7. Securities and Derivatives a) Securities I) By Category Bank Effect of adjustment to fair value on:

Trading securities TGovernment Securities Private Securities Available-for-sale securities Government Securities Private Securities Held-to-maturity securities Government Securities Subtotal Derivatives (Assets) Total Securities and Derivatives Current Long-term Derivatives (Liabilities) Current Long-term

2008

2007

Carrying

Carrying

Cost

Income

Equity

amount

amount

9,066,829 6,697,754 2,369,075 12,785,372 7,786,206 4,999,166 843,424 843,424 22,695,625 5,829,283 28,524,908

(39,939) 52,624 (92,563) (39,939) 1,639,404 1,599,465

185,698 122,875 62,823 185,698 185,698

(6,589,622)

(1,858,971)

-

9,026,890 6,750,378 2,276,512 12,971,070 7,909,081 5,061,989 843,424 843,424 22,841,384 7,468,687 30,310,071 17,041,998 13,268,073 (8,448,593) (5,815,703) (2,632,890)

10,595,913 8,302,845 2,293,068 8,862,375 4,750,664 4,111,711 766,565 766,565 20,224,853 3,420,312 23,645,165 15,300,972 8,344,193 (4,567,555) (3,226,639) (1,340,916) Consolidated

Effect of adjustment to fair value on:

Trading securities Government Securities Private Securities Investment fund shares for guarantee of PGBL/VGBL benefit plans Available-for-sale securities Government Securities Private Securities Held-to-maturity securities Government Securities Private Securities Total Securities Derivatives (Assets) Total Securities and Derivatives Current Long-term Derivatives (Liabilities) Current Long-term

2008

2007

Carrying

Carrying

Cost

Income

Equity

amount

amount

13,731,612 9,870,637 1,276,083

9,244 101,807 (92,563)

-

13,740,856 9,972,444 1,183,520

9,245,868 8,368,816 877,052

2,584,892 30,959,486 26,183,373 4,776,113 1,495,208 1,290,935 204,273 46,186,306 8,483,960 54,670,266

9,244 1,041,570 1,050,814

103,393 237,331 (133,938) 103,393 103,393

(9,753,900)

(1,861,383)

-

2,584,892 31,062,879 26,420,704 4,642,175 1,495,208 1,290,935 204,273 46,298,943 9,525,530 55,824,473 26,509,181 29,315,292 (11,615,283) (7,763,795) (3,851,488)

7,035,031 4,851,243 2,183,788 766,565 766,565 17,047,464 3,416,973 20,464,437 14,024,674 6,439,763 (4,564,131) (3,226,346) (1,337,785)

Relatório Anual 2008

95

II) Trading Securities Bank

Trading Securities

Government Securities Treasury certificates - CFT National Treasury bills - LTN Treasury bills - LFT National Treasury notes - NTN B National Treasury notes - NTN C National Treasury notes - NTN D National Treasury notes - NTN F Agricultural debt securities - TDA Global bonds Private Securities Shares Receivables Investment Fund (1) Investment fund shares Debentures Eurobonds Certificates of real estate receivables - CRI Total

2008

2007

Adjustment to fair

Carrying

Carrying

Cost

value – income

amount

amount

6,697,754 50,964 2,308,334 1,093,787 2,160,174 23,177 792,842 213,808 54,668 2,369,075 254,339 248,776 102,532 1,763,428 9,066,829

52,624 14 11,424 (125) 47,328 (546) (581) (4,890) (92,563) (101,340) 8,777 (39,939)

6,750,378 8,302,845 50,978 40,876 2,319,758 3,160,082 1,093,662 637,699 2,207,502 2,777,109 22,631 679,940 17,278 792,261 678,918 208,918 191,444 54,668 119,499 2,276,512 2,293,068 152,999 301,156 248,776 280,812 102,532 10 1,772,205 1,665,157 23,905 22,028 9,026,890 10,595,913 Bank 2008

96

Trading Securities

Without

Up to

From 3 to

From 1 to

Over

by maturity

maturity

3 months

12 months

3 years

3 years

Total

Government Securities Treasury certificates - CFT National Treasury bills - LTN Treasury bills - LFT National Treasury notes - NTN B National Treasury notes - NTN C National Treasury notes - NTN F Agricultural debt securities - TDA Global bonds Private Securities Shares Receivables Investment Fund (1) Investment fund shares Debentures Total

255,531 152,999 102,532 255,531

696,950 602,820 4,479 15,964 361 42,265 29,227 1,834 15,436 15,436 712,386

2,028,881 1,319,820 387,896 250,586 70,559 20 4,723 4,723 2,033,604

777,990 397,118 46,484 177,965 90,407 66,016 174,569 110,916 63,653 952,559

3,246,557 50,978 654,803 1,762,987 22,270 659,589 43,116 52,814 1,826,253 122,424 1,703,829 5,072,810

6,750,378 50,978 2,319,758 1,093,662 2,207,502 22,631 792,261 208,918 54,668 2,276,512 152,999 248,776 102,532 1,772,205 9,026,890

Relatório Anual 2008

Consolidated

Trading Securities

Cost

Government Securities Treasury certificates - CFT National Treasury bills - LTN Treasury bills - LFT National Treasury notes - NTN B National Treasury notes - NTN C National Treasury notes - NTN D National Treasury notes - NTN F Agricultural debt securities - TDA Global Bonds Private Securities Shares Receivables Investment Fund - FIDC (1) Investment fund shares in Participation - FIP Investment fund shares Debentures Eurobonds Certificates of real estate receivables - CRI Investment fund shares for guarantee of PGBL/VGBL benefit plans Total

9,870,637 50,964 3,937,314 1,366,373 2,160,174 23,177 1,676,168 213,870 442,597 1,276,083 255,992 248,776 102,532 590,298 78,485 2,584,892 13,731,612

2008

2007

Adjustment to fair

Carrying

Carrying

value – equity

amount

amount

101,807 14 12,553 (205) 47,328 (546) 34,199 (4,890) 13,354 (92,563) (101,340) 8,777 9,244

9,972,444 50,978 3,949,867 1,366,168 2,207,502 22,631 1,710,367 208,980 455,951 1,183,520 154,652 248,776 102,532 590,298 87,262 2,584,892 13,740,856

8,368,816 40,876 3,160,082 703,670 2,777,109 679,940 17,278 678,918 191,444 119,499 877,052 301,156 280,812 10 83,445 165,696 23,905 22,028 9,245,868 Consolidated 2008

Trading Securities

Without

Up to

From 3 to

From 1 to

Over

by maturity

maturity

3 months

12 months

3 years

3 years

Total

Government Securities Treasury certificates - CFT National Treasury bills - LTN Treasury bills - LFT National Treasury notes - NTN B National Treasury notes - NTN C National Treasury notes - NTN F Agricultural debt securities - TDA Global Bonds Private Securities Shares Receivables Investment Fund - FIDC (1) Investment fund shares in Participation - FIP Investment fund shares Debentures Investment fund shares for guarantee of PGBL/VGBL benefit plans Total

847,482 154,652 102,532 590,298 -

2,379,982 2,203,106 87,225 15,964 361 42,265 29,227 1,834 15,436 15,436 -

2,453,505 1,322,673 408,368 250,586 70,575 401,303 4,723 4,723

850,616 424,088 92,109 177,965 90,407 66,047 174,569 110,916 63,653

4,288,341 50,978 778,466 1,762,987 22,270 1,577,695 43,131 52,814 141,310 122,424 18,886

9,972,444 50,978 3,949,867 1,366,168 2,207,502 22,631 1,710,367 208,980 455,951 1,183,520 154,652 248,776 102,532 590,298 87,262

2,584,892 3,432,374

2,395,418

2,458,228

1,025,185

2,584,892 4,429,651 13,740,856

Relatório Anual 2008

97

III) Available-for-sale Securities Bank

Available-for-sale securities

Cost

Government Securities National Treasury bonus - BTN Treasury certificates - CFT Securitized credit National Treasury bills - LTN Treasury bills - LFT National Treasury notes - NTN A National Treasury notes - NTN B National Treasury notes - NTN C National Treasury notes - NTN F National Treasury notes - NTN P Agricultural debt securities - TDA Private Securities Shares Debentures Eurobonds Promissory notes - NP Real estate credit notes - CCI Certificates of real estate receivables - CRI Total

7,786,206 71,320 928 3,186,639 261,265 153,523 1,948,017 562,803 1,601,406 98 207 4,999,166 299,091 2,800,341 231,581 1,447,819 24,947 195,387 12,785,372

2008

2007

Adjustment to Fair

Carrying

Carrying

Value – Equity

amount

amount

122,875 7,227 467 24,733 (532) (38,186) (92,204) 236,652 (15,266) (16) 62,823 48,697 12,320 1,806 185,698

7,909,081 78,547 1,395 3,211,372 260,733 115,337 1,855,813 799,455 1,586,140 82 207 5,061,989 347,788 2,812,661 231,581 1,447,819 24,947 197,193 12,971,070

4,750,664 1,820 63,001 51,086 283,141 1,219 113,969 1,198,639 747,555 2,286,163 72 3,999 4,111,711 1,095,337 2,555,449 2,032 221,129 237,764 8,862,375 Bank 2008

98

Available-for-sale securities

Without

Up to

From 3 to

From 1 to

Over

by maturity

maturity

3 months

12 months

3 years

3 years

Government Securities Treasury certificates - CFT Securitized credit National Treasury bills - LTN Treasury bills - LFT National Treasury notes - NTN A National Treasury notes - NTN B National Treasury notes - NTN C National Treasury notes - NTN F National Treasury notes - NTN P Agricultural debt securities - TDA Private Securities Shares Debentures Eurobonds Promissory notes - NP Real estate credit notes - CCI Certificates of real estate receivables - CRI Total

347,788 347,788 347,788

293,655 200,000 2,653 12,744 78,257 1 81,658 33,950 186 10,368 37,154 375,313

Relatório Anual 2008

894,681 260,420 875 633,181 205 1,543,914 96,339 4 1,437,451 10,120 2,438,595

3,493,629 2,750,952 209,733 532,943 1 438,314 438,314 3,931,943

Total

3,227,116 7,909,081 78,547 78,547 1,395 1,395 3,211,372 260,733 260,733 114,462 115,337 1,010,246 1,855,813 786,711 799,455 974,940 1,586,140 82 82 207 2,650,315 5,061,989 347,788 2,244,058 2,812,661 231,391 231,581 1,447,819 24,947 24,947 149,919 197,193 5,877,431 12,971,070

Consolidated

Available-for-sale securities

Cost

Government Securities National Treasury bonus - BTN Treasury certificates - CFT Securitized credit National Treasury bills - LTN Treasury bills - LFT National Treasury notes - NTN A National Treasury notes - NTN B National Treasury notes - NTN C National Treasury notes - NTN F National Treasury notes - NTN M National Treasury notes - NTN P Agricultural debt securities - TDA Private Securities Shares Receivables Investment Fund - FIDC (1) Investment fund shares in Participation - FIP Debentures Eurobonds Promissory notes - NP Bank certificates of deposits - CDB Real estate credit notes - CCI Certificates of real estate receivables - CRI Agribusiness receivables certificates - CDCA Others Total

26,183,373 71,320 928 14,390,631 651,430 153,523 2,183,220 562,803 8,168,530 683 98 207 4,776,113 709,694 27,773 14,519 1,112,501 231,581 1,993,534 100,150 24,947 552,888 8,051 475 30,959,486

2008

2007

Adjustment to fair

Carrying

Carrying

value – equity

amount

amount

237,331 7,227 467 64,951 1,008 (38,186) (101,290) 236,652 66,509 9 (16) (133,938) (130,937) 1,179 (4,315) (4,628) 4,352 411 103,393

26,420,704 78,547 1,395 14,455,582 652,438 115,337 2,081,930 799,455 8,235,039 692 82 207 4,642,175 578,757 27,773 15,698 1,108,186 231,581 1,988,906 100,150 24,947 557,240 8,462 475 31,062,879

4,851,243 1,820 63,001 51,086 283,141 101,798 113,969 1,198,639 747,555 2,286,163 72 3,999 2,183,788 1,095,337 627,526 2,032 221,129 237,764 7,035,031 Consolidated 2008

Available-for-sale securities

Without

Up to

From 3 to

From 1 to

Over

by maturity

maturity

3 months

12 months

3 years

3 years

Government Securities Treasury certificates - CFT Securitized credit National Treasury bills - LTN Treasury bills - LFT National Treasury notes - NTN A National Treasury notes - NTN B National Treasury notes - NTN C National Treasury notes - NTN F National Treasury notes - NTN M National Treasury notes - NTN P Agricultural debt securities - TDA Private Securities Shares (1) Receivables Investment Fund - FIDC (1) Investment fund shares in Participation - FIP Debentures Eurobonds Promissory notes - NP Bank certificates of deposits - CDB Real estate credit notes - CCI Certificates of real estate receivables - CRI Agribusiness receivables certificates - CDCA Others Total

578,757 578,757 578,757

2,603,270 2,472,347 37,268 2,653 12,744 78,257 1 115,591 42,393 186 10,368 25,015 37,154 475 2,718,861

1,120,257 353,480 131,824 875 633,181 692 205 2,186,877 27,773 165,611 4 1,978,538 4,831 10,120 3,307,134

12,522,785 11,620,839 4,343 284,968 612,634 1 737,558 668,719 41,953 26,886 13,260,343

Total

10,174,392 26,420,704 78,547 78,547 1,395 1,395 8,916 14,455,582 479,003 652,438 114,462 115,337 1,161,128 2,081,930 786,711 799,455 7,544,148 8,235,039 692 82 82 207 1,023,392 4,642,175 578,757 27,773 15,698 15,698 231,463 1,108,186 231,391 231,581 1,988,906 28,351 100,150 24,947 24,947 483,080 557,240 8,462 8,462 475 11,197,784 31,062,879

(1) Receivables Investment Fund (FIDC) shares are calculated based on the value of the receivables and other financial assets in the respective portfolios, less respective provisions that take into consideration aspects related to the debtors, their guarantors and the corresponding transaction’s characteristics, according to accounting standards and practices for evaluating credits, and are not adjusted to fair value.

Relatório Anual 2008

99

IV) Held-to-maturity securities Bank 2008

Held-to-maturity securities (1)

Government Securities National Treasury notes - NTN C Total

2008

2007

Cost/carrying

Cost/carrying

Up to

by Maturity Over

amount

amount

3 months

3 years

843,424 843,424 843,424

766,565 766,565 766,565

19,875 19,875 19,875

823,549 823,549 823,549 Consolidated

2008

2007

Cost/carrying

Cost/carrying

amount

amount

1,290,935 109,580 1,152,039 26,728 2,313 275 204,273 91,709 1,699 16,649 94,216 1,495,208

766,565 766,565 766,565

Títulos Mantidos até o Vencimento (1)

Government Securities National Treasury notes - NTN B National Treasury notes - NTN C National Treasury notes - NTN I National Treasury notes - NTN M Agricultural debt securities - TDA Private Securities Debentures Securitization Debts Bank certificates of deposits - CDB Credit Linked Notes Total

Consolidated 2008 Held-to-maturit Held-to-maturity securities (1)

Government Se Government Securities National Treasury notes - NTN B National Treasury notes - NTN C National Treasury notes - NTN I National Treasury notes - NTN M Agricultural debt securities - TDA Private Securities Debentures Securitization Debts Bank certificates of deposits - CDB Credit Linked Notes Total

Up to

From 3 to

From 1 to

Over

3 months

12 months

3 years

3 years

Total

23,024 19,875 3,149 2,355 1,699 656 25,379

11,057 8,469 2,313 275 94,461 245 94,216 105,518

11,928 11,928 107,457 91,709 15,748 119,385

1,244,926 109,580 1,132,164 3,182 1,244,926

1,290,935 109,580 1,152,039 26,728 2,313 275 204,273 91,709 1,699 16,649 94,216 1,495,208

(1) The fair value of Held-to-Maturity Securities, R$1,244,349 in the Bank and R$1,956,670 in the Consolidated (2007 - R$1,163,274 Bank and Consolidated).

During the fourth quarter of 2008, Banco Real transferred R$80,693 related to Certificates of Real Estate Receivables - CRI from "Held-to-Maturity" to "Available-for-Sale". In accordance with Central Bank of Brazil Circular 3068/2001, article 8,Santander has the positive intent and ability to hold to maturity the securities classified as Held-to- Maturity Securities. The fair value of securities is computed based on the average quotation on organized markets and their estimated cash flows, discounted to present value using the applicable interest rate, which are considered representative of the market conditions at the balance sheet date. The principal interest rates are obtained from futures and swap contracts traded on the BM&F Bovespa - Securities, Commodities and Futures Exchange (BM&FBovespa). Adjustments to these curves are made whenever certain points are considered illiquid or when, for unusual reasons, they do not fairly represent market conditions.

100

Relatório Anual 2008

V) Financial Income - Securities Transactions Bank

Income from fixed-income securities Income from interbank investments Income from variable-income securities Other Total

Consolidated

2008

2007

2008

2007

4,525,787 2,245,160 (284,340) 39,879 6,526,486

3,958,055 2,122,317 (52,440) 59,159 6,087,091

5,233,676 2,657,283 (215,121) 61,922 7,737,760

3,611,671 2,118,466 (43,243) 66,413 5,753,307

b) Derivatives Santander operates according to global policies, classified based on the risk appetite of the Grupo Santander in Spain, aligned with the objectives in Brazil and worldwide, taking into consideration the guidance of the Board of Directors and in compliance with Bacen regulation and good international practices, to hedge capital and ensure the profitability of business. Santander’s risk management is guided by principles such as independence and collegiate decisions, and is present in its policies, procedures and goals. Credit risk is the exposure to losses in the event of default by a counterparty. Credit risk management is intended to provide insight to define strategies and set limits, covering the analysis of exposures and trends, as well as the efficiency of the credit policy. Operating risk is the probability of financial losses resulting from failures or flaws in people, processes and systems or any other adverse market conditions. Operating risk management and control are intended to ensure the efficiency of the Internal Control system, and prevent, mitigate and reduce risks and losses. Market risk is the exposure to risks such as interest rates, exchange rates, prices of goods, prices in the stock market and others according to the type of product, volume of operations, term and conditions of the agreement and underlying volatility. Market risk management uses practices that include measuring and following up on the use of limits previously set in internal committees, the value at risk of portfolios, the sensitivities to fluctuations in interest rates, foreign exchange exposure, liquidity gaps, among other practices that permit monitoring risks that might impact the Bank’s portfolio positions in the different marketplaces where it operates. In this context, Santander uses derivatives, recorded in balance sheet and memorandum accounts, to minimize the market risks of the Bank’s overall exposure, resulting from its operation. The fair value of swaps is computed based on the estimated cash flows of each position, discounted to present value according to the applicable interest rate curves, considered as representative of the market conditions at the balance sheet date. For options, Santander adopts statistical models that consider the volatility of the asset price and interest rates representative of the market conditions at the balance sheet date. The principal interest rates are obtained from futures and swap agreements traded on the BM&FBovespa. Adjustments to these curves are made whenever certain points are considered illiquid or when due to unusual reasons, they do not fairly represent market conditions. The exposure to credit risk in futures contracts is minimized by daily settlement. Swap agreements are subject to credit risks in the event the counterparty is unable or unwilling to fulfill its contractual obligations.

Relatório Anual 2008

101

I) Derivatives recorded in memorandum and balance sheets Bank 2008

2007

Trading Cost

Fair Value

Notional

Cost

Fair Value

72,531,467 28,206,918 6,401,816 10,251,678 9,293,497 17,057,537 1,320,021 73,386,430 22,756,316 1,418,932 13,962,104 11,861,241 23,209,720 178,117

(854,963) 11,575,390 5,450,602 4,982,884 1,141,904 (12,430,353) (3,710,426) (2,567,744) (6,152,183) -

(799,964) 11,854,580 5,471,960 5,255,863 1,126,757 (12,654,544) (3,886,710) (2,466,640) (6,301,194) -

56,839,989 28,070,002 4,536,786 4,305,455 11,172,837 8,731,075 23,834 56,521,797 20,987,542 1,559,034 2,728,100 12,516,102 18,537,690 193,329

318,192 11,637,567 7,082,460 2,977,752 1,577,355 (11,319,375) (1,343,265) (9,806,615) (169,495)

315,831 11,631,619 7,039,360 3,007,407 1,584,852 (11,315,788) (1,309,952) (9,843,035) (162,801)

212,623,490 91,029,139 12,131,587 8,340,926 36,236,913 34,319,713 121,594,351 22,309,882 15,585,970 53,805,620 29,892,879

(1,490,378) 1,594,150 1,171,183 157,523 201,312 64,132 (3,084,528) (2,286,649) (401,228) (285,641) (111,010)

(1,692,118) 2,734,350 2,255,013 104,943 138,437 235,957 (4,426,468) (3,555,888) (320,395) (380,020) (170,165)

229,947,446 88,435,451 20,803,174 2,300,670 30,808,317 34,523,290 141,511,995 30,966,641 21,013,420 57,199,347 32,332,587

(1,953,364) 258,788 40,527 29,053 136,302 52,906 (2,212,152) (803,998) (1,092,604) (191,859) (123,691)

(1,883,617) 240,922 24,011 26,508 127,903 62,500 (2,124,539) (620,886) (1,120,631) 75,935 (458,957)

Futures Contracts Purchased Position Exchange coupon - DDI Interest rates (DI1 and DIA) Foreign currency Indexes (3) Treasury Bonds/Notes Other Sold Position Exchange coupon - DDI Interest rates (DI1 and DIA) Foreign currency Indexes (3) Treasury Bonds/Notes Other

38,771,007 12,593,591 7,017,054 3,887,472 1,606,793 48,429 33,843 26,177,416 4,288,048 16,781,651 4,837,201 95,899 88,694 85,923

-

-

27,737,715 16,730,656 3,417,298 8,038,348 5,115,296 978 143,354 15,382 11,007,059 2,395,124 8,201,301 38,523 122,644 184,178 65,289

-

-

Forward Contracts and Others Purchased Commitment Currencies Stocks Equities Sell Commitment Currencies Stocks Equities

15,868,287 11,850,088 11,830,481 6,976 12,631 4,018,199 3,985,759 32,440

1,585,002 1,703,150 1,696,174 6,976 (118,148) (119,001) 853

1,512,176 1,625,805 1,618,870 6,935 (113,629) (114,482) 853

8,357,260 4,895,781 4,895,781 3,461,479 2,917,676 543,423 380

389,350 (236,062) (236,062) 625,412 89,359 537,169 (1,116)

420,543 (197,106) (197,106) 617,649 82,991 535,774 (1,116)

Swap Asset CDI (interbank deposit rates) Fixed interest rate - R$ Fixed interest rate - foreign currency (1) Indexed to price and interest rates Indexed to foreign currency (1) Other indexes Liabilities CDI (interbank deposit rates) Fixed interest rate - R$ Fixed interest rate - foreign currency (1) Indexed to price and interest rates Indexed to foreign currency (1) Other indexes Options Purchased Position Call option - Dollar Put option - Dollar Call option - Other (2) Put option - Other (2) Sold Position Call option - Dollar Put option - Dollar Call option - Other (2) Put option - Other (2)

102

Trading

Notional

Relatório Anual 2008

Consolidated 2008

2007

Trading

Trading

Notional

Cost

Fair Value

Notional

Cost

Fair Value

Swap Asset CDI (interbank deposit rates) Fixed interest rate - R$ Fixed interest rate - foreign currency (1) Indexed to price and interest rates Indexed to foreign currency (1) Other indexes Liabilities CCDI (interbank deposit rates) Fixed interest rate - R$ Fixed interest rate - foreign currency (1) Indexed to price and interest rates Indexed to foreign currency (1) Other indexes

112,234,443 37,294,422 6,160,622 25,483,464 11,126,200 30,849,714 1,320,021 114,474,985 24,462,826 1,994,711 28,299,419 13,628,086 45,911,826 178,117

(2,240,542) 18,139,411 12,831,596 4,165,911 1,141,904 (20,379,953) (2,815,955) (2,501,886) (15,062,112) -

(2,028,461) 18,354,576 12,800,349 4,427,470 1,126,757 (20,383,037) (2,051,019) (2,515,287) (15,816,731) -

56,417,815 28,048,281 4,136,333 4,305,455 11,172,837 8,731,075 23,834 56,101,434 20,588,968 1,537,245 2,728,100 12,516,102 18,537,690 193,329

316,381 11,635,756 7,459,313 2,599,088 1,577,355 (11,319,375) (1,343,265) (9,806,615) (169,495)

315,916 11,631,704 7,416,089 2,630,763 1,584,852 (11,315,788) (1,309,952) (9,843,035) (162,801)

Options Purchased Position Call option - Dollar Put option - Dollar Call option - Other (2) Put option - Other (2) Sold Position Call option - Dollar Put option - Dollar Call option - Other (2) Put option - Other (2)

212,584,432 92,481,061 13,608,847 8,315,588 36,236,913 34,319,713 120,103,371 20,934,382 15,585,970 53,690,140 29,892,879

(607,770) 1,078,141 629,795 182,902 201,312 64,132 (1,685,911) (863,347) (426,249) (285,305) (111,010)

(1,734,558) 2,275,921 1,796,877 104,650 138,437 235,957 (4,010,479) (3,140,525) (320,104) (379,685) (170,165)

229,947,446 88,435,451 20,803,174 2,300,670 30,808,317 34,523,290 141,511,995 30,966,641 21,013,420 57,199,347 32,332,587

(1,953,364) 258,788 40,527 29,053 136,302 52,906 (2,212,152) (803,998) (1,092,604) (191,859) (123,691)

(1,883,617) 240,922 24,011 26,508 127,903 62,500 (2,124,539) (620,886) (1,120,631) 75,935 (458,957)

Futures Contracts Purchased Position Exchange coupon - DDI Interest rates (DI1 and DIA) Foreign currency Indexes (3) Treasury Bonds/Notes Other Sold Position Exchange coupon - DDI Interest rates (DI1 and DIA) Foreign currency Indexes (3) Treasury Bonds/Notes Other

75,360,026 26,519,120 13,580,134 7,368,308 5,488,406 48,429 33,843 48,840,906 8,088,018 35,498,376 4,983,996 95,899 88,694 85,923

-

-

27,737,715 16,730,656 3,417,298 8,038,348 5,115,296 978 143,354 15,382 11,007,059 2,395,124 8,201,301 38,523 122,644 184,178 65,289

-

-

Forward Contracts and Others Purchase Commitment Currencies Equities Other Sell Commitment Currencies Equities Other

16,429,235 11,931,923 11,912,316 6,976 12,631 4,497,312 4,464,872 32,440

1,939,904 2,190,746 2,183,770 6,976 (250,842) (251,695) 853

1,831,717 2,115,319 2,108,384 6,935 (283,602) (284,455) 853

8,357,260 4,895,781 4,895,781 3,461,479 2,917,676 543,423 380

389,350 (236,062) (236,062) 625,412 89,359 537,169 (1,116)

420,543 (197,106) (197,106) 617,649 82,991 535,774 (1,116)

(1) Includes credit derivatives. (2) Includes share options, indexes and commodities. (3) Includes Bovespa, S&P, Russell and Futse Indexes.

Relatório Anual 2008

103

II) Derivatives by counterparty Bank Notional 2008

Swap Options Futures Contracts Forward Contracts and Others

2007

Related

Financial

Customers

parties

institutions (1)

Total

Total

29,320,297 10,062,357 9,298,716

22,380,209 14,365,857 6,383,592

20,830,961 188,195,276 38,771,007 185,979

72,531,467 212,623,490 38,771,007 15,868,287

56,839,989 229,947,446 27,737,715 8,357,260 Consolidated Notional

2008

Swap Options Futures Contracts Forward Contracts and Others

2007

Related

Financial

Customers

parties

institutions (1)

Total

Totall

58,946,558 10,214,517 11,671,886

25,913,273 2,412,214 4,255,322

27,374,612 199,957,701 75,360,026 502,027

112,234,443 212,584,432 75,360,026 16,429,235

56,417,815 229,947,446 27,737,715 8,357,260

(1) Includes trades with the BM&FBovespa and other Securities and Commodities Exchanges.

III) Derivatives by maturity Bank Notionall 2008 Up to

Swap Options Futures Contracts Forward Contracts and Others

From 3 to

2007

Over

3 months

12 months

12 months

Total

Total

22,436,190 142,019,559 23,440,867 7,908,361

15,163,411 36,529,771 4,583,627 4,575,117

34,931,866 34,074,160 10,746,513 3,384,809

72,531,467 212,623,490 38,771,007 15,868,287

56,839,989 229,947,446 27,737,715 8,357,260 Consolidado Notionall

2008 Up to

Swap Options Futures Contracts Forward Contracts and Others

From 3 to

2007

Over

3 months

12 months

12 months

Total

Total

30,683,247 143,654,997 33,018,326 8,132,515

24,952,103 34,764,025 12,211,149 5,297,192

56,599,093 34,165,410 30,130,551 2,999,528

112,234,443 212,584,432 75,360,026 16,429,235

56,417,815 229,947,446 27,737,715 8,357,260

IV) Derivatives by trade market Bank Notional

Swap Options Futures Contracts Forward Contracts

2008

2007

Exchange (1)

Cetip (2)

Over the counter

Total

Total

26,512,757 189,237,274 38,771,007 6,976

21,091,464 23,270,736 11,128,562

24,927,246 115,480 4,732,749

72,531,467 212,623,490 38,771,007 15,868,287

56,839,989 229,947,446 27,737,715 8,357,260 Consolidated Notional

Swap Options Futures Contracts Forward Contracts

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Relatório Anual 2008

2007

Exchange (1)

Cetip (2)

Over the counter

Total

Total

30,066,068 201,151,859 75,360,026 2,253,230

55,103,301 11,240,509 9,128,663

27,065,074 192,064 5,047,342

112,234,443 212,584,432 75,360,026 16,429,235

56,417,815 229,947,446 27,737,715 8,357,260

(1) Includes trades with the BM&FBovespa and other Securities and Commodities Exchanges. (2) Includes amount traded on other clearinghouses

2008

V) Credit Derivatives

The Bank enters into credit derivatives to reduce or eliminate is exposure to specific risks arising from the purchase or sale of assets associated with the credit portfolio management. In 2008, Bank and Consolidated, the volume of credit derivatives with total return rate - credit risk received corresponds to R$697,606 of cost and R$696,162 of fair value, and the credit risk volume transferred corresponds to R$94,852 of cost and R$99,785 of fair value. During the period there were no credit events related to events provided for in the contracts. Required base capital used amounted to $3,805. VI) Derivatives used as Hedge instruments

Derivatives used as hedges by index are as follows: Consolidated 2008 Market risk hedge

Swap Contracts Asset Interbank Deposit Rates - CDI Liabilities Indexed to foreign currency Fixed interest rate - Reais

Notional

Curve

Market

(157,759) 1,701,594 1,701,594 1,859,353 1,612,926 246,427

(158,451) 1,709,404 1,709,404 1,867,855 1,620,756 247,099

(692) 7,810 7,810 8,502 7,830 672 Consolidated 2008

Hedge Object Credit Portfolio Indexed to foreign currency Fixed interest rate - Reais

Notional

Curve

Marke

1,856,582

1,867,822

11,240

1,610,155 246,427

1,620,723 247,099

10,568 672

Cash flow hedge

Consolidated includes cash flow hedge - Future DI, with notional value of R$18,055,336 and maturities from January 2, 2009 to January 2, 2012. The mark-to-market effect is recorded in stockholders’ equity and corresponds to a debit of R$85,917, net of taxes. The curve value and the fair values of transactions classified as hedges, Bank Certificates of Deposit (CDBs), is R$18,308,306 as of December 31, 2008. The effectiveness obtained for the hedge portfolio as of December 31, 2008 is compliant with BACEN’s requirements and no ineffective portion was identified to be recorded in income for the period. VII) Financial Instruments Pledged as Guarantee

The amounts pledged to guarantee BM&FBovespa derivative transactions are comprised of federal government securities in the amount of R$4,132,707 (2007 - R$2,722,245) Consolidated R$7,953,041 (2007 - R$2,801,041). VIII) Financial Instruments Recorded in Assets and Liabilities Bank

Consolidated

2008

2007

2008

2007

Assets Swap differentials receivable (1) Option premiums Forward contracts and others Total

2,894,817 2,734,351 1,839,519 7,468,687

2,529,921 240,922 649,469 3,420,312

5,050,014 2,275,922 2,199,594 9,525,530

2,526,582 240,922 649,469 3,416,973

Liabilities Swap differentials receivable (1) Option premiums Forward contracts and others Total

3,694,781 4,426,469 327,343 8,448,593

2,214,090 2,124,539 228,926 4,567,555

7,236,926 4,010,480 367,877 11,615,283

2,210,666 2,124,539 228,926 4,564,131

(1) Includes swap options and credit derivatives.

Relatório Anual 2008

105

c) Financial Instruments -Sensitivity Analysis Banco Santander’s risk management is focused on portfolios and risk factors pursuant to BACEN’s regulations and good international practices. As in the management of market risk exposure, financial instruments are segregated into trading and banking portfolios according to the best market practices and the transaction classification and capital management criteria of the Basel II New Standardized Approach of BACEN. The trading portfolio consists of all transactions with financial instruments and products, including derivatives, held for trading, and the banking portfolio consists of core business transactions arising from the different Bank business lines and their possible hedges. Accordingly, based on the nature of the Bank’s activities, the sensitivity analysis was fully applied to the trading portfolio, as this portfolio represents the exposures that may have impacts on the Bank’s income. The table below summarizes the stress values generated by the Bank’s corporate systems, related to the trading portfolio, for each one of the portfolio scenarios as of December 31, 2008 and does not necessarily reflect the current position, in view of the market dynamics and the Bank’s activities. Financial Consolidated (1) 2008 Risk Factor

Coupon - US dollar Coupon - other currencies Fixed interest rate - Reais Shares and indices Inflation Other Total

scenario 1

scenario 2

scenario 3

(1,092) (1,198) (3,354) 3,812 (1,809) (3,609) (7,250)

14,279 (11,981) (33,536) 9,529 (18,086) (36,091) (75,886)

96,598 (59,903) (167,681) 19,058 (90,431) (180,455) (382,814)

(1) Amounts calculated based on the consolidated information of the financial institutions (financial group).

Scenarios 2 and 3 above consider the deterioration situations established in CVM Instruction 475, of December 17, 2008, considered as of low probability. According to the strategy defined by Management, if signs of deterioration are detected, actions are taken to minimize possible negative impacts. Scenario 1: usually reported in our daily reports and corresponds to a shock of 10 base points on the foreign currencies coupon curves, plus a shock of 10% on the currency and stock market spot positions, and a shock above ten base points on the volatility surface of currencies used to price options. Scenario 2: corresponds to a shock of 100 base points on the foreign currency coupon curves, plus a shock of 25% on the currency

and stock market spot positions, and a shock of 100 base points on the volatility surface of currencies used to price options. Scenario 3: corresponds to a shock of 500 base points on the foreign currency coupon curves, plus a shock of 50% on the currency

and stock market spot positions, and a shock of 500 base points on the volatility surface of currencies used to price options. US dollar coupon: all products with price changes tied to changes in the US currency and the US dollar interest rate. Other currencies coupon: all products with price changes tied to changes in any currency other than the US dollar and the US dollar

interest rate. Fixed rate - in Brazilian reais: all products with price changes tied to changes in interest rate in Brazilian reais. Equities and indices: stock market indices, shares and options tied to share indices or the shares themselves. Inflation: all products with price changes tied to changes in inflation coupons and inflation indices. Others: any other product that does not fit in the classifications above.

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Relatório Anual 2008

8. Interbank Accounts Composed of restricted deposits with the Central Bank of Brazil to meet compulsory obligations for demand deposits, savings deposits and time deposits, and payments and receipts pending settlement, represented by checks and other documents sent to clearinghouses (assets and liabilities).

9. Credit Portfolio and Allowance for Losses a) Credit portfolio Bank

Lending operations Loans and discounted receivables Financing Rural, agricultural and industrial financing Real estate financing Securities financing Infrastructure and development financing Leasing operations Advances on foreign exchange contracts (1) Other receivables (2) Total Current Long-term

Consolidated

2008

2007

2008

2007

49,942,593 27,621,039 16,985,164 2,783,152 2,546,525 6,713 852,479 2,112,808 2,985,653 55,893,533 32,462,612 23,430,921

39,377,758 19,206,584 15,294,808 2,842,223 1,996,278 23,145 14,720 10,374 1,773,786 2,204,239 43,366,157 24,268,561 19,097,596

116,147,234 68,860,313 34,727,149 5,603,025 6,950,034 6,713 12,707,059 3,314,908 7,241,172 139,410,373 80,186,506 59,223,867

39,339,900 19,168,726 15,294,808 2,842,223 1,996,278 23,145 14,720 402,206 1,773,786 2,208,745 43,724,637 24,468,279 19,256,358

(1) Classified as a reduction of “Other payables”. (2) Include receivables for guarantees honored, debtors for purchase of assets, notes and credits receivable (basically credit cards and rural product notes - CPR), income receivable from advances on foreign exchange contracts, and receivables from export contracts.

b) Credit portfolio by maturity Bank

Overdue Due to: Up to 3 moths From 3 to 12 months Over 12 months Total

Consolidated

2008

2007

2008

2007

3,143,875

2,024,618

6,160,485

2,026,850

18,370,985 14,091,627 20,287,046 55,893,533

13,122,694 11,145,867 17,072,978 43,366,157

40,614,738 39,571,768 53,063,382 139,410,373

13,186,051 11,282,228 17,229,508 43,724,637

2008

2007

2008

2007

457,071 (455,251) 1,166,187 (1,166,187) 1,242,973 (137,040) 152,184 (407,458) 852,479

11,138 (764) 10,374

7,607,700 (7,401,603) 10,750,809 (10,750,809) 20,316,178 (5,426,823) 4,612,474 129,012 (7,159,287) 29,408 12,707,059

363,378 (349,761) 244,951 (244,951) 754,047 (278,316) 12,666 35,595 (135,403) 402,206

c) Lease portfolio at present value Bank

Lease receivables Unearned income on lease Unrealized residual values Offsetting residual values Leased property and equipment Accumulated depreciation Excess depreciation Losses on unamortized lease Advances for guaranteed residual value Other Assets Total

Consolidated

Relatório Anual 2008

107

d) Credit portfolio by business sector Bank

Private sector Industrial Commercial Financial institutions Services and other Individuals Credit Cards Mortgage Loans Payroll Loans Leasing e Auto Finance Other Rural Public sector Federal State Municipal Total

Consolidated

2008

2007

2008

2007

55,700,692 16,389,987 4,439,123 68,220 11,391,799 20,628,411 3,341,421 2,096,891 2,727,497 5,709,665 6,752,937 2,783,152 192,841 104,574 71,218 17,049 55,893,533

43,188,312 10,843,805 3,500,931 86,409 8,359,944 17,555,000 2,555,207 1,692,174 2,493,864 5,596,661 5,217,094 2,842,223 177,845 104,250 47,763 25,832 43,366,157

139,065,835 32,980,048 14,015,700 422,784 27,626,311 58,417,967 6,988,446 4,467,550 6,829,554 23,055,990 17,076,427 5,603,025 344,538 115,006 215,416 14,116 139,410,373

43,555,357 10,949,547 3,571,602 86,409 8,545,475 17,560,101 2,555,207 1,692,174 2,493,864 5,600,423 5,218,433 2,842,223 169,280 104,250 47,763 17,267 43,724,637

e) Classification of credit portfolio by risk level and respective allowance for loan losses Bank Minimum

Balance

allowance Risk level

AA A B C D E F G H Total Additional Provision (2) Total Provision

2008

2007

required (%)

Current

Past due (1)

Total

Total

2008

Allowance required 2007

0.5% 1% 3% 10% 30% 50% 70% 100%

33,102,843 16,588,652 488,166 774,032 130,867 58,430 43,709 4,415 32,332 51,223,446

591,383 805,337 578,188 291,402 406,304 252,625 1,744,848 4,670,087

33,102,843 16,588,652 1,079,549 1,579,369 709,055 349,832 450,013 257,040 1,777,180 55,893,533

24,628,397 13,507,121 529,219 910,323 1,870,565 265,287 323,286 209,868 1,122,091 43,366,157

82,943 10,795 47,381 70,906 104,950 225,006 179,928 1,777,180 2,499,089 137,395 2,636,484

67,536 5,292 27,310 187,056 79,586 161,643 146,908 1,122,091 1,797,422 1,797,422 Bank

Minimum

Balance

allowance Risk level

AA A B C D E F G H Total Additional Provision (2) Total Provision

2008

2007

required (%)

Current

Past due (1)

Total

Total

2008

Allowance required 2007

0.5% 1% 3% 10% 30% 50% 70% 100%

48,849,728 60,352,538 10,218,086 4,795,549 643,680 496,342 307,364 49,347 284,693 125,997,327

2,012,577 2,953,166 1,541,007 1,101,740 978,647 682,490 4,143,419 13,413,046

48,849,728 60,352,538 12,230,663 7,748,715 2,184,687 1,598,082 1,286,011 731,837 4,428,112 139,410,373

24,954,190 13,543,167 534,067 914,764 1,846,094 266,366 324,258 210,017 1,131,714 43,724,637

301,763 122,307 232,461 218,469 479,425 643,006 512,286 4,428,112 6,937,829 156,403 7,094,232

67,716 5,340 27,443 184,609 79,910 162,129 147,012 1,131,714 1,805,873 1,805,873

(1) Includes current and past-due operations. (2) The additional allowance is recognized based on Management’s risk assessment, the expected realization of the loan portfolio, and the current regulatory requirements.

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Relatório Anual 2008

f) Changes in allowance for loan losses Bank

At the beginning of the period Acquired Companies (Note 2) Allowances recognized Write-offs Other changes At the end of the period Current Long-term Recoveries (1)

Consolidated

2008

2007

2008

2007

1,797,422 2,802,974 (1,964,091) 179 2,636,484 222,717 2,413,767 195,539

1,606,638 2,090,188 (1,899,005) (399) 1,797,422 235,594 1,561,828 382,273

1,805,873 3,974,010 4,370,740 (3,056,570) 179 7,094,232 1,427,401 5,666,831 413,480

1,622,124 2,084,475 (1,900,327) (399) 1,805,873 238,905 1,566,968 494,578

(1) Recoveries are recorded in Income from Lending and Leasing Operations and include a credit assignment without co-obligation, related to operations previously written off to loss, in the amount of R$48,894 - Bank and R$65.126 - Consolidated(2007 - R$100,320 Bank and Consolidated).

10. Foreign Exchange Portfolio Bank

Consolidated

2008

2007

2008

2007

Assets Rights to foreign exchange sold Exchange purchased pending settlement Advances in local currency Income receivable from advances Income receivable from import financing Others Total Current Long-term

15,129,148 16,082,364 (456,511) 67,264 5,890 30,828,155 14,744,632 16,083,523

5,088,677 5,487,310 (73,296) 39,511 3,979 10,546,181 8,401,776 2,144,405

21,984,578 26,060,935 (626,222) 118,362 3,148 5,890 47,546,691 31,365,346 16,181,345

5,088,677 5,487,310 (73,296) 39,511 3,979 10,546,181 8,401,776 2,144,405

Liabilities Exchange sold pending settlement Foreign exchange purchased Advances on foreign exchange contracts - Financial Institutions Others Total Current Long-term

16,943,538 13,822,928 (2,112,808) 1,233 28,654,891 13,066,728 15,588,163

4,810,724 5,907,613 (1,773,786) 33,864 8,978,415 6,828,883 2,149,532

24,580,848 21,671,391 (3,314,908) 12,159 42,949,490 27,263,121 15,686,369

4,810,724 5,907,613 (1,773,786) 33,864 8,978,415 6,828,883 2,149,532

545,228 16,504

463,529 103,269

640,296 19,448

463,529 103,269

Memorandum accounts Open import credits Confirmed export credits

Relatório Anual 2008

109

11. Trading Account Bank 2008

Consolidated

2007

2008

2007

Assets Transactions pending settlement Debtors pending settlement Stock exchanges - guarantee deposits Other Total Current

1,243,150 5,182 103,230 83 1,351,645 1,351,645

178,639 55,474 76,264 83 310,460 310,460

1,396,140 571,640 103,230 83 2,071,093 2,071,093

190,867 306,893 77,663 7,128 582,551 582,551

Liabilities Transactions pending settlement Creditors pending settlement Creditors for loan of shares Clearinghouse transactions Commissions and brokerage fees payable Gold borrowings Non - delivered forwards Total Current Long-term

1,229,250 5,613 40,585 1,179 1,276,627 1,276,502 125

112,288 9,201 97,303 686 219,478 177,881 41,597

1,460,624 566,493 40,585 16,857 2,599 3,826 1,320 2,092,304 2,092,179 125

117,637 128,592 97,303 142,749 2,643 488,924 447,327 41,597

12/31/2007

Recognition

Realization

12/31/2008

701,116 66,726 515,383 340,429 367,049 403,462 62,168 42,430 639,713 3,138,476 441,360 686,372 4,266,208 (635,190) 3,631,018 1,045,318 2,585,700

673,720 54,951 316,255 242,987 228,343 64,773 983,688 21,057 33,851 135,193 640,254 3,395,072 82,396 133,597 3,611,065 (511,319) 3,099,746

(292,191) (27,895) (328,637) (116,455) (396,920) (14,932) (460,051) (1,637,081) (6,060) (9,760) (1,652,901) 384,189 (1,268,712)

1,082,645 93,782 503,001 466,961 228,343 34,902 1,387,150 68,293 76,281 135,193 819,916 4,896,467 517,696 810,209 6,224,372 (762,320) 5,462,052 2,295,074 3,166,978

12. Tax Credits a) Nature and Origin of Recorded Tax Credits Bank

Allowance for loan losses Reserve for civil contingencies Reserve for tax contingencies Reserve for labor contingencies Amortized Goodwill Reserve for maintenance of stockholders’ equity integrity Adjustment to fair value of trading securities and derivatives (1) Accrual for pension plan Adjustment to fair value of available-for-sale securities (1) Deferred income from derivatives (1) Other temporary provisions Total tax credits on temporary differences Tax loss carryforwards Social contribution tax - Executive Act No. 2158/2001 (2) Total tax credits Unrecorded tax credits (3) Subtotal - recorded tax credits Current Long-term

110

Relatório Anual 2008

Bank

Allowance for loan losses Reserve for civil contingencies Reserve for tax contingencies Reserve for labor contingencies Reserve for maintenance of stockholders’ equity integrity Adjustment to fair value of trading securities and derivatives Accrual for pension plan Adjustment to fair value of available-for-sale securities Other temporary provisions Total tax credits on temporary differences Tax loss carryforwards Social contribution tax - Executive Act No. 2158/2001 Total tax credits Unrecorded tax credits (3) Subtotal - recorded tax credits

12/31/2006

Recognition

Realization

12/31/2007

684,131 67,644 422,665 295,513 667,456 136,893 887,141 59,261 273,641 3,494,345 247,438 703,478 4,445,261 (954,310) 3,490,951

275,345 39,373 102,605 342,008 266,569 22,047 440,349 1,488,296 193,922 1,682,218 1,682,218

(258,360) (40,291) (9,887) (297,092) (300,407) (847,020) (16,831) (74,277) (1,844,165) (17,106) (1,861,271) 319,120 (1,542,151)

701,116 66,726 515,383 340,429 367,049 403,462 62,168 42,430 639,713 3,138,476 441,360 686,372 4,266,208 (635,190) 3,631,018 Consolidated

Acquisition/

Allowance for loan losses Reserve for civil contingencies Reserve for tax contingencies Reserve for labor contingencies Amortized Goodwill Reserve for maintenance of stockholders’ equity integrity Adjustment to fair value of trading securities and derivatives (1) Accrual for pension plan Adjustment to fair value of available-for-sale securities (1) Deferred income from derivatives (1) Other temporary provisions Total tax credits on temporary differences Tax loss carryforwards Social contribution tax - Executive Act No. 2158/2001(2) Total tax credits Unrecorded tax credits (3) Subtotal - recorded tax credits Current Long-term

12/31/2007

Disposal (4)

Recognition

Realization

12/31/2008

713,226 70,163 588,831 353,172 367,049 403,919 62,168 42,433 18 665,978 3,266,957 446,678 701,580 4,415,215 (658,814) 3,756,401 1,064,481 2,691,920

2,541,028 315,006 485,791 333,326 351,599 700,000 59,465 123,031 625,036 5,534,282 649,304 95,072 6,278,658 (707,187) 5,571,471

1,137,584 74,758 379,316 317,413 228,343 64,773 1,231,313 21,725 105,328 189,973 801,665 4,552,191 390,755 133,597 5,076,543 (648,386) 4,428,157

(362,532) (50,590) (377,911) (138,316) (18,026) (396,920) (117) (42,950) (120,675) (11) (636,437) (2,144,485) (16,545) (12,668) (2,173,698) 412,761 (1,760,937)

4,029,306 409,337 1,076,027 865,595 561,916 34,902 2,335,115 100,408 150,117 189,980 1,456,242 11,208,945 1,470,192 917,581 13,596,718 (1,601,626) 11,995,092 4,700,703 7,294,389

Relatório Anual 2008

111

Consolidated 12/31/2007

Recognition

Realization

12/31/2008

739,091 71,118 489,444 310,946 667,456 137,798 887,141 59,270 43 294,142 3,656,449 255,179 719,040 4,630,668 (1,039,293) 3,591,375

278,337 39,783 112,095 342,052 267,275 22,047 449,611 1,511,200 202,925 1,714,125 (13,437) 1,700,688

(304,202) (40,738) (12,708) (299,826) (300,407) (1,154) (847,020) (16,837) (25) (77,775) (1,900,692) (11,426) (17,460) (1,929,578) 393,916 (1,535,662)

713,226 70,163 588,831 353,172 367,049 403,919 62,168 42,433 18 665,978 3,266,957 446,678 701,580 4,415,215 (658,814) 3,756,401

Allowance for loan losses Reserve for civil contingencies Reserve for tax contingencies Reserve for labor contingencies Reserve for maintenance of stockholders’ equity integrity Adjustment to fair value of trading securities and derivatives (1) Accrual for pension plan Adjustment to fair value of available-for-sale securities (1) Deferred income from derivatives (1) Other temporary provisions Total tax credits on temporary differences Tax loss carryforwards Social contribution tax - Executive Act No. 2158/2001(2) Total tax credits Unrecorded tax credits (3) Subtotal - recorded tax credits IRPJ - Corporate income tax CSLL - Social contribution tax Pis and Cofins - Revenue taxes (1) Includes Tax Credits IRPJ, CSLL, Pis and Cofins. (2) Includes the amount of R$133,597 related to transfer from Other payables – tax and social security (note 24.c).

(3) Includes the unrecorded tax credit related to the increase in social contribution tax rate for financial institutions from 9% to 15%. The social contribution tax amount related to the tax rate increase is accrued in Other payables – tax and social security (note 20). (4) Purchased companies/Disposal of equity interest (Notes 2 and 16).

b) Expected realization of recorded tax credits Bank

Year

2009 2010 2011 2012 2013 2014 to 2016 2017 to 2018 2019 to 2021 2022 to 2023 After 2023 Total

Temporary

Temporary

Temporary

differences

differences

differences

Tax loss

IRPJ

CSLL

PIS/Cofins

carryforwards

CSLL 18%

Total

Recorded

1,211,215 1,022,349 448,382 123,697 154,865 9,428 23,342 9,428 6,285 18,856 3,027,847

703,516 590,194 246,993 65,433 83,971 328 10,454 328 219 656 1,702,092

83,264 83,264 166,528

293,583 224,113 517,696

140,744 205,027 260,305 204,133 810,209

2,432,322 2,124,947 955,680 393,263 238,836 9,756 33,796 9,756 6,504 19,512 6,224,372

2,295,074 1,981,639 709,484 330,763 134,817 10,275 5,462,052

Temporary

Temporary

Temporary

differences

differences

differences

Tax loss

IRPJ

CSLL

PIS/Cofins

carryforwards

CSLL 18%

Total

Recorded

2,703,619 2,279,086 1,330,635 322,886 284,666 72,951 31,275 9,428 6,285 18,856 7,059,687

1,597,735 1,151,398 763,464 184,077 146,346 13,071 15,143 328 219 656 3,872,437

193,024 91,681 (1,953) (3,741) (2,218) 28 276,821

334,024 269,005 58,483 346,902 439,902 21,876 1,470,192

149,227 214,219 272,967 217,659 9,503 34,801 19,205 917,581

4,977,629 4,005,389 2,423,596 1,067,783 878,199 142,727 65,623 9,756 6,504 19,512 13,596,718

4,700,703 3,773,375 1,772,840 919,251 673,312 118,745 36,866 11,995,092

Consolidated

Year

2009 2010 2011 2012 2013 2014 to 2016 2017 to 2018 2019 to 2021 2022 to 2023 After 2023 Total

Due to differences between accounting, tax and corporate criteria, expected realization of tax credits should not be taken as indicative of future net income.

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Relatório Anual 2008

c) Present value of deferred tax credits The total present value of tax credits is R$5,333,237 (2007 - R$3,705,644) - Bank and R$11,393,420 (2007 - R$3,831,917) Consolidated and the present value of recorded tax credits is R$4,749,607 (2007 - R$3,116,568) - Bank and R$10,187,374 (2007 R$3,221,415) - Consolidated. The present value was calculated taking into account the expected realization of temporary differences, tax loss carryforwards, and social contribution tax at the rate of 18% (Executive Act No. 2.158/2001) and the average funding rate projected for the corresponding periods.

13. Other Receivables - Other Bank

Credit cards Escrow deposits for: Tax claims Labor claims Other Contract guarantees - former controlling stockholders (Note 22.h) Recoverable taxes Receivables Rural product notes Reimbursable payments Receivable from affiliates Salary advances/other Debtors for purchase of assets Receivables from export contracts Other Total Current Long-term

Consolidated

2008

2007

2008

2007

2,128,134

1,535,054

5,017,288

1,535,054

1,408,013 1,126,128 351,421 654,538 275,630 384,007 132,027 427,246 208,049 399,098 54,865 130,597 351,943 8,031,696 3,373,721 4,657,975

1,093,003 1,043,559 266,115 880,238 90,383 231,043 156,820 172,045 191,749 33,921 49,504 48,330 15,570 5,807,334 2,093,621 3,713,713

3,423,713 1,914,743 615,779 654,538 824,148 1,632,109 132,027 628,374 222,767 953,694 101,341 129,717 1,547,291 17,797,529 8,986,484 8,811,045

1,244,299 1,077,531 274,418 880,238 201,330 233,700 156,820 179,041 191,749 34,219 51,353 46,565 18,199 6,124,516 2,107,395 4,017,121

2008

2007

2008

2007

180,192 (148,192) 8,956 40,956 40,956

187,438 (155,438) 32,000 32,000

277,698 (178,178) 13,025 112,545 112,545

192,835 (160,835) 32,000 32,000

14. Other Assets Bank

Assets not in Use (1) (Allowance for Valuation) Materials in inventory Total Current

Consolidated

(1) Refer mainly to repossessed assets, consisting basically of properties and vehicles received as payment in kind.

Relatório Anual 2008

113