796,285			8,598,790
(+) Contingencies guaranteed by indemnity clauses (Note 4n I)		-			66,692			66,692			70,597
Closing balance (Note 14c)		4,505,910			2,357,067			6,862,977			8,669,387
Closing balance at 06/30/2017 (Note 14c)		4,816,589			3,852,798			8,669,387

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 124

										01/01 to
	01/01 to 06/30/2018									06/30/2017
	Legal
Escrow deposits	obligation			Contingencies			Total			Total
Opening balance		4,549,151			621,058			5,170,209			4,846,526
Appropriation of income		75,582			7,257			82,839			174,206
Changes in the period		(139,425	)		(13,099	)		(152,524	)		18,253
Deposited		76,949			6,261			83,210			136,328
Withdrawals		(33,102	)		(7,786	)		(40,888	)		(117,191	)
Reversals to income		(183,272	)		(11,574	)		(194,846	)		(884	)
Closing balance		4,485,308			615,216			5,100,524			5,038,985
Relocated  to  assets  pledged  in guarantee  of contingencies (Note 12d)		-			(937	)		(937	)		-
Closing balance after relocated		4,485,308			614,279			5,099,587			5,038,985
Closing balance at 06/30/2017		4,499,576			539,409			5,038,985

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 125

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

· CSLL – Isonomy – R$ 1,314,858: 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$ 1,298,333;

· PIS and COFINS – Calculation basis – R$ 627,616: defending the levy of PIS and COFINS on revenue, a tax on revenue from the sales of assets and services. The balance of the deposit in court totals R$ 605,831;

· INSS – Non-compensatory amounts – R$ 651,866: the non-levy of social security contribution on amounts paid as profit sharing is defended.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 126

Off-balance sheet contingencies

The amounts involved in tax and social security lawsuits for which the likelihood of loss is possible are not recognized as a provision. The estimated amounts at risk in the principal tax and social security lawsuits with a likelihood of loss deemed possible, which total R$ 21,606,115 are described below:

· INSS – Non-compensatory amounts – R$ 5,115,082: defends the non-levy of this contribution on these amounts, among which are profit sharing, stock options, transportation vouchers and sole bonuses;

· PIS and COFINS - Reversal of Revenues from Depreciation in Excess – R$ 3,570,283: discussing the accounting and tax treatment granted to PIS and COFINS upon settlement of leasing operations;

· IRPJ and CSLL – Goodwill – Deduction – R$ 2,630,442: the deductibility of goodwill with future expected profitability on the acquisition of investments;

· IRPJ, CSLL, PIS and COFINS – Requests for offsetting dismissed - R$ 1,670,569: cases in which the liquidity and the ability of offset credits are discussed;

· IRPJ and CSLL – Interest on capital – R$ 1,485,623: 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;

· ISS – Banking Institutions – R$ 1,122,338: these are banking operations, revenue from which may not be interpreted as prices for services rendered, and/or which arises from activities not listed under Supplementary Law nº. 116/03 or Decree Law nº. 406/68;

· IRPJ and CSLL – Deductibility of Losses in Credit Operations – R$ 748,582: assessments 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$ 1,038,359 (R$ 1,151,904 at 06/30/2017) (Note 13a). 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 as collateral for contingencies refer to lawsuits involving contingent liabilities and are restricted or in escrow deposits, as shown in the table below:

	06/30/2018		06/30/2017
Securities (basically financial treasury bills – Note 7b)		769,318		939,565
Deposits in guarantee		4,582,197		4,646,118

ITAÚ UNIBANCO HOLDING’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 HOLDING 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. – Complete Financial Statements – June 30, 2018 127

Note 13 - Breakdown of accounts

a) Other sundry receivables

	06/30/2018			06/30/2017
Social contribution for offsetting (Note 14b I)		604,699			633,001
Taxes and contributions for offsetting		8,138,366			7,049,657
Escrow deposits for foreign fundraising program		846,060			528,916
Receivables from reimbursement of contingent liabilities (Note 12c)		1,038,359			1,151,904
Receivables from reimbursement of contingent liabilities		2,220,241			2,274,334
(Allowance for loan losses)		(1,181,882	)		(1,122,430	)
Sundry domestic debtors		2,555,701			1,440,440
Premiums from loan operations		155,470			568,291
Sundry foreign debtors		1,006,575			2,374,784
Retirement plan assets (Note 19)		1,073,261			1,090,253
Recoverable payments		38,043			33,124
Salary advances		361,858			293,074
Operations without credit granting characteristics		2,161,819			2,509,751
Securities and credits receivable		3,675,054			3,119,759
(Allowance for loan losses)		(1,513,235	)		(610,008	)
Other		909,345			496,885
Total		18,889,556			18,170,080

In ITAÚ UNIBANCO HOLDING, Other Sundry Receivables is mainly composed of Taxes and Contributions for Offset R$ 1,923,194 (R$ 1,590,613 at 06/30/2017) (Note 14b I).

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 128

b) Prepaid expenses

	06/30/2018		06/30/2017
Commissions (*)		355,852		809,431
Related to vehicle financing		23,218		66,809
Related to insurance and pension plan		29,534		131,205
Restricted to commissions / partnership agreements		2,796		16,012
Related to Payroll Loans		143,921		437,779
Other		156,383		157,627
Advertising		527,858		334,075
Other		1,096,804		1,082,920
Total		1,980,514		2,226,426

(*) In the second quarter of 2018, the impact on income related to commission from local correspondents, as described in Note 4g, was R$ 202.266 (R$ 192,496 at 06/30/2017).

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 129

c) Other sundry liabilities

	06/30/2018		06/30/2017
Liabilities from Payment Transactions (Note 4e)		33,712,064		30,036,236
Liabilities from transactions related to credit assignments (Note 8f)		4,538,558		5,339,686
Provisions for sundry payments		3,553,536		2,410,755
Sundry creditors - foreign		3,889,259		4,003,962
Sundry creditors - local		2,448,739		2,685,856
Provision financial guarantees provided (Note 8c)		1,810,014		1,884,402
Personnel provision		1,894,602		1,722,571
Creditors of funds to be released		1,202,459		757,374
Liabilities for official agreements and rendering of payment services		899,101		816,584
Provision for health insurance (*)		849,034		752,173
Provision for retirement plan benefits (Note 19)		769,111		780,791
Provision for Citibank integration expenditures		504,300		-
Liabilities for purchase of assets and rights		155,671		171,926
Related to insurance operations		147,883		166,656
Funds from consortia participants		139,931		110,594
Liabilities from sales operations or transfer of financial assets		35,635		37,443
Other		1,133,421		1,224,952
Total		57,683,318		52,901,961

(*) Provision set up to cover possible future deficits up to the total discontinuation of the portfolio, arising from the difference between monthly installments adjustments, authorized annually by the regulatory body, and the actual variation of hospital costs that affect the compensation of claims (Note 13i).

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 130

d) Banking service fees

	01/01 to		01/01 to
	06/30/2018		06/30/2017
Asset management		3,135,181		2,627,120
Funds management fees		2,815,401		2,316,710
Consortia management fees		319,780		310,410
Current account services		348,889		397,161
Credit cards		5,293,208		5,079,965
Relationship with stores		5,293,155		5,079,913
Credit card processing		53		52
Sureties and credits granted		1,327,607		1,272,719
Loan operations		566,879		520,034
Guarantees provided		760,728		752,685
Receipt services		883,297		800,304
Collection fees		748,174		670,413
Collection services		135,123		129,891
Other		1,613,159		1,374,753
Custody services and management of portfolio		211,495		197,710
Economic and financial advisory		372,369		311,202
Foreign exchange services		74,974		57,666
Other services		954,321		808,175
Total		12,601,341		11,552,022

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 131

e) Income related to bank charges

	01/01 to		01/01 to
	06/30/2018		06/30/2017
Loan operations / registration		436,742		445,613
Credit cards – annual fees and other services		1,877,391		1,740,554
Deposit account		103,115		96,429
Transfer of funds		189,962		139,163
Income related to securities brokerage		393,846		298,566
Service package fees		3,238,028		3,024,186
Total		6,239,084		5,744,511

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 132

f) Personnel expenses

	01/01 to			01/01 to
	06/30/2018			06/30/2017
Compensation		(4,903,934	)		(4,594,997	)
Charges		(1,489,734	)		(1,398,109	)
Welfare benefits (Note 19)		(1,827,015	)		(1,667,006	)
Training		(107,350	)		(99,695	)
Labor claims and termination of employees (Note 12b)		(956,035	)		(1,313,242	)
Stock Option Plan		(108,430	)		(100,428	)
Total		(9,392,498	)		(9,173,477	)
Employees’ profit sharing		(1,938,754	)		(1,608,217	)
Total including employees’ profit sharing		(11,331,252	)		(10,781,694	)

g) Other administrative expenses

	01/01 to			01/01 to
	06/30/2018			06/30/2017
Data processing and telecommunications		(2,063,418	)		(2,012,074	)
Depreciation and amortization		(1,276,260	)		(1,096,681	)
Installations		(1,612,942	)		(1,528,349	)
Third-party services		(2,115,733	)		(2,056,554	)
Financial system services		(368,514	)		(378,328	)
Advertising, promotions and publication		(653,483	)		(507,839	)
Transportation		(167,430	)		(166,626	)
Materials		(155,929	)		(155,800	)
Security		(380,232	)		(363,730	)
Travel expenses		(107,217	)		(97,228	)
Other		(660,317	)		(565,396	)
Total		(9,561,475	)		(8,928,605	)

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 133

h) Other operating revenue

	01/01 to		01/01 to
	06/30/2018		06/30/2017
Reversal of operating provisions		22,532		38,050
Recovery of charges and expenses		90,985		66,362
Other		340,231		442,176
Total		453,748		546,588

i) Other operating expenses

	01/01 to			01/01 to
	06/30/2018			06/30/2017
Provision for contingencies (Note 12b)		(406,386	)		(563,897	)
Civil lawsuits		(137,184	)		(606,384	)
Tax and social security contributions		(8,561	)		29,043
Other		(260,641	)		13,444
Selling - credit cards		(1,820,501	)		(1,667,337	)
Claims		(159,815	)		(149,642	)
Impairment – Operations with no Credit Granting Characteristics		(573,441	)		(183,583	)
Impairment – Other receivables Sundry		(167,363	)		-
Provision for health insurance (Note 13c)		(6,831	)		(10,126	)
Refund of interbank costs		(140,830	)		(152,161	)
Amortization of investments/goodwill		(607,365	)		(547,275	)
Other		(930,620	)		(904,948	)
Total		(4,813,152	)		(4,178,969	)

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 134

Note 14 - Taxes

a) Composition of expenses for taxes and contributions

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

	01/01 to			01/01 to
Due on operations for the period	06/30/2018			06/30/2017
Income before income tax and social contribution		12,950,583			16,853,726
Charges (income tax and social contribution) at the rates in effect (Note 4p)		(5,827,762	)		(7,584,177	)
Increase / decrease in income tax and social contribution charges arising from:
Investments in affiliates and jointly controlled entities		7,941			91,296
Foreign exchange variations on investments abroad		4,224,720			398,984
Interest on capital		1,817,829			1,905,392
Corporate reorganizations (Note 4r)		313,869			313,924
Dividends and interest on external debt bonds		262,457			219,930
Other nondeductible expenses net of non taxable income (*)		(5,103,859	)		1,333,231
Income tax and social contribution expenses		(4,304,805	)		(3,321,420	)
Related to temporary differences
Increase (reversal) for the period		4,112,836			(1,633,251	)
Increase (reversal) of prior periods		18,169			425,289
(Expenses)/Income related to deferred taxes		4,131,005			(1,207,962	)
Total income tax and social contribution expenses		(173,800	)		(4,529,382	)

(*) Includes temporary (additions) and exclusions.

II - Composition of tax expenses:

	01/01 to			01/01 to
	06/30/2018			06/30/2017
PIS and COFINS		(1,926,372	)		(2,584,799	)
ISS		(662,050	)		(537,909	)
Other		(387,605	)		(309,620	)
Total (Note 4p)		(2,976,027	)		(3,432,328	)

The tax expenses of ITAÚ UNIBANCO HOLDING amount to R$ 145,436 (R$ 186,799 at 06/30/2017) and are mainly composed of PIS and COFINS.

III- Tax effects on foreign exchange management of investments abroad

In order to minimize the effects on income in connection with the foreign exchange variations on investments abroad, net of the respective tax effects, ITAÚ UNIBANCO HOLDING CONSOLIDATED carries out derivative transactions in foreign currency (hedges), as mentioned in Note 22b.

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. – Complete Financial Statements – June 30, 2018 135

b) Deferred taxes

I - The Deferred Tax Asset balance and its changes, segregated based on its origin and disbursements incurred, are represented as follows:

	Provisions				Deferred Tax Assets
	06/30/2017		06/30/2018		12/31/2017		Realization / Reversal			Increase		06/30/2018		06/30/2017
Reflected in income and expense accounts						49,076,207		(13,768,795	)		8,428,256		43,735,668		50,613,690
Allowance for loan losses		68,384,811		59,310,042		28,446,922		(4,979,179	)		859,356		24,327,099		29,291,759
Related to income tax and social contribution loss carryforwards						6,284,551		(2,291,258	)		1,698,787		5,692,080		7,167,588
Provision for profit sharing		2,655,526		3,037,279		1,821,801		(1,821,801	)		1,283,073		1,283,073		1,120,350
Provision for devaluation of securities with permanent impairment		2,900,280		4,072,855		1,293,652		(500,070	)		832,288		1,625,870		1,166,091
Adjustment to market value of securities and derivative financial instruments (assets/liabilities)		533,240		1,075,333		210,561		(210,561	)		478,010		478,010		222,762
Adjustments of operations carried out on the futures settlement market		1,282,467		473,990		299,754		(299,754	)		228,851		228,851		540,354
Goodwill on purchase of investments		1,289,679		1,336,906		652,897		(87,457	)		142,430		707,870		491,527
Provision for contingent liabilities		14,249,223		12,163,447		5,192,543		(847,681	)		608,592		4,953,454		5,952,096
Civil lawsuits		4,835,663		4,407,044		1,974,092		(262,652	)		87,351		1,798,791		1,968,703
Labor claims		5,560,762		5,399,336		2,198,326		(500,097	)		395,754		2,093,983		2,249,633
Tax and social security contributions		3,852,798		2,357,067		1,020,125		(84,932	)		125,487		1,060,680		1,733,760
Legal obligation - tax and social security contributions		2,429,888		1,203,490		488,790		(41,710	)		77,365		524,445		392,727
Provision related to health insurance operations		752,173		849,034		340,591		(436	)		2,502		342,657		300,522
Other non-deductible provisions		10,186,857		9,269,821		4,044,145		(2,688,888	)		2,217,002		3,572,259		3,967,914
Reflected in stockholders’ equity accounts						1,895,172		(314,754	)		839,637		2,420,055		2,542,040
Corporate reorganizations (Note 4r)		2,769,599		923,147		627,739		(313,869	)		-		313,870		941,664
Adjustment to market value of available-for-sale securities		872,262		2,269,539		167,397		(42	)		833,256		1,000,611		392,521
Cash flow hedge		3,147,867		2,433,638		1,099,305		(843	)		5,684		1,104,146		1,200,273
Provision for retirement plan benefits		18,780		3,504		731		-			697		1,428		7,582
Total (*)		111,472,652		98,422,025		50,971,379		(14,083,549	)		9,267,893		46,155,723		53,155,730
Social contribution for offsetting arising from Option established in article 8º of Provisional Measure nº. 2,158-35 of August 24, 2001						611,694		(6,995	)		-		604,699		633,001

(*) 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 subsidiaries, Itaú Unibanco S.A e Banco Itaucard S.A, a requirement has been sent to Central Bank of Brazil, in compliance with paragraph 7 of article 1 of Resolution no. 4,441/15 and Circular no. 3,776/15.

For ITAÚ UNIBANCO HOLDING, Tax Credits totaled R$ 2,108,300 (R$ 1,607,783 at 06/30/2017) and are mainly represented by Tax Loss Carryforwards of R$ 1,395,888 (R$ 1,283,902 at 06/30/2017), Provisions for Escrow Accounts of R$ 117,064 (R$ 117,108 at 06/30/2017), Administrative Provisions of R$ 37,668 (R$ 46,242 at 06/30/2017), Provisions for Legal, Tax and Social Security Risks of R$ 70,366 (R$ 70,972 at 06/30/2017), the realization of which is contingent upon the outcome of the respective lawsuits and Adjustment to Market Value of Trading Securities and Derivative Financial Instruments of R$ 368,184 (R$ 1,449 at 06/30/2017).

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 136

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

	12/31/2017		Realization / Reversal			Increase		06/30/2018		06/30/2017
Reflected in income and expense accounts		13,364,175		(10,898,833	)		2,840,401		5,305,743		13,262,751
Depreciation in excess – leasing		613,348		(78,209	)		-		535,139		844,624
Restatement of escrow deposits and contingent liabilities		1,279,719		(9,706	)		65,074		1,335,087		1,232,772
Provision for pension plan benefits		304,032		(12,920	)		9,667		300,779		304,808
Adjustments to market value of securities and derivative financial instruments		8,498,725		(8,498,725	)		1,185,839		1,185,839		8,263,977
Adjustments of operations carried out on the future settlement market		1,575,716		(1,575,716	)		1,567,064		1,567,064		1,589,395
Taxation of results abroad – capital gains		2,316		-			970		3,286		1,829
Other		1,090,319		(723,557	)		11,787		378,549		1,025,346
Reflected in stockholders’ equity accounts		233,603		(93,379	)		30,556		170,780		172,598
Adjustments to market value of available-for-sale securities		224,342		(93,379	)		19,819		150,782		163,442
Provision for pension plan benefits (*)		9,261		-			10,737		19,998		9,156
Total		13,597,778		(10,992,212	)		2,870,957		5,476,523		13,435,349

(*) Reflected in stockholders' equity, pursuant to CVM Resolution n° 4,424/15 (Note 19).

At ITAÚ UNIBANCO HOLDING, the Provisions for Deferred Taxes and Contributions total R$ 10,814 (R$ 135,440 at 06/30/2017) and are basically comprised of Monetary Restatement of Escrow Deposits for Legal Obligations and Contingent Liabilities of R$ 3,919 (R$ 5,217 at 06/30/2017) and Adjustments to Market Value of Trading Securities and Financial Derivative Instruments of R$ 122,738 at 06/30/2017.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 137

III - The estimate of realization and present value of tax credits and social contribution to offset, arising from Provisional Measure 2,158-35 of 08/24/2001 and from the Provision for Deferred Income Tax and Social Contribution existing at June 30, 2018, are:

																					Provision for
	Deferred tax assets																				deferred
						Tax loss/social										Social					income tax
	Temporary					contribution loss										contribution for					and social						Net deferred
Year of realization	differences		%			carryforwards		%			Total		%			offsetting		%			contribution			%			taxes		%
2018		14,092,044		35	%		67,571		1	%		14,159,615		31	%		6,137		1	%		(479,007	)		9	%		13,686,745		33	%
2019		12,311,923		30	%		152,014		3	%		12,463,937		27	%		63,939		11	%		(1,284,129	)		23	%		11,243,747		27	%
2020		3,174,813		8	%		1,687,485		30	%		4,862,298		10	%		485,768		80	%		(226,330	)		4	%		5,121,736		13	%
2021		3,803,877		9	%		2,048,725		36	%		5,852,602		13	%		-		0	%		(1,700,761	)		31	%		4,151,841		10	%
2022		1,833,957		5	%		1,709,390		30	%		3,543,347		8	%		48,855		8	%		(267,702	)		5	%		3,324,500		8	%
after 2022		5,247,029		13	%		26,895		0	%		5,273,924		11	%		-		0	%		(1,518,594	)		28	%		3,755,330		9	%
Total		40,463,643		100	%		5,692,080		100	%		46,155,723		100	%		604,699		100	%		(5,476,523	)		100	%		41,283,899		100	%
Present value (*)		37,101,320					4,912,610					42,013,930					548,665					(4,744,103	)					37,818,492

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

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

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

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 138

c) Tax and social security contributions

	06/30/2018		06/30/2017
Taxes and contributions on income payable		2,735,129		2,164,947
Taxes and contributions payable		1,882,308		1,860,012
Provision for deferred income tax and social contribution (Note 14b II)		5,476,523		13,435,349
Legal liabilities – tax and social security (Note 12b)		4,505,910		4,816,589
Total		14,599,870		22,276,897

At ITAÚ UNIBANCO HOLDING, the balance of tax and social security contributions totals R$ 561,085 (R$ 308,500 at 06/30/2017) and is mainly comprised of taxes and contributions on income payable of R$ 535,343 (R$ 158,807 at 06/30/2017) and provision for deferred income tax and social contribution R$ 10,814 (R$ 135,440 at 06/30/2017).

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 139

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

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

	06/30/2018		06/30/2017
Taxes paid or provided for		10,044,435		9,146,657
Taxes withheld and collected from third parties		8,418,701		8,590,411
Total		18,463,136		17,737,068

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 140

Note 15 – Permanent Assets

a) Investment

I - Change of investments - ITAÚ UNIBANCO HOLDING

		Balance at 12/31/2017														Changes 06/30/2018
																															Exchange			Adjustments
		Book value																	Dividends/			Equity in earnings of subisidiaries									Variation–			in										Equity in
				Changes in															interest												Functional			marketable										earnings of
Companies	Functional currency	Stockholders' equity		exchange rates- Functional currency			Adjustments under investor criteria (1)		Unrealized results			Goodwill		Balance at 12/31/2017		Amortization of goodwill			on capital paid/ provided for (2)			Earnings/ (Losses)		Adjustments under investor criteria (1)		Unrealized results			Total		currency other than the Real			securities of subsidiaries and other			Corporate Events (3)			Balance at 06/30/2018		Balance at 06/30/2017		subsidiaries from 01/01 to 06/30/2017
Domestic			74,937,305		287,331			436,488		(231,258	)		5,279		75,435,145		(3,168	)		-			7,331,428		96,645		53,063			7,481,136		962,100			(1,449,271	)		14,499,995			96,925,937		85,281,244		8,248,483
Itaú Unibanco S.A.			60,966,756		288,493			384,266		(155,558	)		5,279		61,489,236		(3,168	)		-			6,039,092		88,501		46,292			6,173,885		961,433			(1,382,301	)		14,500,000			81,739,085		71,908,836		6,986,252
Banco Itaucard S.A.			8,546,636		(287	)		3,034		(53,498	)		-		8,495,885		-			-			761,052		876		(4,094	)		757,834		340			(44,182	)		-			9,209,877		8,249,530		737,504
Banco Itaú BBA S.A.			2,173,988		(1,047	)		41,556		(22,202	)		-		2,192,295		-			-			270,337		6,089		10,865			287,291		(558	)		(22,656	)		-			2,456,372		2,013,756		274,991
Itaú BBA Participações S.A.			2,069,612		172			-		-			-		2,069,784		-			-			117,821		-		-			117,821		885			983			-			2,189,473		1,935,580		137,182
Itaú Corretora de Valores S.A.			1,180,299		-			7,632		-			-		1,187,931		-			-			143,125		1,179		-			144,304		-			(1,115	)		-			1,331,120		1,173,530		112,553
Itaú Seguros S.A.			14		-			-		-			-		14		-			-			1		-		-			1		-			-			(5	)		10		12		1
Foreign			6,374,733		562,231			-		(11,533	)		372,551		7,297,982		(22,579	)		(97,566	)		434,934		-		(395	)		434,539		643,823			(16,021	)		-			8,240,178		7,101,614		123,740
Itaú Corpbanca	Chilean peso		3,217,382		351,329			-		-			372,551		3,941,262		(22,579	)		(28,003	)		13,189		-		(1	)		13,188		349,422			(8,546	)		-			4,244,744		3,833,383		11,724
BICSA Holdings, LTD.	Chilean peso		1,606,414		169,140			-		(11,533	)		-		1,764,021		-			-			81,838		-		(394	)		81,444		179,089			18			-			2,024,572		1,724,588		(20,300	)
Banco Itaú Uruguay S.A.	Uruguayan peso		1,288,710		35,140			-		-			-		1,323,850		-			-			254,442		-		-			254,442		96,674			(7,512	)		-			1,667,454		1,297,211		84,566
OCA S.A.	Uruguayan peso		262,227		6,622			-		-			-		268,849		-			(69,563	)		85,465		-		-			85,465		18,638			19			-			303,408		242,105		47,682
ACO Ltda. (4)	Uruguayan peso		-		-			-		-			-		-		-			-			-		-		-			-		-			-			-			-		4,327		68
Grand total			81,312,038		849,562			436,488		(242,791	)		377,830		82,733,127		(25,747	)		(97,566	)		7,766,362		96,645		52,668			7,915,675		1,605,923			(1,465,292	)		14,499,995			105,166,115		92,382,858		8,372,223

(1) Adjustment arising from the standardization of the investee’s financial statements according to the investor’s accounting policies;

(2) Dividends approved and not paid are recorded as Dividends receivable;

(3) Corporate events arising from acquisitions, spin-offs, merges, takeovers, and increases or decreases of capital;

(4) Company incorporated on December 1st, 2017.

													Equity share
							Number of shares/quotas owned by						in		Equity share
			Stockholders’		Net income		ITAÚ UNIBANCO HOLDING						voting capital		in
Companies	Capital		equity		for the period		Common		Preferred		Quotas		(%)		capital (%)
Domestic
Itaú Unibanco S.A.		61,925,426		81,845,892		6,039,092		2,932,936,995		2,840,549,071		-		100.00		100.00
Banco Itaucard S.A.		4,252,600		9,267,468		761,052		237,962,639,781		1,277,933,118		-		99.99		99.99
Banco Itaú BBA S.A.		1,490,000		2,467,710		270,337		4,474,435		4,474,436		-		99.99		99.99
Itaú BBA Participações S.A.		1,328,562		2,189,473		117,821		548,954		1,097,907		-		100.00		100.00
Itaú Corretora de Valores S.A.		802,482		1,331,120		143,125		27,482,523		811,503		-		99.99		99.99
Itaú Seguros S.A.		1,756,139		4,017,441		551,619		450		1		-		0.01		0.01
Foreign
Itaú CorpBanca		11,016,754		17,348,007		58,745		115,039,610,411		-		-		22.45		22.45
BICSA Holdings, LTD.		1,275,733		2,036,502		81,838		-		-		330,860,746		99.99		99.99
Banco Itaú Uruguay S.A.		547,872		1,667,453		254,442		4,465,133,954		-		-		100.00		100.00
OCA S.A.		18,448		303,408		85,465		1,503,496,740		-		-		100.00		100.00

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 141

II - Composition of investments

a) The table below shows the major investments of ITAÚ UNIBANCO HOLDING CONSOLIDATED:

	% participation at 06/30/2018						06/30/2018
							Stockholders’							Equity in
	Total			Voting			equity		Net income			Investment		earnings
Domestic													5,053,138		253,590
BSF Holding S.A (1a)		49.00	%		49.00	%		2,184,957		198,888			1,171,478		97,455
Conectcar Soluções de Mobilidade Eletrônica S.A. (1b)		50.00	%		50.00	%		137,839		(16,612	)		172,548		(8,306	)
IRB-Brasil Resseguros S.A. (2) (3)		11.20	%		11.20	%		3,342,280		423,467			386,390		47,370
Porto Seguro Itaú Unibanco Participações S.A.(2) (4)		42.93	%		42.93	%		4,552,992		352,501			1,954,754		151,363
Outras (5a) (6)													1,367,968		(34,292	)
Foreign - Other (7)													4,199		1,629
Total													5,057,337		255,219

	% participation at 06/30/2017						06/30/2017
							Stockholders’							Equity in
	Total			Voting			equity		Net income			Investment		earnings
Domestic													4,496,078		281,154
BSF Holding S.A (1a)		49.00	%		49.00	%		1,978,969		116,230			1,149,815		52,429
Conectcar Soluções de Mobilidade Eletrônica S.A. (1b)		50.00	%		50.00	%		114,590		(17,840	)		173,115		(8,920	)
IRB-Brasil Resseguros S.A. (2)		15.01	%		15.01	%		3,170,771		458,087			478,070		72,033
Porto Seguro Itaú Unibanco Participações S.A.(2)		42.93	%		42.93	%		4,485,669		380,219			1,925,850		163,660
Outras (5b) (6)													769,228		1,952
Foreign - Other (7)													2,859		985
Total													4,498,937		282,139

(1) Includes goodwill in the amount of a) R$ 100,849 (R$ 180,120 at 06/30/2017); b) R$ 103,629 (R$ 115,820 at 06/30/2017);

(2) For the purpose of accounting for participation in earnings, the position at 05/31/2018 and 05/31/2017, as provided for in Circular Letter nº 1,963 of August 23, 1991, from BACEN;

(3) Investments partially sold on 07/28/2017 and 08/28/2017;

(4) Includes adjustments resulting from standardization of the financial statements of the investee to the financial policies to the investor’s;

(5) a) Includes companies Gestora de Inteligência de Crédito S.A, Kinea Private Equity, Olimpia Promoção e Serviços S.A., Tecnologia Bancária S.A which are started under the equity accounting and companies Gipar S.A, Intercement Brasil S.A. and Companhia Brasileira de Securitização, which are not started under the equity accounting. b) Includes companies Kinea Private Equity, Olimpia Promoção e Serviços S.A., Tecnologia Bancária S.A and Gestora de Inteligência de Crédito S.A which are started under the equity accounting and Intercement Brasil S.A.and Gipar S.A which are not started under the equity accounting;

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

(7) Includes Compãnia Uruguaya de Medios de Processamiento and Rias Redbanc S.A.

III) Other investments

	06/30/2018			06/30/2017
Other investments		524,635			735,065
Shares and quotas		18,910			53,285
Investments through tax incentives		201,675			201,675
Equity securities		12,369			12,369
Other		291,681			467,736
(Allowance for loan losses)		(208,848	)		(208,850	)
Total		315,787			526,215
Equity - Other investments		24,593			6,307

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 142

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 12/31/2017		365,704			975,333			3,106,582			2,203,443			1,955,671			1,151,278			6,447,547			1,149,215			17,354,773
Acquisitions		168,968			-			-			15,712			973			30,156			246,966			53,997			516,772
Disposals		-			(2,851	)		(46,700	)		(32,894	)		(3,471	)		(14,116	)		(86,722	)		(6,506	)		(193,260	)
Exchange variation		7,199			10,474			464			84,357			13,822			27,598			39,463			4,615			187,992
Transfers		(95,610	)		-			49,887			31,557			14,166			-			-			-			-
Other		-			(326	)		(1,198	)		90,878			(5,519	)		3,029			(4,836	)		921			82,949
Balance at 06/30/2018		446,261			982,630			3,109,035			2,393,053			1,975,642			1,197,945			6,642,418			1,202,242			17,949,226
Depreciation
Balance at 12/31/2017		-			-			(1,893,035	)		(1,374,580	)		(1,151,012	)		(713,682	)		(5,074,132	)		(753,384	)		(10,959,825	)
Depreciation expenses		-			-			(40,072	)		(95,873	)		(77,044	)		(47,599	)		(309,065	)		(58,229	)		(627,882	)
Disposals		-			-			12,671			21,658			1,991			10,083			78,513			5,331			130,247
Exchange variation		-			-			(837	)		(47,821	)		1,392			(15,789	)		(46,552	)		(4,418	)		(114,025	)
Other		-			-			1,088			(83,785	)		(482	)		(8,125	)		7,623			(13,687	)		(97,368	)
Balance at 06/30/2018		-			-			(1,920,185	)		(1,580,401	)		(1,225,155	)		(775,112	)		(5,343,613	)		(824,387	)		(11,668,853	)
Impairment
Balance at 12/31/2017		-			-			-			-			-			-			-			-			-
Additions / assumptions		-			-			-			-			-			-			-			-			-
Reversals		-			-			-			-			-			-			-			-			-
Balance at 06/30/2018		-			-			-			-			-			-			-			-			-
Book value
Balance at 06/30/2018		446,261			982,630			1,188,850			812,652			750,487			422,833			1,298,805			377,855			6,280,373
Balance at 06/30/2017		201,657			973,305			1,414,972			753,663			852,413			503,510			1,399,431			413,680			6,512,631

(1) The contractual commitments for the purchase of the fixed assets totaled R$ 138,807 achievable by 2019;

(2) Includes amounts pledged in guarantee of voluntary deposits (Note 12d);

(3) Includes the amount of R$ 3,040 (R$ 3,548 at 06/30/2017) related to attached real estate.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 143

II) Goodwill

				Changes
	Amortization period	Balance at 12/31/2017		Acquisitions		Amortization expenses			Exchange variation		Other		Balance at 06/30/2018		Balance at 06/30/2017
Goodwill (Notes 2b and 4j)	10 years		1,451,809		-		(98,222	)		15,969		-		1,369,556		1,296,024

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 144

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 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 12/31/2017		1,059,890			2,452,107			4,502,310			4,352,576			8,984,696			1,047,868			22,399,447
Acquisitions		153,290			1,000			340,959			147,323			-			-			642,572
Disposals		(90,719	)		(19,626	)		(310,348	)		(1,412	)		-			-			(422,105	)
Exchange variation		-			124,593			343,710			-			661,040			13,694			1,143,037
Other		10,300			74,288			14,861			46,897			10,513			(5,287	)		151,572
Balance at 06/30/2018		1,132,761			2,632,362			4,891,492			4,545,384			9,656,249			1,056,275			23,914,523
Amortization
Balance at 12/31/2017		(471,372	)		(646,902	)		(1,995,175	)		(1,267,239	)		(2,136,815	)		(504,318	)		(7,021,821	)
Amortization expenses (3)		(108,827	)		(110,204	)		(286,672	)		(320,027	)		(490,367	)		(14,723	)		(1,330,820	)
Disposals		90,719			19,626			310,302			-			-			-			420,647
Exchange variation		-			(110,524	)		(218,271	)		-			(136,558	)		13,553			(451,800	)
Other		(1,070	)		73,528			4,764			(46,897	)		(10,513	)		-			19,812
Balance at 06/30/2018		(490,550	)		(774,476	)		(2,185,052	)		(1,634,163	)		(2,774,253	)		(505,488	)		(8,363,982	)
Impairment (4)
Balance at 12/31/2017		-			-			(54,286	)		(342,475	)		-			-			(396,761	)
Additions / assumptions		-			-			(167,003	)		(360	)		-			-			(167,363	)
Disposals		-			-			(10,250	)		-			-			-			(10,250	)
Balance at 06/30/2018		-			-			(231,539	)		(342,835	)		-			-			(574,374	)
Book value
Balance at 06/30/2018		642,211			1,857,886			2,474,901			2,568,386			6,881,996			550,787			14,976,167
Balance at 06/30/2017		495,221			1,319,123			2,121,356			2,528,441			6,494,283			537,659			13,496,083

(1) The contractual commitments for the purchase of the new intangible assets totaled R$ 813,131 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 related to 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 13i).

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 145

Note 16 – Stockholders' equity

a) Shares

At the Meeting of the Board of Directors held on December 15, 2017 and February 22, 2018, the cancellation of 31,793,105 and 14,424,206, respectively, 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 6,536,090,232 book-entry shares with no par value, of which 3,305,526,906 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 June 30, 2017), of which R$ 65,426,797 (R$ 66,257,941 at June 30, 2017) refers to stockholders domiciled in the country and R$ 31,721,203 (R$ 30,890,059 at June 30, 2017) 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 12/31/2017		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
Shares of capital stock at 12/31/2017		3,319,951,112			3,230,563,326			6,550,514,438
(-) Cancellation of Shares – Meeting of the Board of Directors at February 22, 2018		(14,424,206	)		-			(14,424,206	)
Shares of capital stock at 06/30/2018		3,305,526,906			3,230,563,326			6,536,090,232
Residents in Brazil at 06/30/2018		3,282,781,277			1,119,115,278			4,401,896,555
Residents abroad at 06/30/2018		22,745,629			2,111,448,048			2,134,193,677
Treasury shares at 12/31/2017 (1)		14,424,206			71,459,714			85,883,920			(2,742,767	)
Purchase of treasury shares		-			13,100,000			13,100,000			(510,308	)
Exercised – granting of stock options		-			(22,988,198	)		(22,988,198	)		690,495
Disposals – stock option plan		-			(987,221	)		(987,221	)		50,427
(-) Cancellation of Shares – Meeting of the Board of Directors at February 22, 2018		(14,424,206	)		-			(14,424,206	)		534,421
Treasury shares at 06/30/2018 (1)		-			60,584,295			60,584,295			(1,977,732	)
Outstanding shares at 06/30/2018		3,305,526,906			3,169,979,031			6,475,505,937
Outstanding shares at 06/30/2017		3,351,741,143			3,146,902,006			6,498,643,149

(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 06/30/2018:

Cost / Market value	Common		Preferred
Minimum		-		37.45
Weighted average		-		38.95
Maximum		-		40.06
Treasury shares
Average cost		-		32.64
Market value		35.90		40.34

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 146

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.

I - Calculation

Net income - ITAÚ UNIBANCO HOLDING	9,945,840
Adjustments:
(-) Legal reserve	(497,292	)
Dividend calculation basis	9,448,548
Mandatory dividend	2,362,137
Dividends and Interest on Capital Paid/Provided for/Identified	5,313,130

II – Stockholders' compensation

	Gross		WTS			Net
Paid / Prepaid		485,716		-			485,716
Dividends - 5 monthly installments of R$ 0.015 per share paid in February to June 2018		485,716		-			485,716
Provided for (recorded in Other liabilities – Social and statutory)		1,998,002		(121,581	)		1,876,421
Dividends - 1 monthly installment of R$ 0.015 per share paid on 07/02/2018		97,329		-			97,329
Dividends declared - R$ 0.1683 per share		1,090,131		-			1,090,131
Interest on capital - R$ 0.1252 per share.		810,542		(121,581	)		688,961
Identified in Revenue Reserve In Stockholders’ Equity - R$ 0.4557 per share		2,950,993		-			2,950,993
Total from 01/01 to 06/30/2018		5,434,711		(121,581	)		5,313,130
Total from 01/01 to 06/30/2017		5,466,640		(529,039	)		4,937,601

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 147

c) Capital and revenue reserves - ITAÚ UNIBANCO HOLDING

	06/30/2018		06/30/2017
Capital reserves		1,586,364		1,352,881
Premium on subscription of shares		283,512		283,512
Granted options recognized – law nº. 11,638, Share-based instruments and Share-based payment		1,301,747		1,068,264
Reserves from tax incentives and restatement of equity securities and other		1,105		1,105
Revenue reserves		27,063,438		27,263,502
Legal		9,390,215		8,374,656
Statutory		14,722,230		16,320,518
Unrealized profits (*)		2,950,993		2,568,328

(*) Refers to Interest on capital and dividends provided for up to June 30 for each period, in compliance with BACEN Circular Letter nº 3,516, of July 21, 2011.

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

	Net income						Stockholders’ equity
	01/01 to			01/01 to
	06/30/2018			06/30/2017			06/30/2018			06/30/2017
ITAÚ UNIBANCO HOLDING		9,945,840			10,743,116			122,621,644			120,679,258
Amortization of goodwill		109,948			113,077			(254,657	)		(471,867	)
Corporate reorganizations (Note 4r)		923,146			923,306			(609,276	)		(1,827,935	)
Conversion adjustments of foreign investments (Note 4t)		1,545,474			286,956			-			-
Foreign exchange variations of investments		(238	)		(5,775	)		-			-
Hedge of net investments in foreign operations		2,701,499			511,694			-			-
Tax effects – hedge of net investments in foreign operations		(1,155,787	)		(218,963	)		-			-
ITAÚ UNIBANCO HOLDING CONSOLIDATED		12,524,408			12,066,455			121,757,711			118,379,456

e) Asset valuation adjustments - ITAÚ UNIBANCO HOLDING CONSOLIDATED

	06/30/2018			06/30/2017
Available-for-sale securities		(1,348,728	)		(441,958	)
Hedge cash flow		(1,459,619	)		(1,593,153	)
Remeasurements in liabilities of post-employment benefits		(838,665	)		(890,989	)
Foreign exchange variation on investments / Net Investment Hedge in Foreign Operations		(244,875	)		(237,751	)
Asset valuation adjustments (*)		(3,891,887	)		(3,163,851	)

(*) net of tax effects.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 148

f) Non-controlling interests

	Stockholders’ equity				Net Income
					01/01 to			01/01 to
	06/30/2018		06/30/2017		06/30/2018			06/30/2017
Itaú CorpBanca (Note 2c)		11,092,904		9,846,394		(37,576	)		(33,562	)
Itaú CorpBanca Colombia S.A. (Note 2c)		1,332,145		1,118,495		(6,532	)		(21,637	)
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento		376,164		453,956		(42,836	)		(56,204	)
Luizacred S.A. Soc. de Crédito, Financiamento e Investimento		344,684		306,196		(42,604	)		(37,361	)
Other		94,425		78,510		(18,574	)		(11,240	)
Total		13,240,322		11,803,551		(148,122	)		(160,004	)

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 149

g) Share-based payment

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

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

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

From 01/01 to 06/30/2018, the accounting effect of the Share-based payment in income was R$ (313,883) (R$ (253,910) from 01/01 to 06/30/2017).

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. – Complete Financial Statements – June 30, 2018 150

	Simple options
				Weighted		Weighted
				average		average
	Quantity			exercise price		market value
Opening 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		-			-
Options:
Granted		-			-
Canceled / Forfeited (*)		(7,020	)		32.10
Exercised		(9,289,940	)		38.79		50.09
Closing balance at 06/30/2018		7,045,946			38.79
Options exercisable at the end of the period		7,045,946			38.79
Options outstanding but not exercisable
Range of exercise prices
Granting 2010-2011					21.71 - 42.92
Granting 2012					32.10
Weighted average of the remaining contractual life (in years)		0.89

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

	Simple options
				Weighted		Weighted
				average		average
	Quantity			exercise price		market value
Opening balance at 12/31/2016		38,033,506			36.94
Options exercisable at the end of the period		23,440,177			40.98
Options outstanding but not exercisable		14,593,329			30.45
Options:
Granted		-			-
Canceled / Forfeited (*)		(19,667	)		38.90
Exercised		(5,684,306	)		30.58		40.03
Closing balance at 06/30/2017		32,329,533			37.56
Options exercisable at the end of the period		32,329,533			37.56
Options outstanding but not exercisable
Range of exercise prices
Granting 2010-2011					21.71 - 41.09
Granting 2012					30.01
Weighted average of the remaining contractual life (in years)		1.48

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 151

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$ 39.33 per share at 06/30/2018 (R$ 32.33 per share at 06/30/2017).

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 12/31/2017		34,049,627
New granted		6,608,237
Cancelled		(310,243	)
Exercised		(7,731,613	)
Balance at 06/30/2018		32,616,008
Weighted average of remaining contractual life (years)		2.74
	Quantity
Balance at 12/31/2016		35,462,379
New granted		7,041,957
Cancelled		(439,424	)
Exercised		(7,523,051	)
Balance at 06/30/2017		34,541,861
Weighted average of remaining contractual life (years)		2.86

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 152

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$ 51.07 per share at 06/30/2018 (R$ 38.25 per share at 06/30/2017).

Change in variable compensation in shares	2018
	Quantity
Balance at 12/31/2017		20,819,982
New		6,827,114
Delivered		(11,074,347	)
Cancelled		(83,373	)
Balance at 06/30/2018		16,489,376

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

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 153

Note 17 – 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 as follows:

· 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;

· The non-financial subsidiaries and joint-controlled entities of ITAÚSA, specially: Itautec S.A., Duratex S.A., 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 CONSOLIDATED;

· Fundação Itaú Social, Instituto Itaú Cultural, Instituto Unibanco, 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 22e and 22j; and

· Investments in Porto Seguro Itaú Unibanco Participações S.A. and BSF Holding S.A.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 154

The transactions with these related parties are basically characterized by:

	ITAÚ UNIBANCO HOLDING													ITAÚ UNIBANCO HOLDING CONSOLIDATED
		Assets / (liabilities)						Revenue / (expense)							Assets / (liabilities)						Revenue / (expense)
								01/01 to			01/01 to										01/01 to			01/01 to
	Annual rate	06/30/2018			06/30/2017			06/30/2018			06/30/2017			Annual rate	06/30/2018			06/30/2017			06/30/2018			06/30/2017
Interbank investments			70,116,822			69,800,541			2,428,660			2,944,467				-			-			-			-
Itaú Unibanco S.A.	6.4% to 8.96% prefixed / 100% Selic		31,959,824			40,265,370			1,446,721			2,190,082				-			-			-			-
Agência Grand Cayman	5.83% to 6.3633% prefixed		10,680,820			9,162,681			286,871			266,230				-			-			-			-
Itaú Unibanco S.A. Nassau Branch	5.125% to 6.5% prefixed		27,476,178			20,372,490			695,068			488,155				-			-			-			-
																-			-			-			-
Loan operations			-			-			-			-				69,209			-			5,617			-
Alpargatas S.A.			-			-			-			-				69,209			-			5,617			-
Derivative financial instruments - assets			1,993,510			-			2,996,291			-				-			-			-			-
Fundo de Investimento Multimercado			1,993,510			-			2,996,291			-				-			-			-			-
Deposits			(13,361,740	)		(13,266,111	)		(207,226	)		(183,425	)			-			-			-			-
Itaú Unibanco S.A. Nassau Branch	2.89 % to 3.4% prefixed		(13,361,740	)		(13,266,111	)		(207,226	)		(183,425	)			-			-			-			-
Derivative financial instruments - liabilities			(2,008,975	)		-			-			-				-			-			-			-
Fundo de Investimento Multimercado			(2,008,975	)					-			-				-			-			-			-
Securities sold under repurchase agreements			-			-			(2,105	)		-				(37,728	)		(63,239	)		(1,404	)		(2,853	)
Itaú Unibanco S.A.			-			-			(2,105	)		-				-			-			-			-
Itaúsa Investimentos Itaú S.A.			-			-			-			-				-			(12,406	)		-			-
Duratex S.A.			-			-			-			-		95,5% a 98% do CDI		(19,161	)		(22,256	)		(628	)		(1,064	)
Elekeiroz S.A.			-			-			-			-				-			(3,168	)		-			(151	)
Itautec S.A.			-			-			-			-				-			(10	)		-			(6	)
Olimpia Promoção e Serviços S.A.			-			-			-			-		100% Selic		(1,801	)		(11,172	)		(521	)		(734	)
Alpargatas S.A.			-			-			-			-		97,5% do CDI		(4,528	)		-			(28	)		-
Other			-			-			-			-		60% a 100,15% do CDI		(12,238	)		(14,227	)		(227	)		(898	)
Debentures			-			(46,412	)		-			-				-			-			-			-
Itaú Unibanco S.A. Nassau Branch			-			(46,412	)		-			-				-			-			-			-
Amounts receivable from (payable to) related companies / Banking service fees (expenses)			(1,733	)		(344	)		(2,511	)		(2,244	)			(110,847	)		(117,445	)		4,549			18,260
Itaú Unibanco S.A.			(2	)		-			-			-				-			-			-			-
Itaú Corretora de Valores S. A.			(381	)		(344	)		(2,511	)		(2,244	)			-			-			-			-
Itaúsa Investimentos Itaú S.A.			-			-			-			-				388			(105	)		2,249			1,585
Itaúsa Empreendimentos S.A.			-			-			-			-				(3,431	)		(25	)		(16,163	)		130
Olimpia Promoção e Serviços S.A.			-			-			-			-				(1,708	)		(1,775	)		(12,294	)		(11,770	)
Fundação Itaú Unibanco - Previdência Complementar			-			-			-			-				(106,146	)		(115,607	)		24,640			23,156
FUNBEP - Fundo de Pensão Multipatrocinado			-			-			-			-				324			313			3,121			2,993
Other			(1,350	)		-			-			-				(274	)		(246	)		2,996			2,166
Rent revenues (expenses)			-			-			(196	)		(192	)			-			-			(26,243	)		(28,644	)
Itaúsa Investimentos Itaú S.A.			-			-			(14	)		(14	)			-			-			(1,252	)		(1,548	)
Itaú Seguros S.A.			-			-			(139	)		(136	)			-			-			-			-
Fundação Itaú Unibanco - Previdência Complementar			-			-			-			-				-			-			(21,149	)		(23,702	)
FUNBEP - Fundo de Pensão Multipatrocinado			-			-			-			-				-			-			(3,757	)		(5,681	)
Other			-			-			(43	)		(42	)			-			-			(85	)		2,287
Donation expenses			-			-			-			-				-			-			(83,270	)		(58,477	)
Instituto Itaú Cultural			-			-			-			-				-			-			(63,000	)		(48,057	)
Associação Cubo Coworking Itaú			-			-			-			-				-			-			(19,350	)		(9,500	)
Associação Itaú Viver Mais			-			-			-			-				-			-			(920	)		(920	)

In addition to the aforementioned operations, ITAÚ UNIBANCO HOLDING and non-consolidated related parties, as an integral part of the Agreement for apportionment of common costs of Itaú Unibanco, recorded in Other Administrative Expenses in the amount of R$ (5,042) (R$ (3,701) from 01/01 to 06/30/2017) in view of the use of the common structure.

In accordance with the rules in effect, the financial institutions cannot grant loans or advances to the following:

a) any individual or company that control the Institution or any entity under common control with the institution, or any officer, director, fiscal council member or direct relative of such individuals;

b) any entity controlled by the Institution; or

c) any entity of which the bank directly or indirectly holds at least 10% of the capital stock.

Therefore, no loans or advances are made to any subsidiaries, executive officers, Board of Directors members or their relatives.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 155

b) Compensation of management key personnel

Compensation for the period paid to Management Members and members of the Audit Committee of ITAÚ UNIBANCO HOLDING CONSOLIDATED consist of:

	01/01 to		01/01 to
	06/30/2018		06/30/2017
Compensation		257,829		210,332
Board of Directors		20,440		20,018
Management members		237,389		190,313
Profit sharing		104,381		97,885
Board of Directors		3,300		565
Management members		101,081		97,320
Contributions to pension plans		5,011		6,512
Board of Directors		60		114
Management members		4,951		6,397
Stock option plan – Management members		102,407		90,659
Total		469,628		405,387

Information related to the granting of the share-based payment, benefits to employees and post-employment benefits is detailed in Notes 16g II and 19, respectively.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 156

Note 18 - Market value

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

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 a 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
	06/30/2018		06/30/2017		06/30/2018		06/30/2017		06/30/2018			06/30/2017			06/30/2018			06/30/2017
Interbank deposits		23,728,714		28,713,146		23,783,483		28,775,872		54,769			62,726			54,769			62,726
Securities and derivative financial instruments		449,461,966		389,593,169		450,279,779		390,861,093		(1,433,950	)		525,440			817,813			1,267,924
Adjustment of available-for-sale securities										(1,858,574	)		(286,923	)		-			-
Adjustment of held-to-maturity securities										424,624			812,363			817,813			1,267,924
Loan, lease and other credit operations		482,391,382		442,457,562		487,285,859		449,450,312		4,894,477			6,992,750			4,894,477			6,992,750
Investments
B3		9,743		14,610		149,487		216,493		139,744			201,883			139,744			201,883
Porto Seguro Itaú Unibanco Participações S.A. (2)		1,954,754		1,925,850		3,998,540		3,008,734		2,043,786			1,082,884			2,043,786			1,082,884
Funding and borrowing (3)		385,265,347		329,232,736		385,741,810		329,936,787		(476,463	)		(704,051	)		(476,463	)		(704,051	)
Subordinated debt (Note 10f)		53,925,330		52,104,210		53,887,701		53,144,832		37,629			(1,040,622	)		37,629			(1,040,622	)
Treasury shares		1,977,732		2,571,065		2,443,970		3,074,654		-			-			466,238			503,589

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

(2) Parent company of Porto Seguro S.A;

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

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 CONSOLIDATED.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 157

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 companies B3 and Porto Seguro 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. – Complete Financial Statements – June 30, 2018 158

Note 19 – Post-Employments Benefits

The accounting policies and procedures adopted by ITAÚ UNIBANCO HOLDING CONSOLIDATED for employee benefits are summarized below.

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

Total amounts recognized in Income for the period

	Defined benefit						Defined contribution (*)						Other benefits						Total
	01/01 to			01/01 to			01/01 to			01/01 to			01/01 to			01/01 to			01/01 to			01/01 to
	06/30/2018			06/30/2017			06/30/2018			06/30/2017			06/30/2018			06/30/2017			06/30/2018			06/30/2017
Cost of current service		(33,735	)		(34,496	)		-			-			-			-			(33,735	)		(34,496	)
Net interest		(5,249	)		(6,136	)		33,762			37,937			(12,437	)		(10,976	)		16,076			20,825
Contribution		-			-			(39,815	)		(42,431	)		-			-			(39,815	)		(42,431	)
Benefits paid					-			-			-			8,217			7,701			8,217			7,701
Total Amounts Recognized		(38,984	)		(40,632	)		(6,053	)		(4,494	)		(4,220	)		(3,275	)		(49,257	)		(48,401	)

(*) In the period, contributions to the defined contributions plan, including PGBL, totaled R$ 157,094 (R$ 157,736 from January 1 to June 30, 2017), of which R$ 39,815 (R$ 42,431 from January 1 to June 30, 2017) arising from social security funds.

Total amounts recognized in Stockholders’ Equity – Asset valuation adjustment

	Defined benefit						Defined contribution						Other benefits						Total
	06/30/2018			06/30/2017			06/30/2018			06/30/2017			06/30/2018			06/30/2017			06/30/2018			06/30/2017
At the beginning of the period		39,863			(69,512	)		(1,369,678	)		(1,323,234	)		(76,583	)		(48,400	)		(1,406,398	)		(1,441,146	)
Effects on asset ceiling		11,431			3,897			8,317			(3,191	)		-			-			19,748			706
Remeasurements		(31,157	)		(15,300	)		(11,410	)		(17,517	)		-			-			(42,567	)		(32,817	)
Balance arising from the acquisition of Citibank operations		(579	)		-			-			-			-			-			(579	)		-
Total Amounts Recognized		19,558			(80,915	)		(1,372,771	)		(1,343,942	)		(76,583	)		(48,400	)		(1,429,796	)		(1,473,257	)

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 159

a) Retirement plans

ITAÚ UNIBANCO HOLDING CONSOLIDATED 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 19c.

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 CONSOLIDATED.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 160

c) Defined benefit plan

I - Main assumptions used in actuarial valuation of Retirement Plans

	06/30/2018	06/30/2017
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. – Complete Financial Statements – June 30, 2018 161

- 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.

At 06/30/2018 and 06/30/2017 the allocation of plan assets and the allocation target for 2018, by type of asset, are as follows:

	Fair value				% Allocation
Types	06/30/2018		06/30/2017		06/30/2018			06/30/2017			2018 Target
Fixed income securities		17,213,219		15,960,720		95.97	%		94.65	%	53% to 100%
Variable income securities		18,669		199,754		0.10	%		1.18	%	0% to 20%
Structured investments		42,753		15,664		0.24	%		0.09	%	0% to 10%
Real estate		580,870		617,857		3.24	%		3.66	%	0% to 7%
Loans to participants		81,152		70,740		0.45	%		0.42	%	0% to 5%
Total		17,936,663		16,864,735		100.00	%		100.00	%

The defined benefit plan assets include shares of ITAÚ UNIBANCO HOLDING CONSOLIDATED, its main parent company (ITAÚSA) and of subsidiaries of the latter, with a fair value of R$ 10,723 (R$ 192,800 at 06/30/2017), and real estate rented to Group companies, with a fair value of R$ 498,826 (R$ 592,484 at 06/30/2017).

Fair value - the fair value of the plan assets is adjusted up to the base 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 base date, in compliance with the respective agreements.

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

IV- Net amount recognized in the balance sheet

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

	06/30/2018			06/30/2017
1 - Net assets of the plans		17,936,663			16,864,735
2 - Actuarial liabilities		(14,717,695	)		(13,931,675	)
3- Surplus (1-2)		3,218,968			2,933,060
4- Asset restriction (*)		(3,366,490	)		(3,157,451	)
5 - Net amount recognized in the balance sheet (3-4)		(147,522	)		(224,391	)
Amount recognized in Assets (Note 13a)		360,646			332,000
Amount recognized in Liabilities (Note 13c)		(508,168	)		(556,391	)

(*) 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. – Complete Financial Statements – June 30, 2018 162

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

	06/30/2018
				Actuarial									Recognized
	Plan net assets			liabilities			Surplus			Asset Ceiling			amount
Value at the beginning of the period		17,588,377			(14,490,542	)		3,097,835			(3,217,361	)		(119,526	)
Cost of current service		-			(33,735	)		(33,735	)		-			(33,735	)
Net interest (1)		850,018			(694,707	)		155,311			(160,560	)		(5,249	)
Benefits paid		(546,060	)		546,060			-			-			-
Contributions of sponsor		34,533			-			34,533			-			34,533
Contributions of participants		5,441			-			5,441			-			5,441
Effects on asset ceiling		-			-			-			11,431			11,431
Exchange variation		4,354			(8,173	)		(3,819	)		-			(3,819	)
Remeasurements (2) (3)		-			(36,598	)		(36,598	)		-			(36,598	)
Value at end of the period		17,936,663			(14,717,695	)		3,218,968			(3,366,490	)		(147,522	)

	06/30/2017
				Actuarial									Recognized
	Plan net assets			liabilities			Surplus			Asset Ceiling			amount
Value at the beginning of the period		16,520,045			(13,722,927	)		2,797,118			(3,008,536	)		(211,418	)
Cost of current service		-			(34,496	)		(34,496	)		-			(34,496	)
Net interest (1)		819,366			(671,786	)		147,580			(153,716	)		(6,136	)
Benefits paid		(516,003	)		516,003			-			-			-
Contributions of sponsor		35,106			-			35,106			-			35,106
Contributions of participants		6,438			-			6,438			-			6,438
Effects on asset ceiling		-			-			-			3,897			3,897
Exchange variation		634			3,322			3,956			-			3,956
Remeasurements (2) (3)		(851	)		(21,791	)		(22,642	)		904			(21,738	)
Value at end of the period		16,864,735			(13,931,675	)		2,933,060			(3,157,451	)		(224,391	)

(1) Corresponds to the amount calculated on 01/01/2018 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 9.98% p.a.(On 01/01/2017 the rate used was 10.24% 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$ 850,018 (R$ 818,515 at 06/30/2017).

During the period, contributions made totaled R$ 34,533 (R$ 35,106 from 01/01 to 06/30/2017). The contribution rate increases based on the beneficiary’s salary.

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

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

	Estimated
Period	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 which would be
	Effects on actuarial liabilities						recognized in Stockholders’
Change in Assumption	of the plans						Equity (*)
				Percentage of
				actuarial
	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. – Complete Financial Statements – June 30, 2018 163

d) Defined contribution plans

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

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

	06/30/2018									06/30/2017
	Pension Plan Fund			Asset Ceiling			Recognized Amount			Pension Plan Fund			Asset Ceiling			Recognized Amount
Amount - beginning of the period		1,633,690			(911,929	)		721,761			1,287,213			(490,932	)		796,281
Net interest		78,607			(44,845	)		33,762			62,996			(25,059	)		37,937
Contribution		(39,815	)		-			(39,815	)		(42,431	)		-			(42,431	)
Receivables – allocation of funds (*)		-			-			-			(12,826	)		-			(12,826	)
Effects on asset ceiling		-			8,317			8,317			(14,980	)		11,789			(3,191	)
Remeasurements		(11,410	)		-			(11,410	)		(17,517	)		-			(17,517	)
Amount - end of the period (Note 13a)		1,661,072			(948,457	)		712,615			1,262,455			(504,202	)		758,253

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

e) Other post-employment benefits

ITAÚ UNIBANCO HOLDING CONSOLIDATED do not offer other post-employment benefits, except in those cases arising from obligations under acquisition agreements signed by ITAÚ UNIBANCO HOLDING CONSOLIDATED, 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 report 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 CONSOLIDATED are as follows:

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

	06/30/2018			06/30/2017
At the beginning of the period		(256,723	)		(221,125	)
Cost of interest		(12,437	)		(10,976	)
Benefits paid		8,217			7,701
At the end of the period (Note 13c)		(260,943	)		(224,400	)

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 19c 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 following effects:

	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. – Complete Financial Statements – June 30, 2018 164

Note 20 – Information on foreign subsidiaries

	Foreign branches (1)						Latin America consolidated (2)						Other foreign companies (3)						Foreign consolidated (4)
	06/30/2018			06/30/2017			06/30/2018			06/30/2017			06/30/2018			06/30/2017			06/30/2018			06/30/2017
Assets
Current assets and long term receivables
Cash and cash equivalents		3,413,049			5,336,414			6,577,803			7,749,026			22,213,628			38,437,077			13,805,591			13,985,200
Interbank investments		13,121,313			16,517,804			12,966,215			14,535,718			2,383,867			6,936,189			18,354,407			23,419,675
Securities		109,660,641			75,891,711			31,155,183			21,559,501			11,325,292			14,256,708			146,404,900			109,195,719
Loan, lease and other credit operations		53,299,662			81,944,099			136,640,897			114,541,354			19,646,259			14,733,744			208,944,403			210,405,690
Foreign exchange portfolio		52,829,107			48,694,740			8,771,350			6,998,206			4,982,843			3,303,849			64,910,638			58,671,271
Other assets		8,353,922			6,072,412			6,625,826			6,085,980			932,205			614,108			15,410,232			12,831,139
Permanent assets		11,609			11,037			9,992,585			8,634,020			126,780			110,221			9,566,376			8,333,982
Total		240,689,303			234,468,217			212,729,859			180,103,805			61,610,874			78,391,896			477,396,547			436,842,676
Liabilities
Current and long term liabilities
Deposits		56,444,794			76,053,265			109,018,128			93,853,914			16,678,982			12,211,061			153,935,039			136,446,975
Deposits received under securities repurchase agreements		24,727,448			17,639,573			5,968,516			3,012,140			5,826,804			9,439,162			29,926,182			20,256,737
Funds from acceptance and issuance of securities		2,768,090			6,252,417			29,759,871			26,833,264			5,908,560			5,460,649			38,436,521			38,546,331
Borrowing		27,417,811			30,971,340			11,736,430			8,430,758			1,162,035			1,132,331			39,733,525			40,035,591
Derivative financial instruments		9,390,698			4,121,798			6,306,355			4,530,057			1,216,530			705,517			14,400,857			8,349,978
Foreign exchange portfolio		52,760,606			48,780,371			8,809,997			7,030,382			4,977,678			3,287,173			64,875,619			58,772,402
Other liabilities		43,109,631			30,950,803			15,577,189			14,148,136			843,926			833,189			61,878,761			47,507,124
Deferred income		45,494			65,478			427,802			275,875			49,812			42,652			523,107			398,730
Non-controlling interests		-			-			12,426,297			10,965,961			-			-			12,426,297			10,965,961
Stockholders’ equity		24,024,731			19,633,172			12,699,274			11,023,318			24,946,547			45,280,162			61,260,639			75,562,847
Total		240,689,303			234,468,217			212,729,859			180,103,805			61,610,874			78,391,896			477,396,547			436,842,676
Statement of Income
Income related to financial operations		3,164,393			3,497,220			8,650,903			5,757,751			591,696			589,772			12,807,235			9,061,001
Expenses related to financial operations		(2,267,175	)		(2,122,350	)		(4,590,046	)		(2,740,381	)		(248,336	)		(257,157	)		(7,368,328	)		(4,209,081	)
Result of loan losses		(438,636	)		(375,660	)		(899,810	)		(788,331	)		(37,501	)		(40,145	)		(1,375,947	)		(1,204,136	)
Gross income related to financial operations		458,582			999,210			3,161,047			2,229,039			305,859			292,470			4,062,960			3,647,784
Other operating revenues (expenses)		(189,047	)		(186,830	)		(2,118,962	)		(1,669,611	)		109,304			100,327			(2,298,418	)		(1,866,426	)
Operating income		269,535			812,380			1,042,085			559,428			415,163			392,797			1,764,542			1,781,358
Non-operating income		-			-			(18,686	)		(15,561	)		1,302			2,496			(18,699	)		(14,383	)
Income before taxes on income and profit sharing		269,535			812,380			1,023,399			543,867			416,465			395,293			1,745,843			1,766,975
Income tax		(56,506	)		37,124			(216,618	)		(92,498	)		(54,089	)		(52,997	)		(327,167	)		(108,342	)
Statutory participation in income		-			-			(6,767	)		(5,784	)		(12,430	)		(15,134	)		(19,196	)		(20,917	)
Non-controlling interests		-			-			(44,157	)		(55,435	)		-			-			(44,157	)		(55,435	)
Net income (loss)		213,029			849,504			755,857			390,150			349,946			327,162			1,355,323			1,582,281

(1) Itaú Unibanco S.A. – Agências Grand Cayman, New York, Tokyo, Nassau Branch, Itaú Unibanco Holding S.A – Agência Cayman and CorpBanca New York Branch;

(2) Basically composed of subsidiaries Banco Itaú Argentina S.A., Banco Itaú Uruguay S.A., Banco Itaú Paraguay S.A., Itaú CorpBanca and Itaú CorpBanca Colômbia S.A.; only at only at 06/30/2017, ACO Ltda, Recuperadora de créditos Ltda, Corpbanca Administradora General de Fondos S.A. and Corpbanca Securities Inc; only at 06/30/2018, CGB II SPA and CGB III SPA;

(3) Basically composed of subsidiaries Itau Bank, Ltd., ITB Holding Ltd. and Itaú BBA International plc, only at 06/30/2017, Afinco Americas Madeira, SGPS, Sociedade Unipessoal LTDA, Itaú International Investment LLC, Itaú Global Asset Management and Itaú Japan Asset Management Limited.

(4) Foreign consolidated information presents balances net of consolidation eliminations.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 165

Note 21 – Risk and capital management

On February 23, 2017, BACEN published CMN Resolution 4,557, which was in force on August 21, 2017, and revokes CMN Resolutions 3,380, 3,464, 3,721, 3,988, and 4,090, which provide for the implementation of management structure of operating, market, credit, capital and liquidity risk, respectively.

Assuming and managing risks is one of the activities carried out by Itaú Unibanco 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 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’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’s employees should behave on the day-to-day for decision-making purposes are as follows:

· Sustainability and Client Satisfaction: Itaú Unibanco’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 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 Itaú Unibanco 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 to be an agile bank, with a robust and stable infrastructure to offer top services.

· Ethics and Respect for Regulation: for Itaú Unibanco, 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.

On August 21, 2017, CMN Resolution 4,557, which provides for the capital and risk management structure, came into force. In the resolution, noteworthy are the implementation of continuous and integrated risk management structure, requirements for definition of the “Risk Appetite Statement” (RAS) and the stress test program, the organization of the Risk Committee and nomination, before BACEN, of the Chief Risk Officer (CRO), with assignment of roles, responsibilities and independence requirements.

Itaú Unibanco complies with the best risk and capital management practices set forth in CMN Resolution 4,557, so that there are no negative impacts resulting from its adoption.

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 S.A. – Complete Financial Statements – June 30, 2018 166

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.

The Board of Directors is the primary body in the establishment of guidelines, policies, and approval level for risk and capital management. The Capital and Risk Management Committee (CGRC), in turn, is responsible for supporting the Board of Directors in the performance of its roles related to capital and risk management. In the executive level, panels, presided over by the Chief Executive Officer (CEO) of Itaú Unibanco, are responsible for capital and risk management and which decisions are monitored in the scope of CGRC.

Additionally, the institution has panels, which exercise the responsibilities delegated in capital and risk management, presided over by the Executive Vice-President of the Risk and Finance Department (ARF).

Additionally, to support this structure, ARF is structured by specialized officers. The purpose is to ensure, on an independent and centralized basis, that risks and capital of the institution are management in compliance with established the policies and procedures.

A detailed description of this structure may be found in the Consolidated Annual Report, in the section our Risk Management. The Consolidated Annual Report is available on the website www.itau.com.br/investors-relations in the section Financial Information.

The risk management organizational structure of Itaú Unibanco 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 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;

· in the second defense line, an independent unit controls risks on a centralized basis, aiming at assuring that the risks of Itaú Unibanco 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 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 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.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 167

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. – Complete Financial Statements – June 30, 2018 168

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.

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

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

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

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

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

At June 30, 2018, ITAÚ UNIBANCO HOLDING CONSOLIDATED posted a Total VaR of R$ 491.1 million (R$ 460.8 million at June 30, 2017). Increase in Total VaR Total verified in relation to the previous year was mainly due to the increase of volatility in the Interest Rate market.

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. – Complete Financial Statements – June 30, 2018 169

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 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. – Complete Financial Statements – June 30, 2018 170

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 2018, the index minimum requirement is 90%. Further details on the LCR for the period may be accessed at www.itau.com.br/investor-relations, section Corporate Governance/ Capital and Risk Management - Pillar 3.

Information on the Liquidity Coverage Ratio (LCR)	Second quarter of 2018
	Total Adjusted Amount(1)
Total high-quality liquid assets (2)		172,177,693
Total potential cash outflows (3)		101,584,392
Liquidity Coverage Ratio (%)		169.5	%

(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. – Complete Financial Statements – June 30, 2018 171

· 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 assessment of the legal and risk areas, which have a technical 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 HOLDING CONSOLIDATED has been awarded.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 172

Note 22 – Supplementary information

a) Insurance policy - ITAÚ UNIBANCO HOLDING CONSOLIDATED despite the low risk exposure due to the physical non-concentration of their assets, it has a policy of guaranteeing 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 as follows:

	06/30/2018			06/30/2017
Permanent foreign investments		61,279,040			75,571,531
Net amount of other assets and liabilities indexed to foreign currency, including derivatives		(104,885,601	)		(132,770,212	)
Net foreign exchange position		(43,606,561	)		(57,198,681	)

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
	06/30/2018		06/30/2017		06/30/2018		06/30/2017		06/30/2018		06/30/2017
Investment funds		873,997,732		744,126,220		873,997,732		744,126,220		5,852		5,457
Fixed income		812,158,322		697,800,209		812,158,322		697,800,209		5,460		5,092
Shares		61,839,410		46,326,011		61,839,410		46,326,011		392		365
Managed portfolios		276,045,790		251,106,446		176,222,229		156,416,916		19,630		17,932
Customers		213,891,208		189,748,713		156,754,283		135,361,058		19,556		17,850
Itaú Group (2)		62,154,582		61,357,733		19,467,946		21,055,858		74		82
Total		1,150,043,522		995,232,666		1,050,219,961		900,543,136		25,482		23,389

(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 June 30, 2017 for comparison purposes.

d) Consortia funds

	06/30/2018		06/30/2017
Monthly estimate of installments receivable from participants		170,669		170,205
Group liabilities by installments		11,439,779		10,926,164
Participants – assets to be delivered		9,648,059		9,194,682
Funds available for participants		1,836,361		1,695,177
(In units)
Number of managed groups		566		576
Number of current participants		398,490		384,808
Number of assets to be delivered to participants		132,313		137,993

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 173

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

During the period from 01/01 to 06/30/2018 and 01/01 to 06/30/2017, the subsidiaries did not make donations and the foundation´s net assets totaled R$ 4,315,708 (R$ 3,334,814 at 06/30/2017). 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.

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

During the period from 01/01 to 06/30/2018 and 01/01 to 06/30/2017, the subsidiaries made donations in the amount of R$ 63,000 (R$ 48,057 from 01/01 to 06/30/2017) and the institute’s net assets totaled R$ 33,462 (R$ 30,649 at 06/30/2017). The funds to finance the objectives of the institute and maintain its operating and administrative structure derive from donations and proceeds generated by its assets.

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

During the period from 01/01 to 06/30/2018 and 01/01 to 06/30/2017, the subsidiaries did not make donations and the institute’s net assets totaled R$ 1,837,589 (R$ 1,655,380 at 06/30/2017). The funds to finance the objectives of the institute and maintain its operating and administrative structure derive from donations and proceeds generated by its assets.

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

During the period from 01/01 to 06/30/2018 and 01/01 to 06/30/2017, the subsidiaries did not make donations and the institute’s net assets totaled R$ 19,980 (R$ 21,058 at 06/30/2017). The funds to finance the objectives of the institute and maintain its operating and administrative structure derive from donations and proceeds generated by its assets.

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

During the period from 01/01 to 06/30/2018 and 01/01 to 06/30/2017, the subsidiaries made donations in the amount of R$ 920 (R$ 920 from 01/01 to 06/30/2017) and the association’s net assets totaled R$ 837 (R$ 586 at 06/30/2017). The funds to finance the objectives of the association and maintain its operating and administrative structure derive from donations and proceeds generated by its assets.

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

During the period from 01/01 to 06/30/2018 and 01/01 to 06/30/2017, the subsidiaries made donations in the amount of R$ 19,350 (R$ 9,500 from 01/01 to 06/30/2017) and the association’s net assets totaled R$ 3,416 (R$ 1,236 at 06/30/2017). 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.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 174

k) Exclusions of non recurring effects net of tax effects – ITAÚ UNIBANCO HOLDING and ITAÚ UNIBANCO HOLDING CONSOLIDATED

	01/01 to			01/01 to
	06/30/2018			06/30/2017
Goodwill on acquisition (Note 15b ll)		(296,029	)		(248,464	)
Realization of Assets and Impairment		(101,399	)		(7,472	)
Provision for contingencies		91,481			(72,731	)
Civil Lawsuits - Economic Plans		96,865			(40,053	)
Social security fund (Note 12b)		(5,384	)		(32,678	)
Others		29,223			50,577
Total		(276,724	)		(278,090	)

l) Agreements for offsetting and settlement of liabilities within the scope of the National Financial System – Offset agreements were entered into within the scope of derivative contracts, as well as agreements for the offsetting and settlement of receivables and payables pursuant to CMN Resolution nº. 3,263, of February 24, 2005, the purpose of which is to enable the offsetting of credits and debits maintained with the same counterparty, and where 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 the case of bankruptcy of the debtor.

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

On May 11, 2017, ITAÚ UNIBANCO HOLDING CONSOLIDATED, 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). A portion of this amount will be withheld as a guarantee for possible future obligations of XP CONTROLE, for a 10-year period, and possible remaining balance will be paid to XP CONTROLE at the end of this term.

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.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 175

n) Reclassifications for comparison purposes – In compliance with BACEN circular letter 3,828, of 06/19/2017, which came into force as from the base date July 2017, the Company carried out reclassifications in the balances of June 30, 2017, 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		1,422,005,333		-			1,422,005,333
Interbank accounts		92,887,416		24,918,815			117,806,231
Pending settlement		4,087,303		24,918,815			29,006,118
Other receivables		181,261,174		(24,918,815	)		156,342,359
Transactions with credit card issuers		24,918,815		(24,918,815	)		-
Total assets		1,448,335,223		-			1,448,335,223
LIABILITIES
Current and Long term liabilities		1,315,971,300		-			1,315,971,300
Pending settlement		3,414,056		24,868,524			28,282,580
Other liabilities		245,182,938		(24,868,524	)		220,314,414
Credit card operations		54,904,760		(54,904,760	)		-
Sundry		24,311,170		28,590,791			52,901,961
Total liabilities		1,448,335,223		-			1,448,335,223

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 176

ITAÚ UNIBANCO HOLDING S.A.

CNPJ. 60.872.504/0001-23 A Listed Company NIRE. 35300010230

SUMMARY OF THE AUDIT COMMITTEE REPORT

FIRST SEMESTER OF 2018

The Audit Committee (Committee) is a statutory advisory body of the Board of Directors (Board), which operates in accordance with the provisions set forth in its Charter (available on website http://www.itau.com.br/investor- relations).

The Committee serves as the sole vehicle for all institutions authorized to operate by the Central Bank of Brazil (local acronym BACEN) and for the companies overseen by the Superintendence of Private Insurance (SUSEP) that are part of the Itaú Unibanco Financial Conglomerate, which comprises Itaú Unibanco and all its direct and indirect subsidiaries (Conglomerate), and is responsible for the oversight of the internal control and risk management processes, the technical internal audit activities and the activities of the Conglomerate’s independent audit companies.

This oversight process carried out by the Committee are based on information received from Management and on the presentations carried out by the many business and support areas officers, as well as on the results of the work performed by the independent auditors, internal audit, and those responsible for risk management, capital management, internal controls and compliance, and on its own analysis resulting from direct observation.

Management is responsible for preparing the financial statements of the Conglomerate and for establishing the procedures required to ensure the quality of the processes that generate the information used for preparation of financial statements and financial reports. Management is also responsible for risk control and monitoring, supervising the company’s internal controls and compliance activities, and for overseeing the compliance with legal and regulatory requirements.

The Internal Audit mission is to assess the quality and conformity of the internal control and risk management systems, as well as the compliance with defined policies and procedures, including those adopted for preparation of financial and accounting reports.

PricewaterhouseCoopers Auditores Independentes (PwC) is responsible for the independent audit of the individual and consolidated financial statements and for attesting whether those statements present fairly, in all material respects, the individual and consolidated financial position of the Conglomerate, and the individual and consolidated performance of its operations, in accordance with Brazilian accounting practices and the international accounting standards issued by the International Accounting Standards Board (IASB).

Activities of the Committee

In compliance with its duties, the Committee carried out, among others, the following activities in the period:

Risk Management and Business Continuity, Internal Controls and Compliance - In meetings held with the responsible areas, the Committee monitored issues related to the quality and effectiveness of the internal control and risk management systems of the Conglomerate, the processes to check the management’s compliance with the legal and regulatory provisions and internal standards, as well as the evolution of the risk appetite governance and of the risk culture.

Independent Audit – A regular communication channel is opened with the independent auditors to discuss the scope, planning and outcome of their work and significant accounting matters, allowing members to support their opinion on the integrity of financial statements and financial reports.

Issues related to the assessment of the quality and adequacy of the internal controls system and of the compliance with legal and regulatory provisions by the entities of the Conglomerate were submitted to and discussed with the Committee at its meetings.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 177

Internal Audit – Monthly meetings are held with the internal audit officers responsible for the wholesale, retail, technology, operations and other supporting departments to discuss issues such as planning follow-up, the outcome of the work performed, reports issued, conclusions and recommendations.

Financial Statements – The major criteria adopted in the preparation of the financial statements, as well as the notes to the financial statements and Management reports were submitted to the Committee by the Management and the independent auditors. Meetings were held with the officers responsible for monitoring the accounting processing back office control environment and the presentation of significant accounting issues.

The Committee has also monitored the preparation and disclosure of the consolidated financial statements prepared in accordance with the International Financial Reporting Standards (IFRS), including the assessment of the impacts arising from the implementation of IFRS 9 – Financial Instruments.

Consumer matter– The Committee has an agenda of meetings with the business and support areas officers to monitor the control environment and the evolution of topics impacting clients. As part of these activities, the Committee was informed of the performance of the Ombudsman.

Regulators – The Committee took notice of the reports on inspections and of comments made by regulators, monitored the respective actions carried out by Management. In this period, the Committee held meetings with supervisors of the Central Bank of Brazil.

Information Security, Anti-Money Laundering and Fraud Prevention – Meetings were held with the areas responsible for monitoring the three risks indicators and how the major events occurred were addressed.

Foreign Units – Focused on strengthening the governance by improving the internal policy that addresses the governance on the performance of the Internal Committees of these foreign units, including paying visits to the units to hold meetings with the business and support areas, local audit committees, internal audit and the internal control areas. Members of the Committee work as effective members and monitor activities or operate as observers or guests in audit committees of foreign units.

Other activities carried out in the period - In addition to the activities described above, in the period meetings with the many business and support areas officers were held to monitor the internal control and risk management environment, including digital business. The Committee submitted monthly reports on its activities to the Board of Directors and held quarterly meetings with the Co-chairmen of the Board of Directors and the CEO of Itaú Unibanco Holding S.A. to discuss significant topics arising from performing their duties. The Committee also held meeting with the Fiscal Council.

Conclusions

Having duly considered its responsibilities and the natural limitations resulting from the scope of its activities, and based on the activities carried out in the period, the Committee concludes as follows:

• The internal control systems, the compliance policy and the risk management and capital management frameworks are adequate to the Conglomerate’s size and complexity and the approved risk appetite;

• The coverage and quality of the Internal Audit work are satisfactory;

• The significant accounting practices adopted by the Conglomerate are in line with those adopted in Brazil, including those required by the Central Bank of Brazil, and with international accounting standards issued by the International Accounting Standards Board (IASB); and

• The volume and quality of information provided by PricewaterhouseCoopers Auditores Independentes (PwC), which supports the Committee’s recommendation on the financial statements, are satisfactory, and no situation was identified that could impair the objectivity and independence of the independent auditors.

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 178

Based on the work and assessments carried out and taking into account the context and limitation of its duties, the Committee recommends to the Board of Directors the approval of the consolidated financial statements of Itaú Unibanco Holding S.A. for the half year ended June 30, 2018.

São Paulo, July 30, 2018.

The Audit Committee

Gustavo Jorge Laboissière Loyola – Chairman

Antonio Carlos Barbosa de Oliveira

Antonio Francisco de Lima Neto

Diego Fresco Gutierrez

Maria Helena dos Santos Fernandes de Santana

Rogério Paulo Calderón Peres

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 179

ITAÚ UNIBANCO HOLDING S.A.

CNPJ. 60.872.504/0001-23 Listed Company NIRE. 35300010230

OPINION OF THE FISCAL COUNCIL

The effective members of the Fiscal Council of ITAÚ UNIBANCO HOLDING S.A., after having examined the financial statements for the period from January to June 2018 and verified the accuracy of all items examined, and in view of the unqualified opinion of PricewaterhouseCoopers Auditores Independentes, understand that these documents adequately reflect the company’s capital structure, financial position and the activities conducted during the period, and they have the conditions to be submitted to the appreciation and approval of the Stockholders.

São Paulo (SP), July 30, 2018.

JOSÉ CARUSO CRUZ HENRIQUES

 President

ALKIMAR RIBEIRO MOURA	CARLOS ROBERTO DE ALBUQUERQUE SÁ
Member	Member

Itaú Unibanco Holding S.A. – Complete Financial Statements – June 30, 2018 180

www.pwc.com.br

(A free translation of the original in Portuguese)

Itaú Unibanco

Holding S.A.

Parent company and consolidated

financial statements at

June 30, 2018

and independent auditor's report

 

  

(A free translation of the original in Portuguese)

Independent auditor's report

To the Board of Directors and Stockholders

Itaú Unibanco Holding S.A.

Opinion

We have audited the accompanying parent company financial statements of Itaú Unibanco Holding S.A. ("Bank"), which comprise the balance sheet as at June 30, 2018 and the statements of income, changes in stockholders' equity and cash flows for the six-month period, as well as the accompanying consolidated financial statements of Itaú Unibanco Holding S.A. and its subsidiaries ("Consolidated"), which comprise the consolidated balance sheet as at June 30, 2018 and the consolidated statements of income and cash flows for the six-month period, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Itaú Unibanco Holding S.A. and of Itaú Unibanco Holding S.A. and its subsidiaries as at June 30, 2018, and the individual financial performance and cash flows, as well as the consolidated financial performance and cash flows, for the six-month period then ended, in accordance with accounting practices adopted in Brazil applicable to institutions authorized to operate by the Brazilian Central Bank (BACEN).

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 Parent Company and Consolidated Financial Statements" section of our report. 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.

Key Audit Matters

Key Audit Matters are those matters that, in our professional judgment, were of most significance in our audit of the current period. These matters were addressed in the context of our audit of the parent company and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

PricewaterhouseCoopers, Av. Francisco Matarazzo 1400, Torre Torino, São Paulo, SP, Brasil, 05001-903, Caixa Postal 61005, T: +55 (11) 3674 2000, www.pwc.com.br

 

Itaú Unibanco Holding S.A.

Our audit for the six-month period ended on June 30, 2018 was planned and executed considering that the operations of the Bank and the Consolidated did not present significant modifications in relation to the previous year. In this context, the Key Audit Matters, as well as our audit approach, have remained substantially in line with those of the previous year.

Why it is a Key Audit Matter	How the matter was addressed in the audit
Allowance for loan and lease losses (Notes 4(f) and 8)
The calculation of the allowance for loan and lease losses is subject to management's judgment. The identification of situations relating to the recoverable value of receivables and the determination of the allowance for loan and lease losses is a process that involves a number of assumptions and factors, including the counterparty's financial condition, the expected future cash flows, the estimated amounts of recovery and realization of guarantees. The utilization of different modeling techniques and assumptions could result in a materially different estimate of recoverable amounts. Furthermore, managing the credit risk is complex and depends on the completeness and integrity of the related database, as well as managing credit risk, including guarantees and renegotiations, are important aspects on determining the allowance for loan and lease losses. Considering the matters mentioned above, this area continued to be an area of focus during the audit.	Our audit procedures consider, among others: •     Tests of the design and effectiveness of the main controls used to calculate the allowance for loan and lease losses, including: (i) totality and integrity of the database; (ii) models and assumptions adopted by management to determine the recoverable value of the credit portfolio; (iii) monitoring and valuation of guarantees; (iv) identification, approval, and monitoring of renegotiated transactions; and (v) processes established by management to meet the assumptions and the standards of the Brazilian Central Bank (BACEN) and National Monetary Council (CMN) as well as the disclosures in notes to the financial statements. •     For the individually calculated allowance for loan and lease losses, we tested the relevant assumptions adopted to identify the impairment and the resulting rating of the debtors, as well as the expected future cash flows, underlying guarantees, and the estimates of recovery of overdue receivables. •     For the allowance for loan losses calculated on a collective basis (retail segment), we tested the underlying models, including the model approval process and the validation of the assumptions used to determine the loss and recovery estimates, as well as the consistency of the models with those applied in previous periods. •     We tested the adequacy of the inputs for these models, and, when available, compared the data and assumptions used with market information. We believe that the criteria and assumptions adopted by Management in determining and recording the allowance for loan losses are

 

Itaú Unibanco Holding S.A.

Why it is a Key Audit Matter	How the matter was addressed in the audit
	appropriate and consistent, in all material respects, in the context of the financial statements.
Measurement of the fair value of financial instruments and derivatives with little liquidity and without active market-(Notes 4(c), 4(d) and 7)
The fair value measurement of financial instruments with little liquidity and without an active market requires subjectivity, considering that it depends on valuation techniques based on internal models that involve management's assumptions for their valuation. In addition, management of market risk is complex, especially during periods of high volatility and when observable market prices or parameters are not available. These financial instruments are substantially comprised of investments in securities issued by companies and derivative contracts. This continues as an area of focus of our audit since the utilization of different valuation techniques and assumptions could lead to materially different fair value estimates.	Our audit procedures consider, among others: •     Testes of the design and the effectiveness of the main controls established for the fair valuation of these financial instruments, as well as the approval of models and related disclosures. •     We analyzed the methodology used to fair value these financial instruments and the assumptions adopted by management by comparing them with independent methodologies and assumptions. We reperformed, on a sampling basis, the fair valuation of certain operations and compared the assumptions and methodologies used by management with our knowledge about fair valuation practices, which are commonly adopted as well as evaluated the consistency of these methodologies with the ones applied in prior periods. We considered that the criteria and assumptions adopted by Management to measure the fair value of these financial instruments and derivatives are appropriate and consistent with the information disclosed in the financial statements.
Information technology environment
Itaú Unibanco Holding S.A. and its subsidiaries rely on their technology structure to process their operations and prepare their financial statements. Technology represents a fundamental aspect on the Bank's business evolution and, over the last years, significant short and long-term investments have been made in the information technology systems and processes. The technology structure, due to the history of acquisitions and size of the related operations, is comprised of more than one technology	As part of our audit procedures, with the support of our specialists, we assessed the information technology environment, including the automated controls of the application systems that are significant for the preparation of the financial statements. The procedures we performed comprised the combination of relevant control tests and, when necessary, the tests of compensating controls, as well as the performance of tests related to the information security, including the access

 

Itaú Unibanco Holding S.A.

Why it is a Key Audit Matter	How the matter was addressed in the audit
environment with different processes and segregated controls. The lack of adequacy of the general controls of the technology environment and of the controls that depend on technology systems may result in the incorrect processing of critical information used to prepare the financial statements, as well as risks related to information security and cybersecurity. Accordingly, this continued as an area of focus in our audit.	management control and the segregation of duties. The audit procedures applied resulted in appropriate evidence that was considered in determining the nature, timing and extent of other audit procedures, and we believe that the processes and controls of the information technology environment have provided a satisfactory basis to be used in the outcome of our audit of the financial statements.
Deferred tax assets (Note 14(b))
The deferred tax assets arising from temporary differences, tax losses carryforward and negative basis of social contribution are recorded to the extent management considers probable that Itaú Unibanco Holding S.A. and its subsidiaries will generate future taxable profits. The projection of the future taxable profits takes into account a number of subjective assumptions established by management. We continue to consider that this area requires audit focus, taking into account that using different assumptions in the projection of the future taxable profits could materially modify the expected periods for realization of deferred tax assets, thus affecting the accounting records.	We tested the design and the effectiveness of the main controls established by management to calculate the deferred tax assets and the recording of such credits in accordance with the accounting standards and specific requirements of BACEN and CMN, including the necessity of analysis of the perspectives for the realization of these assets, via projections of future taxable profits, for each of the institutions which comprise the Consolidated. We tested the design and the effectiveness of the main controls over the respective disclosures, as well as we compared the critical assumptions used to the projection of the future results with macroeconomic information disclosed by the market and with the historical data, in order to support the consistency of these estimates. With the support of our specialists in the tax area, we performed tests on the nature and amounts of the temporary differences, fiscal losses and negative bases of social contribution, subject to future tax deduction. We believe that the assumptions adopted by Management in the determination and recording of tax credits are appropriate and consistent with the disclosures in the notes to the financial statements.

 

Itaú Unibanco Holding S.A.

Why it is a Key Audit Matter	How the matter was addressed in the audit
Realization of amounts recorded on intangible assets (Notes 4(k) and 15(b))
The balances of intangible assets are tested semiannually for impairment. These tests involve estimates and significant judgment, including the identification of cash-generation units. The determination of expected cash flows and the risk-adjusted interest rate for each cash-generating unit or group of cash-generating units requires the application of judgment as well as estimates by management. We continue to consider this as an area of audit focus due to: (i) projection of future results, in which the use of different assumptions can significantly modify the perspective of realization of these assets and the possible need to record impairment with consequent impact on the financial statements and (ii) the relevance of intangible assets arising from the acquisition of Itaú Corpbanca.	We have tested the design and effectiveness of the main controls established, including the analysis of the assumptions and critical judgments used by Management. With the support of our specialists, we tested the projections for the determination of impairment of intangible assets as prepared by management, focusing on the most representative cases, such as intangible assets arising from the acquisition of Itaú Corpbanca, in order to corroborate the reasonableness of these realization estimates. We believe that the assumptions adopted by Management to evaluate the realization of intangible assets are appropriate and the disclosures in the notes to the financial statements are consistent with the information obtained.
Provision for contingent liabilities (Notes 4(n) and 12)
Itaú Unibanco Holding S.A. and its subsidiaries have contingent liabilities mainly arising from judicial and administrative proceedings, inherent to the normal course of their business, filed by third parties, former employees, and public agencies, involving civil, labor, tax, and social security matters. In general, the settlement of these proceedings takes a long time and involve not only discussions on the matter itself, but also complex process-related aspects, depending on the applicable legislation. In certain situations, the legislation allows taxpayers to settle certain tax proceedings in advance by decreasing or eliminating related interest rates and fines. Civil and labor legislation also permits that agreements are made to settle proceedings in advance. In addition, in 2017, a labor reform was approved and an agreement instrument for the termination of civil legal proceedings related to economic plans was signed.	As part of our audit procedures, we tested the design and the effectiveness of the main controls used to identify, assess, monitor, measure, record, and disclose the provision for contingent liabilities, including the totality and the integrity of the database. Civil and labor proceedings are divided on a group basis and on an individualized basis. Proceedings considered under a group basis are quantified based on internal models and are revalued considering the judicial decisions on the related matters. Regarding the individualized proceedings, the calculation is made periodically based on the determination of the amount of the request and on the likelihood of a loss, which is estimated according to the characteristics, in fact or in law, related to each sentence in particular. We tested the models used to quantify judicial proceedings of civil and labor natures considered on a group basis. We were supported by our specialists in the labor, legal, and fiscal areas, according to the nature of each proceeding.

 

Itaú Unibanco Holding S.A.

Why it is a Key Audit Matter	How the matter was addressed in the audit
Among other things, the aspects used to establish the likelihood of a loss attributed to each proceeding are subjective and the evolution of the jurisprudence is not always uniform. In this context, we consider that this subject requires audit focus.	Also, we performed external confirmation procedures with both internal and external lawyers responsible for the proceedings. We considered that the criteria and assumptions adopted by Management for determining the provision for contingent liabilities, as well as the information disclosed in the financial statements, are appropriate.

Others matters

Statements of value added

The parent company and consolidated statements of value added for the six-month period ended on June 30, 2018, prepared under the responsibility of the Bank's management, which presentation is required by the Brazilian Corporate Law for listed companies and treated as supplementary information for purposes of BACEN, were submitted to audit procedures performed in conjunction with the audit of the financial statements. For the purposes of forming our opinion, we evaluated whether these statements are reconciled with the financial statements and accounting records, as applicable, and if their form and content are in accordance with the criteria defined in Technical Pronouncement CPC 09, "Statement of Value Added". In our opinion, these statements of value added have been properly prepared, in all material respects, in accordance with the criteria established in the Technical Pronouncement and are consistent with the parent company and consolidated financial statements taken as a whole.

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

The Bank's management is responsible for the other information which comprise the Management Report and the Management Discussion and Analysis Report.

Our opinion on the parent company and consolidated financial statements does not cover the Management Report or the Management Discussion and Analysis Report, and we do not express any form of audit conclusion thereon.

In connection with the audit of the parent company and consolidated financial statements, our responsibility is to read the Management Report and the Management Discussion and Analysis Report and, in doing so, consider whether these reports are 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 or in the Management Discussion and Analysis 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 parent company and consolidated financial statements

Management is responsible for the preparation and fair presentation of the parent company and consolidated financial statements in accordance with accounting practices adopted in Brazil applicable to institutions authorized to operate by BACEN, and for such internal control as management

 

Itaú Unibanco Holding S.A.

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

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

Auditor's responsibilities for the audit of the parent company and consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the parent company or the consolidated financial statements, 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, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the parent company and 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 parent company and 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 parent company and consolidated financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

 

Itaú Unibanco Holding S.A.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Consolidated to express an opinion on the parent company and 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 (Audit Committee and Management) 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.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and that we communicated to them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company and consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

São Paulo, July 30, 2018

PricewaterhouseCoopers

Auditores Independentes 

CRC 2SP000160/O-5

Washington Luiz Pereira Cavalcanti

Contador CRC 1SP172940/O-6