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Consumer Credit Vehicle Finance

Consumer Credit Vehicle Finance. Ruy M. Abreu Executive Director Banco Itaú. August 25 th 2003. Vehicle Finance Market. Banco Itaú and the Logic behind the Acquisitions of Fináustria and Fiat. Vehicle Financing Operation. Fiat “Consortium”. Acquisitions’ Synergies.

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Consumer Credit Vehicle Finance

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  1. Consumer CreditVehicle Finance Ruy M. Abreu Executive DirectorBanco Itaú August 25th 2003

  2. Vehicle Finance Market Banco Itaú and the Logic behind the Acquisitions of Fináustria and Fiat Vehicle Financing Operation Fiat “Consortium” Acquisitions’ Synergies

  3. Vehicle Finance Market Vehicles Motorcycles Heavy Vehicles Cars and Light Commercial Vehicles New Used New Used Success Factors New Used Itaú’s Skills Distribution (Capillary Effect) Efficient Processes (Technology) Scale (Itaú’s retail volume) Retail Credit (Itaú’s Customer Base) Dispersed risk Better Spreads Lower losses Itaú’s Business Focus

  4. Annual Sales of New Vehicles – Brazil(Number of vehicles / thousands) Forecast Itaú Source: Anfavea

  5. % of Financed Sales of New Vehicles Source: Banco Fiat

  6. Consumer Credit and Leasing Portfolio (New and Used Vehicles) – R$ Billions CAGR = 12.7% (6%) 19% 44% Source : Banco Itaú forecast based on Bacen and Abel data

  7. New Consumer Credit and Leasing Business(New and Used Vehicles) – R$ Millions Source : Banco Itaú forecast based on Bacen and Abel data

  8. Gross Spread(*) (p.y.)Vehicle Finance Market (*) Includes Dealers’ Commission and Taxes (Pis , Cofins, ISS , among others)Source: Bacen

  9. Delinquency rates over 90 days (%)Vehicle Finance Market Source: Bacen

  10. Vehicle Finance Market Banco Itaú and the Logic behind the Acquisitions of Fináustria and Fiat Vehicle Finance Operation Fiat “Consortium” Acquisitions’ Synergies

  11. Itaú’s Market Share Consumer Credit and Vehicle Leasing Market In % 16.0 9.0 (1) Acquisition of Fináustria CFI (2) Acquisição of Banco Fiat Source : Banco Itaú forecasts based on Bacen , Abel , Itaú, Fiat and Fináustria data

  12. Regions of Complementary Business Activity: Itaú Mato Grosso Bahia Minas Gerais Goiás Espírito Santo Rio de Janeiro Brasília São Paulo Mato Grosso do Sul Paraná Santa Catarina Rio Grande do Sul

  13. Regiões de Atuação Complementares Itaú + Fináustria Maranhão Piauí Ceará Rio Grande do Norte Paraíba Pernambuco Alagoas Mato Grosso Sergipe Bahia Minas Gerais Goiás Espírito Santo Rio de Janeiro Brasília São Paulo Mato Grosso do Sul Paraná Santa Catarina Rio Grande do Sul

  14. Regions of Complementary Business Activity:Itaú + Fináustria + Fiat Pará Roraima Amapá Tocantins Maranhão Piauí Amazonas Ceará Rio Grande do Norte Paraíba Pernambuco Acre Alagoas Sergipe Mato Grosso Bahia Rondônia Minas Gerais Goiás Espírito Santo Rio de Janeiro Brasília São Paulo Mato Grosso do Sul Paraná Santa Catarina Rio Grande do Sul

  15. Distribution of Financing by Vehicle Age 88% Also complementary in different types of market 53% 42% 37% 27% 21% 20% 7% 5% 0km to 3 years 4 to 6 years > 6 years Fiat Itaú Fináustria Source: Banco Itaú, Fiat and Fináustria

  16. Distribution of Financing by Rate 95% 74% 56% 44% 26% 5% 2.0 to 3.0 % > 3.0 % Fiat Itaú Fináustria Source: Banco Itaú, Fiat and Fináustria

  17. 4,000 3,494 3,404 3,000 2,000 829 1,000 448 347 - Overlapping Active Points of SaleItaú x Fináustria Overlapping in only 10% of total points of sale,which corresponds to 16% of total production Number Points of Sale Relative Market Share Banco Fiat: active overlapping points of sale irrelevant Fináustria Itaú Source : Banco Itaú and Fináustria

  18. Vehicle Finance Market Banco Itaú and the Logic behind the Acquisitions of Fináustria and Fiat Vehicle Financing Operation Fiat “Consortium” Acquisitions’ Synergies

  19. Vehicle Finance – Banco Itaú Itaú Vehicle Finance Central Office:Dedicated credit, collection , back office and front office structure. Platforms Platforms Plataforms ..... Operators Operators Dealers Dealers Dealers Dealers

  20. Customer Vehicle Financing Portfolio ITAÚ Fináustria Banco Fiat TOTAL 325 thousand 225 thousand 350 thousand 895 thousand Source : Banco Itaú, Fiat and Fináustria

  21. Proposals Examined (*) ITAÚ Fináustria Banco Fiat TOTAL 16 thousand 17 thousand 13 thousand 46 thousand (*) Monthly Average – 2nd Half 2002 Source : Banco Itaú, Fiat andFináustria

  22. Number of Monthly Financing Operations (*) ITAÚ Fináustria Banco Fiat TOTAL 7,500 5,700 7,400 20,600 (*) Monthly Average – 2nd Half 2002 Source : Banco Itaú, Fiat and Fináustria

  23. Call Center – Number of Calls (*) ITAÚ Fináustria Banco Fiat TOTAL 83 thousand 133 thousand 225 thousand 448 thousand (*) Monthly Average – 2nd Half of 2002 Source : Banco Itaú, Fiat and Fináustria

  24. 20% are immediately answered Credit Systems – Received via Internet 70% of the proposals are sent via internet Credit score There are 5 regionalized models for new and used vehicles Dealer score The system compares the proposal with the credit policy and indicates eventual discrepancies. The credit analyst analyzes the veracity of the information via external sources – risk center , SPC , among others.

  25. Credit Systems – Received via Fax The system calculates the score based on data input Scaned Document

  26. Credit Systems – Control Panel The reply to the credit proposal is sent by the system to the dealer, operator and commercial manager via web or fax. 20% of the proposals receive a reply in real time.

  27. Credit – Response Time Breakdown Reply Time(In Minutes) % Production Automatic Up to 15 From 15 to 30 > 30 20% 30% 35% 15% Source : Banco Itaú

  28. Credit Systems - Payment of the Operation 80% of the guarantees are constituted at the time of payment of the operation via the National Lien System Analysis of the Guarantee – On line consultation of RENAVAM (Brazilian vehicle registration database) which is integral to the process of payment of the operations

  29. Back Office – Digitalization of Documents Back office system for this operation was established based on the factory concept using the technology employed in the processing of bulk volumes for the Itaú Branch Network

  30. Vehicle Finance Market Banco Itaú and the Logic behind the Acquisitions of Fináustria and Fiat Vehicle Financing Operation Fiat “Consortium” Acquisitions’ Synergies

  31. Ranking of Vehicle Finance Companies Vehicle Consortium – May 2003 Ranking by Quantity of Market Finance Company Participants Participants Share VW 1 109,357 12% Fiat + Itaú 2 95,803 11% Fiat 2 89,257 10% GM 3 67,832 8% Disal 4 47,441 5% Unibanco Rodobens 5 31,646 4% CNF 6 23,724 3% Novaterra 7 21,589 2% Servopa 8 21,078 2% Rodobens Administradora e Promoções Ltda 9 16,381 2% União 10 13,888 2% Source : Bacen

  32. Consortium Market Active Quotas Portfolio (Thousands) Source : Banco Itaú forecast based on Bacen data

  33. Consortium Market Quota sales – Monthly Average/Year (Thousands) Source : Banco Itaú forecast based on Bacen data

  34. Share of Consortium MarketSale of New Vehicles (*) Banco Itaú forecast Source : Anef

  35. Vehicle Finance Market Banco Itaú and the Logic behind the Acquisitions of Fináustria and Fiat Vehicle Finance Operation Fiat “Consortium” Acquisitions’Synergies

  36. Itaú FundingItaú = base hundreds per period (*)variation in funding rate (p.m.) half year average for Fiat/Fináustria Source: Banco Itaú

  37. Estimated Cost Reduction for 2004After I.T. and Social Contribution R$ 100 million Fiat Fináustria 8.5% 29% 37% ... ... 18% ... 2% ... 1.3% 6.7% 51% ... ... ... 29% ... 17% (2%) ... ... Cost reductionFináustria Cost reductionFIAT CostreductionTOTAL Operational Commercial Commercial Credit Systems Credit Operational Systems Source : Banco Itaú

  38. Estimated Growth in Annual Total RevenuesItaú = base hundreds (*) Total Revenues: Financial Margin + Banking Service Fees + Insurance Revenues, Pension Plan and Capitalization + Equity Income from Afilliates Source : Banco Itaú

  39. Consumer CreditVehicle Finance Ruy M. Abreu Executive DirectorBanco Itaú August 25th 2003

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