HSBC J.P. Morgan Standard Chartered Bank - bicbanco

Allowance for loan losses
The Central Bank defines the minimum allowance necessary for each level of risk classification, which is
measured as a percentage of the total amount of loans. Currently the Bank meets all Central Bank requirements
relative to such operations.
The following table shows the allowance for loan losses, on a consolidated basis, as of December 31, 2009,
2008 and 2007:
As of December 31,
2009 2008 2007
(In R$ millions, except percentages)
Opening balance ........................................................................................................ 310.9 133.2 91.7
Constitution/Reversal .................................................................................................. 231.8 277.3 138.7
Write-off ...................................................................................................................... (123.8) (99.7) (97.1)
Closing balance .......................................................................................................... 418.8 310.9 133.3
Recovered loans .......................................................................................................... 37.8 25.9 21.5
Renegotiated loans ...................................................................................................... 185.7 47.4 40.3
Balance at end of period as a percentage of loan portfolio ........................................ 4.6% 3.9% 1.8%
Foreign exchange operations
The Bank is authorized by the Central Bank to operate in the foreign exchange market, in which the Bank
actively participates. See “Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Exchange Rates.”
The table below summarizes the balances of the Bank’s loan portfolio, as disclosed in its financial
statements for the relevant periods, and includes the import, export, interbank (spot), arbitrage and interdepartmental
operations.
As of December 31,
2009 2008 2007
(In R$ millions)
Assets ....................................................................................................................... 973.9 1,528.0 1,141.6
Foreign exchange purchased to settle .................................................................. 943.9 1,268.4 1,072.7
Advances received in foreign currency ............................................................... (0.4) — (0.3)
Bills of exchange in foreign currency ................................................................. — — 0.3
Rights from sale of foreign exchange .................................................................. 31.5 248.8 92.6
Advances received in local currency ................................................................... (23.6) (17.1) (50.4)
Income receivable from advances on foreign exchange contracts ...................... 22.5 27.9 26.7
Liabilities ................................................................................................................. 135.1 631.9 314.9
Foreign exchange sold to settle ........................................................................... 31.3 247.6 92.4
Financed imports—contracted foreign exchange ................................................ (1.2) (13.0) (43.5)
Liabilities from foreign exchange purchases ...................................................... 988.2 987.4 1,144.1
Advances on foreign exchange contracts ............................................................ (883.4) (590.3) (878.3)
Foreign currency liabilities .................................................................................. 0.2 0.2 0.2
Both activities related to trade finance as well as those related to negotiations of the Bank’s treasury are
important businesses for the Bank. As of December 31, 2008, the total volume of the Bank’s foreign exchange
transactions related to exports reached R$1,479.6 million against R$635.1 million in connection with imports. As of
December 31, 2007, the total volume of the Bank’s foreign exchange transactions related to exports corresponded to
R$1,172.7 million against R$543.1 million in connection with imports. As of December 31, 2009, the total volume
of the Bank’s foreign exchange transactions related to exports reached R$1,474.6 million against R$635.1 million in
connection with imports. As of December 31, 2008, the total volume of the Bank’s foreign exchange transactions
related to exports corresponded to R$1,479.6 million against R$635.1 million in connection with imports.
AMR-248898-v2
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