Quarterly Management Discussion & Analysis (MDA300905.pdf)

Analysis of the Consolidated Net IncomePersonnel ExpensesPersonnel Expenses totaled R$ 1,062 million, increasingby R$ 91 million on the prior quarter. This increase wasmainly due to the single payment of a R$ 1,700.00 bonusper employee, as well as to the 6.0% salary increaseunder the collective labor agreement effectiveSeptember 2005. The agreement gave rise to additionalexpenses of R$ 93 million in the quarter.Such increase was partly offset by the expenses forEmployee Resignations and Labor Claims, whichdecreased by R$ 14 million in the quarter.At the end of September 2005, Itaú had 49,546employees, compared to 46,881 at the end of June. Theincrease is attributable to the continuing growth of Taií.Number of Employees (*) (**) (***)Sep/03 Dec/03 Mar/04 Jun/04 Sep/04 Dec/04 Mar/05 Jun/05 Sep/05FIT: Personnal Loan Stores OperationFIC: Itaú CDB Financial Company(*) Includes Orbitall and Intercap bank’s sales promotion company since Dec/04.(**) Includes FIC which is 100% consolidated, despite the fact that Itaú’s share in it is 50%.(***) Credicard Banco, where Itaú’s share is 50% , is not included. In Sep.05 this company had 453employees.Other Administrative ExpensesOther Administrative Expenses totaled R$ 1,245 millionin the third quarter of 2005, increasing by R$ 66 millionwhen compared to the R$ 1,179 million of the previousquarter.New ventures, including the spin-off of CredicardBanco, currently under way, were largely responsiblefor the increase, in particular expenses for DataProcessing and Telecommunications, Third-PartyServices and Materials.Marketing Expenses grew by R$ 22 million, impactedby the institutional campaign “Itaú 60 Years”, heavilypromoted in the quarter.Volume of Self-Service TransactionsOther Operating ExpensesIn the third quarter of 2005, Other Operating Expensesamounted to R$ 220 million, a significant R$ 85 milliondecline compared to the previous quarter. Provisions forContingencies decreased by R$ 54 million in the quarter,as a result of actions taken in the second quarter of 2005,which increased these expenses in that period, primarilythe adjustment in provisions linked to the minimum wage,which increased by 15% in May.Tax Expenses for CPMF and Other TaxesTax Expenses for CPMF and Other Taxes totaled R$ 79million in the third quarter of 2005, a significant decreasecompared to the R$ 117 million in the previous quarter.The decline is due to the corporate reorganization thattook place in the second quarter, which resulted in CPMFexpenses of approximately R$ 50 million.(Quantity in million)1st Q./02 224 27 69 33 10 13 59 3 19 4572nd Q/02 225 46 70 38 10 11 71 3 20 4943rd Q./02 243 48 72 31 10 9 84 3 23 5244th Q./02 254 71 73 33 10 6 92 2 27 5691st Q./03 260 67 75 37 10 5 95 2 26 5762nd Q/03 248 117 76 36 10 4 99 2 28 6213rd Q./03 254 151 75 36 11 3 111 2 30 6754th Q./03 271 251 76 36 10 1 121 2 36 8051st Q./04 263 237 77 33 9 0 127 2 34 7832nd Q/04 258 139 78 32 8 0 130 2 37 6863rd Q./04 272 152 81 32 9 0 130 2 40 7194th Q./04 280 163 85 32 9 - 137 2 47 7541st Q./05 277 156 88 30 9 - 149 2 45 7562nd Q./05 272 158 92 29 9 - 157 2 46 7653rd Q./05 274 167 96 29 9 - 168 2 51 795(*) Transaction through warning screen on ATM.19 Management Discussion and AnalysisBanco Itaú Holding Financeira S.A.