01 - capa junho2011 inglês · banking products and services, by 01/02/2012. opening of the loja...

INDEX

Management Report 1

Financial Statements 43

Balance Sheet ...................................................................................................................................... 43

Statement of Income ............................................................................................................................ 47

Statement of Changes in Shareholders’ Equity................................................................................ 48

Statement of Cash Flows .................................................................................................................... 50

Statement of Added Value .................................................................................................................. 51

Notes to the Financial Satatements 52

Note 1 – The Bank and its operations ................................................................................................ 52

Note 2 – Corporate restructuring ....................................................................................................... 52

Note 3 – Presentation of the Financial Statements .......................................................................... 54

Note 4 – Description of significant accounting policies .................................................................. 57

Note 5 – Information by segment ....................................................................................................... 63

Note 6 – Cash and cash equivalents .................................................................................................. 67

Note 7 – Short-term Interbank Investments ...................................................................................... 67

Note 8 – Securities and derivative financial instruments ................................................................ 68

Note 9 – Interbank accounts ............................................................................................................... 83

Note 10 – Loan Operations ................................................................................................................. 84

Note 11 – Other receivables ................................................................................................................ 90

Note 12 – Foreign exchange portfolio ............................................................................................... 92

Note 13 – Other assets ........................................................................................................................ 93

Note 14 – Investment ........................................................................................................................... 94

Note 15 – Property and equipment and leased assets .................................................................... 98

Note 16 – Intangible assets ................................................................................................................. 98

Note 17 – Deposits and money market borrowings ....................................................................... 100

Note 18 – Borrowing and onlendings .............................................................................................. 103

Note 19 – Resources from Securities Issues .................................................................................. 106

Note 20 – Other liabilities .................................................................................................................. 108

Note 21 – Operations of insurance, pension and capitalization ................................................... 112

Note 22 – Other income/operating expenses .................................................................................. 116

Note 23 – Non-operating income, net .............................................................................................. 118

Note 24 – Shareholders' equity ........................................................................................................ 119

Note 25 – Taxes .................................................................................................................................. 122

Note 26 – Related-party Transactions ............................................................................................. 125

Note 27 – Benefits for employees .................................................................................................... 127

Note 28 – Contingent assets and liabilities and legal obligations – Taxes and social security 136

Note 29 – Risk management and regulatory capital ...................................................................... 139

Note 30 – Statement of comprehensive income ............................................................................. 149

Note 31 – Other Information.............................................................................................................. 149

Independent Auditors’ Report 153

Summary of Audit Commitee Report 155

Members of the Management Bodies 157

Management Report – 1st Half 2011

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Dear Shareholders,

We present the Management Report of Banco do Brasil (BB) for the 1st

half of 2011 (1H11), in accordance with the requirements of the Brazilian Corporate Law, the National Monetary Council (CMN), the Central Bank of Brazil – BCB, the Brazilian Securities and Exchange Commission – CVM and Banco do Brasil's Bylaws.

ECONOMIC ENVIRONMENT

In the international environment, the first half of 2011 was marked by continuity of doubts concerning the pace of growth of developed economies, the severe effects of the earthquake in Japan and increasing inflation on a global scale.

In general, the international outlook remained characterized by a mismatch between the pace of growth of economic activity in developed and emerging countries. In the first group, the imbalance of public accounts and the still unstable trajectory of recovery justified the maintenance of expansionary fiscal and monetary policies in the United States, which are reinforced in Japan, given the recession recorded in that economy early this year. However, in Europe, despite the difficulties in financing the debts of some countries, the European Central Bank took the first step towards the beginning of a cycle of rising interest rates.

The increase of interest rates in the Euro area and in several other countries was a response to the inflationary impacts arising from increased domestic demand, mainly due to the rise in commodity prices in the international market, especially of food.

The supply shock from food products was precisely one of the main factors that reflected negatively on the level of domestic prices, leading to inflation measured by the IPCA for values accumulated in twelve months close to the upper limit of the inflation target (6.5%).

There is also the good performance of the job market, with unemployment rates at minimum levels, high net generation of formal jobs and real income gains. These fundamentals, together with the credit market, continued to be the main domestic demand leverage vectors.

In response, the Central Bank of Brazil commenced a cycle of adjustment of the basic interest rate, raising it by 150 basis points over the half, with the rate reaching a level of 12.25% per annum. At the same time, the government implemented a series of macroprudential


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measures considered complementary to the interest rate adjustment, the most traditional monetary policy instrument.

The main mechanism for transmission of these measures to the economy is via the credit channel. Indeed, the preliminary data from the first half of 2011 confirms the slowdown in the pace of growth of concessions of loans, especially those targeting individuals.

HIGHLIGHTS OF THE PERIOD

With a net income of R$ 6.3 billion and total assets of 904.1 billion, BB ended the first half as the leader in the Banking Industry, with an emphasis on its loan operations, with a market share of 19.6%.

In April, Banco do Brasil concluded the agreement for acquisition of Banco Patagonia’s (from Argentina) shareholding control, with the payment to the sellers and transfer to BB of 366,825,016 common shares, corresponding to 51% of the capital stock and voting capital of that bank. The next step refers to the performance of a Public Offering of Compulsory Acquisition (OPA), the request for which was filed with the Comisión Nacional de Valores da Argentina (CNV) on 4.7.2011.

The "BB 2.0 Retail Transformation Program" continues to gather the main strategic actions designed to consolidate and expand BB’s leadership in the Brazilian retail banking sector. Throughout the half, new actions implemented under the program remained focused on the profitability of the client base, through excellent service, knowledge of clients (CRM), expansion of relationship and business, efficiency in processes and increase in the supply of convenience through adequacy of the customer service channels.

Several actions were adopted to review the model of service delivered to corporate clients with gross annual turnover above R$ 25 million, in order to improve the quality of service delivered, allowing advances in efficiency indicators and reinforcing BB’s competitive positioning in this market. During the half, BB implemented the review of the clients’ segmentation model from the wholesale market superintendencies and branches, besides areas dedicated to the structuring of loans for large clients.

We present below a chronological list of some events relating to BB that were highlights in the half:

� acquisition, on 1/24/2011, of all the shareholding control (16.67% ON) held by Sul América Capitalização S.A. in Brasilcap, for the price of R$ 137 million;


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� signing of a Share’s Sales and Purchase Agreement with Visa International Service Association for the purchase of part of the shares held by that firm in Companhia Brasileira de Soluções e Serviços - CBSS, corresponding to 4.99% of the capital stock of CBSS, valued at R$ 85.5 million on 1/24/2011;

� launch of Elo Flagship and start of trading of Ourocard Elo on 04/04/2011, which is managed by the company Elo Serviços, and conclusion of the partnership of Banco do Brasil with Elo Participações - responsible for the consolidation of business related to electronic payment methods (credit cards, debit, prepaid, cobranded) – with the signing of the corporate documents on 4/29/2011;

� beginning of the structuring of the company Alpha Serviços de Rede de Autoatendimento S.A, a subsidiary of Elo Participações, which will handle the sharing of ATM networks of the partner banks;

� upgrading, in April/2011, of BB’s ratings by the Fitch Ratings agency, as described below:

• Long-term Foreign Currency: BBB, with stable outlook (previous 'BBB-');

• Short-term Foreign Currency: F2 (previous 'F3');

• Long-term Domestic Currency: BBB, with stable outlook (previous 'BBB-');

• Short-term Domestic Currency: F2 (previous 'F3');

• Support Rating Floor: BBB (previous “BBB -“)

• Long-term National Rating: AAA (bra) (previous AA+(bra);

� Conclusion of the acquisition process of Banco Patagonia S.A., in 04/12/2011

� signing, on 4/25/2011, of a Share’s Sales and Purchase Agreement aiming at the acquisition of 100% of EuroBank’s owner’s capital, by the amount of US$ 6 million;

� acquisition, by the amount of R$ 2.8 billion, of the Banco Postal network (an operation of the Brazilian Postal and Telegraph Company – Correios), allowing BB to use its network to offer banking products and services, by 01/02/2012.

� opening of the Loja Conceito in Brasilia, on 5/17/2011, becoming an unprecedented initiative in retail banking market, with a space


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where clients can experience the key attributes that make up the BB’s brand positioning;

� upgrading, in June/2011, of BB's ratings by the Moody's agency, as described below:

• Long-Term Deposit in Foreign Currency: Baa2, with positive outlook (previous “Baa3”);

• Short-Term Deposit in Foreign Currency: Prime-2 (previous “Prime-3”);

• Long-Term Foreign Currency Senior Debt: (P)Baa1, with positive outlook (previous '(P)Baa2').

STRATEGIC PLAN FOR 2011–2015 PERIOD

Aiming to maintain its leadership in the Brazilian banking industry and to reinforce its role of essential partner for the development of Brazil, Banco do Brasil prioritized the streamlining of returns, efficiency, customer care improvement and the expansion of activity in the foreign market as major strategic topics for 2011-2015 period.

The streamlining of returns will be achieved through the increase of profitable business, observing an adequate risk/return ratio. Banco do Brasil will pursue operational and business efficiency through the upgrading of business processes and models, besides the improvement of customer service that will occur through the upgrading of clients relationship.

International performance will be based on three vectors: overseas Brazilian communities, the transnationalization of Brazilian corporations, and expansion of the Brazil's business relations with the world.

Banco do Brasil’s performance as a partner in the sustainable development of the country will take place with an emphasis on activities that generate employment and income, especially: Minha Casa Minha Vida Program, Programa Nacional do Microcrédito Produtivo Orientado, support to small and micro entreprises, Programa Nacional da Agricultura Familiar – Pronaf (family farming), Fundo de Financiamento ao Estudante do Ensino Superior – FIES and encouragement to associative practices.

The mission was adjusted to align the BB’s businesses to the sustainability and the development of the country, and now reads as follows: "to be a competitive and profitable bank, to promote the sustainable development of Brazil and to perform its public role efficiently".


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BB's future vision, updated for the 2011-2015 period, maintains the commitment to performance, to employees, and to socio-environmental responsibility, emphasizing the desire to be closer to the client and to be a reference abroad. Therefore, BB's new future vision is: "to be the first bank of Brazilians, of companies and of the public sector, a reference abroad, the best bank to work for, recognized for its performance, long lasting relationships and socioenvironmental responsibility".

To achieve the strategic planning objectives, Banco do Brasil operates in several fronts of corporate management. Good practices of corporate governance, relationship with the market, internal processes, external ombudsman service, governance of technology and information, people, logistics and eco-efficiency are essential for the success of the planning.

SUSTAINABILITY

Socio-environmental responsibility is part of the Company's bicentennial tradition and is expressed in its corporate policies and strategies. Credit, granted in a responsible manner to a wide variety of productive sectors of the economy - family agriculture, other rural producers, foreign trade, micro and small enterprises - leverages the progress of the Brazilian municipalities where BB operates.

Concerned about responsible credit, Banco do Brasil does not provide credit to clients included in the list of employers that submit their workers to degrading forms of labor or keep them in conditions analogous to slave labor. This decision also applies to anyone involved in child labor and the sexual exploitation of minors.

It is a continuous challenge of Banco do Brasil to get socio-environmental responsibility to be present in all of the company's processes.

In adopting the referential of sustainability as a strategic guideline, BB seeks to assess its organizational performance not only on a basis of economic indicators, but also of indicators of a social and environmental nature, such as the defense and promotion of human rights, generation of jobs and income, and environmental conservation.

In the segment of Private clients, seeking the balance between risk and return, BB developed a stock portfolio composed of shares from companies committed to the sustainability cause. The portfolio is situated between the defensive and moderate profiles. To select the


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shares that will compose the portfolio, BB choose the most well ranked in the Sustentabilidade Empresarial – ISE, Governança Corporativa – IGC and Tag Along – ITAG indexes of BM&FBovespa.

BB'S AGENDA 21

The Sustainability Plan - BB's Agenda 21, is a pioneer initiative in business circles, involving the entire organization in initiatives in favor of sustainable development. It consists of BB's contribution to the efforts established in the Global Agenda 21, conceived during the United Nations Conference on Environment and Development – Rio-92, and that aimed to direct a new standard of development for the 21th century, the foundation of which is the synergy of environmental, social and economic sustainability.

Agenda 21 BB, established since 2005, is periodically reviewed by the Board of Officers, considering stakeholders, public agreements signed, scenarios, national and international socio-environmental references. In 2010, the review featured the participation of executives from across the company, as well as from Fundação Banco do Brasil, Cassi, Previ, BB-DTVM and Fenabb, resulting in 77 actions for the period of 2011-2013, distributed in the Processes and Management, Businesses Focused on Sustainable Development and Private Social Investment Spheres.

The results of the Sustainability Plan are monitored by the Board of Officers and published in the Annual Report, using the highest standard of the Global Reporting Initiative - GRI. In 2010, the review featured the participation of executives from across the company, as well as from Fundação Banco do Brasil, Cassi, Previ, BB-DTVM and Fenabb, resulting in 77 actions for the period of 2011-2013, distributed in the Processes and Management, Businesses Focused on Sustainable Development and Private Social Investment Spheres.

In the "Businesses Focused on Sustainable Development" sphere, special emphasis is placed on the Sustainable Regional Development Strategy - DRS, which is aimed at boosting the development of the regions where BB is present, supporting activities that promote social inclusion and the generation of jobs and income in a sustainable, inclusive and participatory manner. With this strategy, BB materializes its considerable differential, becoming an organization that seeks to catalyze various economic, social and political agents in the adoption of economically viable, environmentally correct and socially fair practices, contributing to invigorate local economies, with respect for cultural diversity.


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Its performance is based on the value chain view to refine the entire productive process, from input supply, through production, processing and storage, until the product reaches the final consumer. Actions include capacity building of beneficiaries, encouragement of associativism and cooperativism, introduction of new technologies, dissemination of the entrepreneurial culture and promotion of access to credit.

In order to further strengthen its commitment to the environment and to society in favor of sustainable development, in 2011 Banco do Brasil launched four fascicles on performance in the chain of recycling and solid waste, focusing on the 4,976 municipalities with up to 50 thousand inhabitants. With this action, BB aims to provide guidance to local governments and contribute to the preparation of the Municipal or Inter-municipal plans for Integrated Management of Solid Waste, in compliance with Law 12305/10, which established the National Policy on Solid Waste, of shared responsibility among governments, entrepreneurs and citizens.

At the end of the half, the DRS Strategy recorded 4.0 thousand business plans under implementation, involving 1.4 million beneficiaries in 4.0 thousand Brazilian municipalities, with a loan portfolio balance of R$ 10.4 billion, of which about R$ 5.8 were invested through the National Program for Strengthening of Family Farming (Pronaf). For further information, see the website www.bb.com.br/sustentabilidade

ECONOMIC-FINANCIAL PERFORMANCE

Banco do Brasil recorded a net income of R$ 6.3 billion in the half, 23.4% higher than the one recorded in the same period of last year, with an annualized return on equity of 25.4%. Net income per share was R$ 2.19 for the period.

Total assets surpassed R$ 904.1 billion, growth of 19.6% in 12 months, with a return on assets of 1.5% in the 1H11. Shareholders' equity reached R$ 54.6 billion, an increase of 38.9% in 12 months, affected by the public offering of shares, in the 2nd half of 2010, and incorporation of results.


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R$ million

Highlights

Income¹ 1H11 1H10 ∆ 1H10 (%) Net income² 6,262 5,076 23.4 Income (without Etraordinary Items) 6,153 4,383 40.4 Gross Financial Intermediation Income 15,160 11,896 27.4 Revenue from Loans 29,739 24,317 22.3 Fee Income 8,495 7,729 9.9 Income from Insurance, Pension Plans and Saving Bonds Operations 1,180 909 29.8 Administrative Expenses³ 13,136 12,441 5.6 Net Income per Share (in R$) 2.19 2.00 9.5 Return on Assets 1.5% 1.4% 0,1 p.p Return on Equity 25.4% 28.7% (3.3 p.p) Efficiency Ratio 42.4 44.5 (2.1 p.p)

R$ billion

Equity Jun/11 Jun/10 ∆ 1H10 (%) Assets 904.1 755.7 19.6 Amplified Loan portfolio4 421.3 350.5 20.2 Deposits and market funding5 589.0 510.6 15.4 Assets under Management 407.7 344.9 18.2

¹ Items based on Consolidated Statements. ² Parent Company Earnings 3 Refers to the sum of Personnel Expenses and Other Administrative Expenses. 4 Includes Private Securities and Guarantees Provided 5 Time and demand deposits, Savings deposits, Interbank deposits and Money Market Borrowings

See further information about the economic-financial performance of BB in the Management Discussion and Analysis at BB's Portal (www.bb.com.br/ri).

STOCK PERFORMANCE BB ended 1H11 with a market value of R$ 80.1 billion. In the theoretical portfolio of Ibovespa for the next four months May/11–Aug/11, BB occupies 6th place, an all-time record at Ibovespa, with a market share of 3.105%.

Banco do Brasil's shares (BBAS3) ended the first half at R$ 28.00, a growth of 20.7% in 12 months, against appreciation of 2.4% of Ibovespa.

BBAS3 was traded in all BM&FBovespa's sessions, in the daily mid amount of R$ 154.7 million in the 1H11, as opposed to R$ 94.9 million in the same period of previous year, and continues to be listed in the theoretical portfolios of the major São Paulo Stock Exchange indexes: Ibovespa, Ibrx50, IGC, ISE and Itag.

The shares of Banco do Brasil were once again listed in the ISE index of BM&FBovespa as the result of management guided by the entrepreneurial Agenda 21. Banco do Brasil strives to maintain the organization's efforts with regard to good corporate governance


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practices and sustainability, based on the balance on economic, social and environmental dimensions.

In addition to the above mentioned indexes, BBAS3 also appeared on the Dow Jones Amplified Sustainability Index, created by the New York Stock Exchange and by SAM - Sustainable Asset Management, a Swiss organization focused on sustainable investments.

In June 2011, the American Depositary Receipt – ADR Level I Program of Banco do Brasil recorded 13.4 million ADRs in circulation.

The exercise of Series C Subscriptions Warrants, issued on 06/17/1996, was in the period of april to june of 2011. Each warrant grants the right to subscribe 3.131799 common shares. The exercise of warrants generated 4,687,773 shares, and after approval by the BB, will be converted into equal number of common shares. This movement resulted in increase in BB’s capital for R$ 44.6 million.

Banco do Brasil, aligned with its profit reinvestment and dividend distribution policy, distributes 40% of the net income earned (payout) in the form of dividends and interest on own capital with quarterly periodicity. The amount of R$ 2,504.9 million was allocated to shareholders in the semester: R$ 1,044.3 million as dividends and R$ 1,460.6 million as interest on own capital. The remaining 60% of the net income were used as legal and by-laws reserves.

BUSINESS PERFORMANCE

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Banco do Brasil ended the 1H11 with a base of 55.2 million customers and 35.6 million checking accounts (33.4 million individuals checking accounts and 2.2 million business checking accounts), a growth of 1.9% in 12 months.

BB 2.0 Retail Transformation Program

Over the half, Banco do Brasil continued with the “BB 2.0 Retail Transformation Program”, the objective of which is attain a new level of strategic positioning and for the sustainability of the institution's business.

In an unprecedented model, four meetings were scheduled with the leaders of BB across the country to share information about the


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program. About 5.5 thousand of managers from branches and superintendences were to the meetings showing high level of interaction and commitment with the program’s improvement goals.

The program establishes the implementation of a set of actions to streamline the return on the client base, with better use of existing business opportunities. The actions are grouped in the following blocks:

� adjustments to the client relationship model, for strengthening of contacts and business;

� customer relationship management - CRM, for identification and seizing of opportunities existing in the client base;

� increase in the offer of convenience and seizing of opportunities for contact with clients, due to the adequacy and integration of the customer service channels;

� review of the sales and customer service dynamics, with an increase in business efficiency and agility in the response to clients;

� adjustments in the sales planning and budget process, aiming at better use of the opportunities of the client base.

Among the main actions carried out under the program over the course of the half, we highlight:

� conclusion of the deployment of the new model of relationship with individual clients at all of BB’s branches.

� conclusion of the deployment and training of the sales force in the new business platform, a tool that rationalizes the core sales processes and builds up knowledge about opportunities with the client, boosting the assertiveness of offers;

� deployment of consumption propensity models for eight banking products prioritized in the retail business operation. The new propensity models boost the assertiveness of direct marketing actions, including setting guidelines for the offer by the sales force;

� review of 15 processes with high demand for customer service, reducing the total time taken for the performance of these processes by up to 60%;

� achievement of the milestone of 152 branches configured with the new customer service environment. The new model adopted in the architecture of BB branches reinforces


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attributes of modernity and convenience for customers, while valuing the spaces reserved for doing business;

� construction of the Strategic Convenience Plan for 2011/2015 that consolidates the proposal of investments in physical channels of BB for the next five years, considering BB’s strategic positioning through the following assumptions: (i) Marketing - earning power, profitability and financial return; (ii) Positioning - visibility, brand value and presence in locations with a heavy flow of people and tourists; (iii) Development Inducer - social and banking inclusion besides citizenship, seeking to serve municipalities and communities with lower rates of development, but with medium and long-term potential;

� training and up-skilling of more than 73.6 thousand employees from the network of branches in business practices and customer service (further information on training can be found in the "People" section of this report);

� review of the segmentation model for companies served in the retail market, with expansion of billing contemplated for up to R$ 25 million and specialization of customer service in three segments: Microenterprise, Small Company and Company;

� expansion of specialized customer service for the public sector market, especially in the Municipal Executive Branch, with the preparation of a relationship model for the larger municipalities;

� adoption of a differentiated relationship model for agribusinessmen that are clients, with personalized service, supply of specific products and services and expert advice.

The search for greater client focus has also been generating adaptations in the organizational framework. BB created the Directorship of Individual Clients in May. This is another area that should contribute to increment the results achieved with the retail operation, running the institutional side of various actions originating within the BB 2.0 program and acting strategically to ensure the client vision in commercial and relationship actions.

With the adjustments made, BB’s corporate architecture geared toward retail performance achieved further specialization in: customer service and relationship with clients; sales force management; process management; and offer of convenience and channel management.


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With these and other actions, the "BB 2.0 Retail Transformation Program" is already presenting some of its first results. There was growth of R$ 510 million in the monthly profitability of individuals retail clients in the semester. The client satisfaction index, released during the same period, and covering 2010, presented positive inflexion of 2.5% in relation to the observed in the last years.

University Niche

University students represent a very special segment, of high value. It is a segment with considerable relationship potential, as it is in the initial stage of the productive cycle, demanding solutions that create support for their personal and professional life projects. The business partnerships formed in this stage tend to be long lasting, contributing to the renewal of BB’s client base. One of the main fronts of BB's relationship with university students is the Fund for Financing Higher Education Students - FIES, which recorded the contracting of 13,500 new operations in 1H11, totaling around R$ 560 million in the period. FIES finances up to 100% of graduation fees, with a payment deadline that is up to three times the period financed and start of payment 18 months after graduation, favoring long-term relationships.

Wholesale Clients

In the wholesale area, where BB serves clients with gross annual turnover above R$ 25 million, the review of segmentation model was concluded, which now features the Large Corporate, Corporate, Upper Middle and Middle segments.

There have been changes in the organizational model of the strategic, tactical and operational units dedicated to wholesale clients. As a result, the headquarters of the Commercial Directorship and its divisions linked to the structuring of operations, strategies with clients and distribution network were transferred from Brasilia to São Paulo, where the wholesale clients are concentrated. The superintendencies and branches were also reviewed in order to focus by client segment.

For the second half of 2011, efforts in the wholesale area will be concentrated on the training and management of talents, expansion of the centralization of middle office services, besides strategies for streamlining of returns and development of innovative products and services. These actions will afford a significant advance in the quality of


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customer service, reinforcing BB's leadership position with the largest companies.

In the retail area, the delivery of service to businesses clients was changed for companies with gross annual turnover up to R$ 25 million, implementing a review of the segmentation model, which now features the Microenterprise, Small Company and Company segments.

BB has also been consolidating its market share with the credit cooperative segment, delivering solutions customized to satisfy the needs of this market. One of the most prominent solutions is the Compe/SPB (Brazilian System of Payment) Integration Service whereby its banking products could be delivered to 400.4 thousand cooperative members, associated with 337 credit cooperatives, in 1H11.

Management of Customer Service and Channels

BB makes available to its customers an access for conducting business by physical networks (branches, service centers, automated teller machines and correspondents) and virtual networks (call center, internet, mobile banking and Digital TV).

BB has the largest number of branches in Brazil in its physical network, with 5,094 thousand units, besides having 12,739 correspondents, 8,492 service points and the largest collection of automated teller machines (ATMs) in Latin America, with 43,920 of its own machines. BB has 87.9% of branches and Bank Service Points - PAB already adapted for physically handicapped people.

In the 1H11, BB opened 86 new branches, 6 of these dedicated specifically to delivery services to Estilo segment (High Income). In the period were opened 66 Electronic Service Stations as well. Furthermore, according to the strategy of expanding its presence in communities, in January 2011 BB opened branches in Morro do Alemão and Cidade de Deus, in Rio de Janeiro, contributing to banking inclusion and the sustainable development of these places.

Moreover, it is the only bank that has a network of specialized branches for the delivery of services to the public sector, present in all the Brazilian capitals and major towns and cities.

BB has two abroad networks: its own, formed by 47 service points in 23 countries, and a supplementary one, formed by 1,087 correspondent banks in 137 countries. BB's abroad network supports the internationalization process of Brazilian companies, the increase of the flow of the international trade and support to Brazilians community.


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In automated teller machines, about 33.9% of all BB banking transactions are performed monthly. In order to provide more comfort and convenience, in the 1H11, 1,522 ATMs were modernized and over 960 were installed in new points. Up to June 30, 2011 the automated channels responded for 92.7% of all BB banking transactions.

Since the beginning of 2011, BB has centralized the tracking of the availability of all the automated teller machines in the ATM Environment Monitoring Centers, aiming to guarantee client satisfaction with this channel.

At the same time, it started the imaging monitoring of ATM rooms in large centers. In addition to cleaner rooms and available equipment, the project targets an inviting environment that favors business transactions.

By means of its virtual network, BB provides additional channels for access to banking services, such as the call center, the internet self-service (both for individuals and corporations), the mobile banking and Digital TV.

BB's internet self-service ended the 1H11 with the mark of over 800.5 million effective transactions, corresponding to 39.3% of the total of transactions and over 11.8 million customers using that channel. The Finance Manager, the self-service channel for business clients, reached 656.5 million operations, being used for more than 1,515 thousand companies.

BB mobile self-service accounted for 3.3 million of transactions carried out by over 1.3 million of customers with a mobile phone enabled to perform banking operations. Moreover, the Central de Atendimento BB (CABB) - a customer service center - carried out 54.6 million of transactions by 12.6 million of customers enabled to use this channel.

The half was also marked by innovations in the customer service provided to clients. Innovations that merit special emphasis include:

� availability of access to the Finance Manager and Public Sector Self-Service via iPhone and iPod Touch. The launch of the new functionality keeps BB in line with the precursor standards of technology and security, making easier the routine of entrepreneurs and public administrators;

� project Orla Rio - in 2010, Banco do Brasil and the company Orla Rio Associados signed an agreement that provides for the rental of 2 booths and 11 electronic service posts on the seafront from Copacabana to Leme, over a period of 11 years.


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In an unprecedented initiative, the institution creatively occupies the space, organizing shows, holding cultural workshops and carrying out promotional actions.

The objective of this project is to reinforce the BB’s presence in one of Brazil's most scenic locations, which receives millions of tourists on an yearly basis and has been chosen to host major international events in the coming years, such as the World Cup and the Olympics;

� espaço Banco do Brasil - On May 17, BB opened the first concept store of the national financial sector in Shopping Iguatemi Brasilia. Conceived as a brand experimentation site, the store allows clients not only access ATMs and receive explanations about financial products, but can also indulge in the comfort of the environment, explore the modern and avant-garde design of the decoration, amuse themselves with games, taste a cup of legitimate Brazilian coffee and get to know the future trends and innovations of the financial market;

� continuity of the Pilot Test of Sharing of the External Networks of ATMs, with the participation of Banco do Brasil S.A, Banco Bradesco S.A and Banco Santander (Brazil) S.A, aiming to evaluate the appeal to the customers of institutions, as well as technological impacts and operational implications relating to the topic. By 5/31/2011 a total of 1.7 million operations (concluded transactions and incidents) had been performed, with 452 thousand by BB clients (26.4%);

� formalization, to operate throughout Brazil, of the partnership formed between BB and the loyalty program operating company Dotz, offering BB's clients more alternatives and higher speed in the accumulation of points, besides greater mix of awards to be redeemed.

Customer service through social networks, through Twitter with the profile @maisbb, and with the Mais Banco do Brasil page on Facebookproved to be effective and has been attracting more and more customers. BB has responded to questions from users with the timing that the channel requires, demonstrating its concern to satisfy the client in all contacts. In the first six months of 2011, perfil @maisbb recorded a growth of 46% in its number of followers, while on Facebook the increase in the number of fans was 82%. The partnerships formed with the correspondents during the year made it possible to achieve an increase of 21.5% in the number of service points in the country. These new partners were responsible for an


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increase of 11.0% in the balance of reception of payroll loan proposals, in comparison with the previous year and for 12.0% of the accounts opened at BB.

Within the strategy of customer service through correspondents, the major action of the half was the acquisition, by Banco do Brasil, of the right to be a partner of Empresa Brasileira de Correios e Telégrafos for the rendering of correspondent services through the Postal Bank.

The victory in the bidding process will allow BB to bring forward the strategy of extending its service points throughout the country and of being in 100% of Brazilian municipalities by 2015. Under the agreement, this target will be achieved in 2012 and, therefore, the revenues originating from this performance.

Today, BB is in 4,387 municipalities, with 53,445 service points. Correios (Brazilian Post Office Company) has 6,195 branches with the Postal Bank and is present in 95% of Brazilian municipalities.

The partnership with the Postal Bank provides the chance to offer other products, such as credit cards and prepaid cards, in addition to microcredit lines.

The commitment to consumer rights and to good customer service is manifested by transparency and objectiveness in relations with clients. BB informs the rates and tariffs practiced in a clear and direct manner. The employees receive specific training to improve customer service, such as "Brazilian Sign Language - Libras" and "Consumer Defense Code".

As an evidence of BB’s priorization of client service, in the 1H11 were hired more than 5,852 new employees, 5,757 of them allocated to work directly in the frontline of our branches, with clients.

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Banco do Brasil, leader in the market of deposits, recorded R$ 589.0 billion in funding in 1H11, growth of 15.4% over the same period of previous year, which reflects the clients' confidence in BB. Time deposits deserve special emphasis with growth of 21.5% in 12 months.

Besides time deposits, demand deposits and saving deposits BB also exhibited growth in the last 12 months, with 9.4% and 3.6%, respectively.

In foreign funding, the highlight was BB’s Euros issue, wich attracted EUR 750 million, one of the largest ever made by a Brazilian company. Additionally, BB also performed a subordinated debt issue in the


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amount of US$ 1.5 billion. The financial costs were competitive in both, factors that demonstrate the market's interest in securities issued by BB. At the end of 1H11, the balance of overseas funding recorded US$ 31.7 billion, variation of US$ 8.1 billion or 34.3% in relation to 1H10.

Seeking to diversify its modus operandi in the market, BB offers its clients the chance to invest in Financial Bills – LF and Agricultural Credit Bills – LCA, the balances of which at the end of 1H11 were R$ 6.8 billion and R$ 4.1 billion, respectively.

ASSET MANAGEMENT

In 1H11, BB DTVM, Brazil's largest asset management, reached R$ 407.7 billion in assets under management, comprising its investment funds and managed portfolios. This volume represented an increase of 18.2% in 12 months, according to the Associação Brasileira das Entidades dos Mercados Financeiros e de Capitais – Anbima.

Please note that these figures still do not include funds managed by Banco Votorantim, that attained R$ 27.3 billion in June 2011. If 50.0% of the balance managed by BV were to be consolidated, a percentage equal to BB's interest in the latter's total equity capital, Banco do Brasil's market share would rise to 23.1%.

Aiming to increment BB’s positioning in the view of our private clients and to qualify our portfolio of products, we developed new funds that include BB Estratégia 6.

In this segment, together with BB-DTVM, we launched Fundo de Investimento Multimercado Global Acqua, a global multi-market investment fund that plans to invest part of its assets in Brazilian and global companies related to the water sector. The fund enables investors to hold a stake in the capital stock of companies from the sector of water exploration, infrastructure and distribution, with the perception that these companies are in a productive chain that requires care and on the other hand is likely to face increasing demand and a possible price hike.

Also along the lines of adding sophistication to the supply of investments for high value clients, BB adopted the new portfolio of Estilo (high income) investment funds in March, becoming more competitive, increasing revenue with bank fees and strengthening the positioning of the Estilo brand in the market.

BB DTVM, a wholly-owned subsidiary of Banco do Brasil, is a signatory of Principles for Responsible Investment - PRI, of the United Nations - UN, not acquiring interest in companies that disrespect principles


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relating to environmental preservation and to human and employment rights.

LOAN PORTFOLIO

BB's loan portfolio in the amplified concept (including private securities and guarantees provided) ended the first half with a balance of R$ 421.3 billion, growth of 20.2% in relation to the same period of 2010 and with a market share of 19.6%.

During the half, transactions with individuals (amplified concept) remained prominent in the BB’s total portfolio, representing 29.1%, even after the adoption of macro-prudential measures by BACEN, which reduced the expansion of loans to individuals in the first quarter of 2011.

The payroll loan is still the most representative category in the individuals loan portfolio, with 39.1% of the total. With the client base qualification strategy and a focus on lines of lower risk, BB's payroll loan portfolio exhibited growth of 18.4% in the last 12 months, which reinforces the BB’s leadership in this segment, whose market share reached 32.6%. The loans granted to civil servants are still the most representative of BB's payroll loan portfolio, accounting for 84.4% of the total loans. The remaining loans were granted to INSS’s (National Institute of Retirement Insurance) retirees and pensioners (9.6%) and employees from the private sector (6.0%).

The balance of vehicle loan operations attained R$ 30.5 billion, an increase of 34.1% in twelve months. Of this total, R$ 15.4 billion are transactions arising from BV.

BB's mortgage loan portfolio kept the growth trend recorded in the previous semesters, ending 1H11 with a balance of R$ 4.2 billion, a growth of 99.5% in relation to 1H10. In the last 12 months, 16,097 contracts were approved for individual clients and 106 contracts were entered into with businesses.

The business loan portfolio in amplified concept ended the half with a balance of R$ 191.2 billion. The business portfolio in amplified concept accounted for 45.4% of the total loan portfolio of BB in 1H11, against 44.9% in the same period of 2010. Together, the working capital and investment lines represent 73.1% of the total business portfolio.

In the delivery of services to micro and small enterprises, Banco do Brasil continued to act as principal partner of the segment. At the end of June/2011, BB had 2 million micro and small business clients. The balance of transactions in favor of SMEs was of R$ 59.9 billion, a 14.7% increase as compared to June/2010. It is worth emphasizing the


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allocation of R$ 42.6 billion for working capital, which represented growth of 11.6% in relation to june of 2010. It is worth highlighting the BB Giro Empresa Flex credit facility, that reached a balance of R$ 12.3 billion, representing 28.8% of the working capital portfolio.

The balance of operations with working capital lines for micro and small businesses reached R$ 16.1 billion at the end of 1H11.

BB financed R$ 2.2 billion in 35 thousand operations with resources from the Constitutional Fund for Financing of the Midwest - FCO and provided services to 463 municipalities from the region. This sum represents an increase of 27.6% in relation to 1H10. We emphasize the fact that 86.6% of this total benefited micro/mini and small borrowers.

The construction of 48 ships and 3 shipyards was financed in the half through the Merchant Marine Fund – FMM, amounting to R$ 3,082 million. Accordingly the balance of financed projects corresponds to R$ 4,320 million, up 410% over 1H10.

By April /2011, Banco do Brasil had recorded a market share of 18.3% and a total disbursement of R$ 4.3 billion in the Global Ranking of BNDES fund transfers. Disbursements made with BNDES card up to April/2011 reached R$ 1.1 billion representing 59.4% of market share. In the Finame category, Banco do Brasil recorded an outlay of R$ 1.9 billion, corresponding to 43.4% of the total of BNDES’ resources released by Banco do Brasil up to April/2011. The result of the BNDES/Finame system of 2Q11 had not yet been released.

The business mortgage loan portfolio ended the half with a balance of R$ 1 billion, an increase of 283% as compared to 1H10. The performance was based largely on the strategy of partnerships with the top developers in the country. Banco do Brasil has developed an innovative business model that fulfills the needs of each company profile.

AGRIBUSINESS

Banco do Brasil continued to act as principal partner of the Brazilian agribusiness. The agribusiness portfolio in amplified concept ended the half with a balance of R$ 81.5 billion in agricultural loan and agroindustrial transactions. This sum represents an increase of 14.7% in relation to 1H10. In the total of agribusiness loan portfolio, R$ 22.3 billion refer to operations contracted with family farmers, R$ 53.3 billion with medium and large producers, R$ 4.9 billion with agricultural cooperatives.


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In the contracting of rural credit loans, special emphasis is placed on the use of risk mitigation mechanisms - bad weather and prices. In June 2011, 42.7% of the agricultural costing operations were covered with production insurance (agricultural insurance or proagro) and 4.3% covered by price insurance (options contracts).

FOREIGN TRADE

In the foreign trade, BB maintained its leadership of the export and import exchange market, with volumes of US$ 35.7 billion and US$ 22.3 billion, respectively, and market shares of 30.3% and 23.0%, respectively. Of the total volume of foreign exchange, 11.2% refers to the companies from the Large Corporate, Corporate and Business segments. BB's activities in the financial exchange market also presented a significant increase, reaching US$ 43.7 billion in purchase and sale transactions, which means growth of 7.9% over 1H10.

In export financing, ACC/ACE operations stand out with disbursements of US$ 8.6 billion, which maintains BB's position as market leader with market share of 33.1%. Of this total, 61.3% refers to the companies from the Large Corporate, Corporate and Business segments. An all-time monthly record was recorded in April in ACC (Advances on Exchange Contracts)/ACE (Advances on Export Contracts), which reached a volume of US$ 1.9 billion. Export Financing Program (Proex) also deserves emphasis in the semester. Disbursements in the Financing category came to US$ 293.5 million together with the BNDES EXIM onlending operations, which totaled US$ 308.1 million. As regards imports, the financed volume increased 41.0% in comparison with 1H10, totaling US$ 3.0 billion.

Exchange and foreign trade online services continue to post records: 67.2% of such export exchange contracts and 45.9% of import contracts were agreed on through the Internet. BB also offers international business training services. In the period, 3.3 thousand people were trained across the whole country.

Also with respect to credit, in every financing in the project financecategory, in addition to the application of the Equator Principles, BB adopts socio-environmental criteria in the evaluation of the study on the limit of credit to companies with current or projected net operating revenue above R$ 50 million and to investment projects with an amount financed by BB that is equal to or higher than R$ 2.5 million.

The table below shows the projects analyzed in light of the Equator Principles in the half:


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Equator Principles¹ R$ million

Industry Level of risk Amount Financed Number of Projects

Public Low 200 1

Energy Medium 215 2

¹ The Equator Principles are a set of socio-environmental responsibility criteria applicable to investment projects that use the standards of performance in social and environmental sustainability of the International Finance Corporation(IFC) and of the World Bank as a reference.

Quality of the Loan Portfolio

In Banco do Brasil, the rate of 90-day-past due items reached 2.0% at the end of June 2011, as compared to 2.7% recorded in 1H10, below the market average for the period. The transactions rated at risk levels AA to C accounted for 93.6% of portfolio, against the 92.2% verified in the Brazilian Banking Industry (SFN).

Banco do Brasil intensified its supply of credit in operations with risk mitigation measures, such as payroll loans, mortgage and by strategies to mitigate price and weather conditions in agribusiness loans, thus improving the quality of the loan portfolio.

Another mechanism of major importance for enabling the contracting of investment financing operations was Fundo de Aval às Micro e Pequenas Empresas – Fampe (Guarantee Fund for Microenterprises and Small Companies). Composed by funds from Serviço Nacional de Apoio às Micro e Pequenas Empresas (Brazilian Service of Support to Micro and Small Enterprises) – Sebrae, Fampe supplements by up to 80% the value of guarantees necessary for the performance of operations with micro and small enterprises with annual gross turnover of up to R$ 2.4 million. At the end of June/11, the portfolio guaranteed by Fampe was R$ 3.9 billion, with the guaranteed amount of R$ 2.9 billion.

In January 2011, Banco do Brasil adopted new measures for the qualified expansion of business with lower risk clients. One of these consists of identifying elements in the corporate client base with the lowest potential risk, also using data from external sources. The parameters for calculation of the credit limit for these clients was adjusted to allow access to a volume of operations better suited to the risk that it presents.

Accordingly, expenses with Allowance for Loan Losses (PCLD) decreased in comparison with the same period of prior year, even with growth of 17.4% of the portfolio, which would naturally increase the balance of the allowance. Revenues with credit recovery, arising from


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efficient management of the collection process, ended 1H11 with a balance of R$ 1.8 billion.

In addition, BB continued with the model of identifying behavioral profiles of clients that could default and began to offer rescheduling of the outstanding balance preventively, before the client delays the payment of the installments.

CARDS

BB obtained a turnover of R$ 63.6 billion with cards in 1H11, growth of 28.5% in relation to 1H10. This performance enabled an advance in its market share to 21.1%, in accordance with estimated data for the period by Associação Brasileira de Empresas de Cartão de Crédito – Abecs (Brazilian Association for Credit Card Companies), maintaining BB in the leadership for the turnover in the Brazilian market of debit cards and in Visa flagship cards.

We emphasize the billing performance in business generated in a set of values through the BNDES Card and the Cartão Ourocard Agronegócios, with disbursements in 1H11 of R$ 2.2 billion and of R$ 3.3 billion, respectively.

The total card base, including credit and debit cards, reached 84.6 million plastic cards in June, recording a slight decline of 1.8% over June 2010. This decrease is resulted from the work held by Banco do Brasil to expunge of its customers base those cards which were issued but were not activated.

Consolidating the cutting-edge position in the card market, in 1H11 BB launched Ourocard Bonus Celular, Ourocard Elo, the Ourocard customizable with images to be chosen by the bearer and Ourocard Visa Rio, with promotional images from

the movie Rio. With the launch of innovative products and solutions, BB is getting increasingly closer to its clients, and was appointed the favorite card of Brazilians according to the Cardmonitor/Instituto Medida Certa survey and the best credit card by the CVA Solutions Survey.

INSURANCE, PENSION PLANS, AND SAVING BONDS

Businesses with insurance, private pension fund and saving bonds added R$ 772.6 million to BB’S income in 1H11, including ownership equity and service revenues, which represents an increase of 29.5% over 1H10. This result may be expressed by the insurance ratio, which


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represents the insurance share in Banco do Brasil's recurring net income, reaching 12.5% in 2Q11.

The consolidated net income of insurance companies was of R$ 10.2 billion in 1H11, growth of 43.2% over the same period of previous year. These results reflect the success of the corporate restructuring, started in 2008.

Since June, BB and Mapfre Group started to operate together, forming the second major Brazilian group in insurance prize revenues.

Originated from this new corporate model, the BB Mapfre SH1, responsible for life, housing and rural insurance segments, ended the first half with R$ 1.3 billion in revenues and a profit of R$ 219.6 million.

The BB Mapfre SH2, responsible for vehicles and equity insurance segments, recorded R$ 1.3 billion in billing and a net income of R$ 42.9 million. The result of both holdings mirrors the new corporate model implemented.

Brasilcap presented a revenue 19.1% higher than the 1H10, totaling R$ 1.6 billion. Its technical provisions exceeded the amount of R$ 4.3 billion, an increase of 14.5% and consolidating its leadership position in the market.

Brasilprev presented R$ 43.0 billion in managed portfolio, a growth of 59.8% in the last six months, ending the 1H11 with 25.4% of market share in the collection item (position of May/2011).

Aligned to consulting for private customers, in the field of equity preservation and protection, actions were carried out to offer residential and auto insurance. Supplementing the insurance consulting services, BB offered life insurance, all with exclusive benefits and differentials for this segment. Improvements were implemented at the central offices of the insurance companies for specialized response to the demands of this segment.

With regard to closed-end private pension plans, BB Previdência ended the half with R$ 1.3 billion in assets, 37 corporate plans by 47 sponsoring companies, 4 plans created by 4 trade and professional entities, and over 55 thousand participants.

CAPITAL MARKET

Banco do Brasil operates in the domestic capital market through BB Banco de Investimento S.A. (BB-BI). In the 1H11 30 issues of fixed-income securities were made, adding up to R$ 9.9 billion , placing BB in the first place in Consolidated Anbima ranking, with 25.9% of market


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share. In the securitization segment, BB made 2 issuances of Credit Rights Investment Fund – FIDC, 3 of Real Estate Receivables Certificates – CRI and 1 of Real Estate Funds, adding up to R$ 918.6 million.

In the stock market, BB-BI coordinated 2 share offerings that amounted to R$ 1.5 billion. In terms of distribution, in the last 12 months BB reached the first position in Anbima ranking of Variable Income, representing 61.9% of market share.

In the custody of assets in the domestic market, BB occupies 3rd place in the Anbima ranking, may/2011 position, with R$ 498 billion under custody, representing 22.6% of market share, and operates as a real estate asset depository institution. It is worth remembering that the Anbima ranking does not include the custody of the assets of the actual custodian institution and its conglomerate. Including the assets belonging to the Treasury of BB and of the Extra market Funds, total assets under custody amounted more R$ 320 billion.

In the international capital market, Banco do Brasil, through its overseas brokers BB Securities Ltd (London) and Banco do Brasil Securities LLC (New York), took part in 9 of the 48 foreign funding operations carried out by companies, banks and the Brazilian government, of which 8 had lead manager condition and 1 co-manager status. Of the total sum of approximately US$ 26.6 billion issued in the semester, BB participated in around US$ 6.4 billion. Additionally, Banco do Brasil took part in 3 operations of foreign issuers, being 1 as lead-manager and 2 as co-manager which summed US$ 2.65 billion and EUR 750 million.

In the mergers and acquisitions market , BB-BI took part in 1 consummated operation, which amounted to R$ 86 million, coming in 12th place in the Anbima ranking accumulated up to march 31th, last available data.

BB offers a share purchase and sale service by means of the network of branches, Internet (home broker) and mobile phone, that recorded a volume of R$ 1.4 billion generated in 1H11.

In the private equity and venture capital industry, BB-BI has been operating since 2004 as an investor and, as of 2007, has been providing economic and financial advisory services to private-equity investment funds. Currently, BB is quotaholder in 13 funds and advisor in 4 funds, totaling a committed capital of R$ 1,262.5 million.

The focus on the offering of Agribusiness Letters of Credit – LCA among Private customers allowed the increase in the market share in


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this market segment. There was an increase of 568% in funding when compared to the fourth quarter of 2010.

Still regarding Private customers, BB made the first issuance of Real Estate Receivables Certificates – CRI with attractive rates in relation to the market, which allowed the loyalty of these customers and increase in businesses.

SERVICES

BB Administradora de Consórcios ended the 1H11 with 284.3 thousand active quotas, growth of 75.7% in 12 months. The vehicles segment, which grew 101.3%, reaching 247.3 thousand quotas in June 2011, merits special emphasis.

In the first half of 2011, there were 94.4 thousand new consortium quotas sold, representing R$ 2,906 million in letters of credit.

In tax collection, BB accounts for 23.9% of the market at federal level. In the first half of the year were collected, among federal and state taxes, R$ 178.4 billion and R$ 8.8 billion in the municipal level.

By means of the bank collection, tax deposit form collection and standing order services, Banco do Brasil provides services to over 569 thousand companies, which brought in R$ 382.8 billion in 1H11, with a total of 489.5 million of bills. These services added R$ 1 billion in revenue, growth of 10.8% in relation to 1H10.

Authorized Direct Debit (DDA) had 1.2 million electronic drawees and 20% market share, and over 96.6 million bank payment forms were electronically processed. That service avoids payment form printing, a measure that contributes to reduce paper use, and thus benefits the environment.

Banco do Brasil processed credits originating from payroll agreements, totaling R$ 85.4 million, involving corporate clients and the public sector in the semester. All told, BB catered to 11.4 million public officials and private company employees with this service, having brought in R$ 147.4 billion.

There were detailed and complex studies of the social security situation of civil servants from two major municipalities, resulting in the presentation of Social Security Diagnoses of the Pension Regimes for Government Workers – RPPS. The Diagnosis also offers guidelines and referrals for refinement, adaptation and the legal framework of RPPS. Other services were provided to the segment, such as: financial, accounting and actuarial advice, analysis for concession of benefit,


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technical support and training for managers and board members of the RPPS.

ENVIRONMENTALLY AND SOCIALLY RESPONSIBLE PRODUCTS AND SERVICES

Banco do Brasil has an extensive portfolio of financial products and services with socio-environmental appeal, which ranges from premium bonds, which set aside part of the management fee for socio-environmental projects, to credit lines that support the modernization of industrial parks by means of the financing of eco-efficient machinery and equipment. BB launched the Cheque Especial PF 10 dias sem juros (Overdraft Account for Individual Clients 10 days without interest) in April 2011. The new product is exempt from the collection of interest from clients and employees that have used the overdraft limit for a period not exceeding 10 days, consecutive or alternate, considering the duration of the portion of charges. For this purpose, the client or employee should adhere to one of the Environment Bonus Service Packages. Besides the benefit of interest rate exemption, part of the revenue earned (up to 5%) with the tariffs of the Environmental Bonus Service Packages will be set aside for Programa Água Brasil (Water Brazil Program). In just over 2 months after its launch, the product obtained the adhesion of 215 thousand clients. Two new investment funds targeting the segment of youths were launched in March 2011: BB Multimercado Balanceado LP Jovem and BB Ações Índice de Sustentabilidade Empresarial Jovem. These products are designed to engage youths in socioenvironmental issues both by the attribute of financial education, creating an investment culture, and by their environmental appeal in setting aside the monthly sum of 20% of the management fee for Programa Água Brasil.

For the beginning of next half, Banco do Brasil is preparing to operate directly in Oriented Productive Micro-credit – MPO, offering micro-credit lines geared toward the formal or informal entrepreneur with annual turnover of up to R$120 thousand.

MPO is the credit extended to meet the financial needs of small businesses, using methodology based on the direct relationship with entrepreneurs, at the place where the economic activity is executed. At least 2,500 employees will be trained to visit small businesses, carry out socioeconomic surveys, provide educational guidance on business planning, for the definition of credit and management needs focused on


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the development of the venture. MPO will initially be available in cities with more than 150 thousand inhabitants.

SOCIAL INVESTMENT

Fundação Banco do Brasil – FBB social investments, reached R$ 57.5 million in programs, actions and social technologies in the jobs generation, income and education area. The amount invested was geared principally toward communities of family farmers, agricultural extractivists, settlers, quilombolas (slave descendants), indigenous peoples and waste pickers that collect recyclable materials across the country, especially in regions with low human development rates and communities with a greater risk of social exclusion.

The actions of BB and FBB currently in progress that merit special emphasis are:

� Programa Aprendiz Banco do Brasil e Estágio de Estudantes (Student Internship and Apprentice Program) – 4,778 low income teenagers trained in 1H11 and 9,496 interns developing curricular activities on BB premises;

� Digital Inclusion Program – over 1.5 thousand points of digital inclusion installed, including the telecenters from Banco do Brasil's Digital Inclusion Programa, recently migrated to FBB, and the Digital Stations, all implemented in previous years. On 4.26.2011, the Board of Officers approved the migration of the Digital Inclusion Program of BB - PIDBB to Fundação Banco do Brasil, as well as the creation of the Program for Social Inclusion and Transformation by means of the Donation of Replaced Computers. In this new model, the allocation of replaced computers is expanded, fulfilling the requirements of the Digital Inclusion Program, now under the management of FBB, and of other regional and national commitments. Thus, Banco do Brasil aims to confer social benefit to the disposal of the equipment, with greater integration of actions and solutions, visibility and leverage to the program.

� Centros Culturais Banco do Brasil (Banco do Brasil Cultural Centers) – 45,854 public school students took part in guided visits in 1H11 for the promotion and disclosure of culture by means of a wide variety of artistic manifestations;

� Sport Sponsorship – social projects and participative promotional actions; collection of foodstuffs in sports' events; and volleyball and tennis schools for the local community from the venues of the events;


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� Social Technology Bank – 239 technologies certified in the first half of 2011;

� AABB-Community Program – broadcasting sport and culture to approximately 51,722 children and adolescents catered to annually;

� Programa Trabalho e Cidadania (Work and Citizenship Program) – 5,897 workers obtaining benefits in projects to support the production chains of cassava cultivation, cashew cultivation and solid waste; 2,055 workers involved in projects to support sustainable regional development in the basin of Rio São Bartolomeu and in the region of Vale do Rio Doce;

� Programa Reaplicação de Tecnologias Sociais (Program for Reapplication of Social Technologies) – 1,224 families of extractivists, farmers and rural micro entrepreneurs obtaining benefits from the deployment of social technologies "Integrated and Sustainable Agroecological Production (Country) and Barraginhas.

For further information visit www.fbb.org.br.

CORPORATE MANAGEMENT

CORPORATE GOVERNANCE

Banco do Brasil's corporate governance structure is comprised by: the Board of Directors, advised by the Audit Committee and Internal Audit, and the Executive Board, made up of the Board of Officers (president and 9 vice-presidents) and by 26 statutory directors. BB also has a permanent Board of Auditors.

Decisions are taken collectively at all levels of BB. With the purpose of involving the executives in the definition of strategies and approval of proposals for BB's different businesses, the Management uses committees, subcommittees and commissions at a strategic level, which ensure the agility and security for the decision making. Among the instruments used to assure good governance, it is also worth highlighting the Corporate Governance Code and the Code of Ethics.

As a good corporate governance practice, BB has introduced tools to evaluate the performance of the Board of Directors, Audit Committee and Executive Board, in order to support the preparation of internal diagnoses and the identification of measures to improve performance.

Banco do Brasil is signatory of the Anbima Code of Regulation and Best Practices for the Private Banking Activity in the Domestic Market,


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ensuring high ethical standards, maximum transparency, qualification of professionals and commitment in the quality of the recommendation of products and services.

Moreover, Banco do Brasil, its Shareholders, the Officers, and the members of the Audit Committee undertake to resolve all and any dispute or controversy related with the New Market Listing Regulation by means of the Arbitration Chamber of the Bovespa Market, in conformity with a commitment clause contained in the By-laws of Banco do Brasil.

MARKET RELATIONS

In business administration, BB has concerned itself with disclosing its activities to the market in as much detail as possible, on a timely basis and without losing quality in the information provided. In addition to the wide range of reports and information made available at the Brazilian Securities Commission (CVM) and on the Investor Relations website, Association of Capital Market Investment Analysts and Professionals (APIMEC) meetings and other events with shareholders, Banco do Brasil has been inviting the market to attend conferences whenever management finds it necessary to clarify specific topics concerning the company.

With this goal, in the 1st half of 2011 BB took part in 57 meetings with domestic investors and analysts, 12 conferences, and promoted 4 conference calls with analysts and investors, besides over 250 responses to telephone inquiries.

BB provides up-to-date information to the market at the Investor Relations site (bb.com.br/ri).

EXTERNAL OMBUDSMAN SERVICE

The complaints received by the BB Ombudsman Service have different motivations, freely portraying past experiences of consumers. After a neutral and impartial analysis, complaints become inputs for potential improvements of processes, products, services and channels of Banco do Brasil.

In the 1H11, the BB Ombudsman Service presented 28 proposals for improvements of various products and services to the Board of Directors, after negotiations of actions and deadlines with the managers in charge.


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The BB Ombudsman Service also seeks integration with the main consumer protection entities and regulatory agencies, for dialogue and refinement of positioning, implementation of shared actions and strengthening of the ombudsman culture besides respect for consumers. Over and above complying with legal determinations, the BB Ombudsman Service represents the commitment of Banco do Brasil to good market practices, in respect of consumer rights and the constant pursuit of refinement and improvement of its relationship with the various audiences served.

INTERNAL PROCEDURES

Risk Management

At Banco do Brasil, risk management is carried out on a joint and segregated basis in relation to its business units. Risk and credit policies are specified by the BB’s Board of Directors. These policies are expressed by global risk exposure limits, which are defined by the Global Risk Committee (CRG), which is a forum composed of its president and vice-presidents. The measures for implementing and monitoring the guidelines issued by the CRG are carried out by the Credit Risk, Marked and Liquidity and Operating Subcommittees.

In the sphere of market risks, Banco do Brasil has improved management with a review of the policy for classifying Trading and Non-Trading Portfolio transactions, defined in Bacen Circular 3354/2007, a review of the parameters for measuring the quantitative requirements of risks of the Internal Market Risk Model, a review of the Market Risk Stress Testing Program and a review of the Corporate Manuals of Mark-to-Market and Modeling of Products without Defined Maturity Date, a defined maturity date, all in line with the stipulations of Bacen Circular 3478/2009, which deals with internal market risk models. With regard to liquidity risk, there was a review of the Liquidity Contingency Plan of the Financial Group and of the assumptions for the Liquidity Stress Scenario. For credit risk management, BB uses proprietary methodologies for the risk rating of clients, which are in line with best market practices and with the concepts introduced by the Basel Accord, considering the cadastral aspects (credit score), the credit history (behavior score) with BB and the market, as well as the use of banking products. BB has also made important investments in information technology (IT) solutions to support its credit risk management process, whereas the new tools are already in the process of installation.


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Alongside credit concession standards, Banco do Brasil maintains strategies for collection and recovery of receivables based on statistical models that help discover, from the identified profile of each client, the most suitable channels and the most efficacious relationship model for resolution of the credit delinquency.

In order to manage operational risk, Banco do Brasil, following the best market practices, monitors operational loss through a systemized internal database, exposure limits and key risk indicators, besides risk matrix to assess relevant outsourced services.

Aiming at the ongoing improvement of the operating risk management, in the first half of 2011 BB reviewed specific limits to operating losses related to "Labor Issues", "Faults in Businesses", "Faults in Processes", "External Fraud and Theft", and "Internal Frauds" with the purpose of providing more expeditious proposals for mitigating measures.

Banco do Brasil also approved an eligibility plan aimed at the adoption of the advanced approach and at the improvement of operational risk management, thus seeking better allocation of its capital in line with its business requirements.

With the objective of preventing, correcting or inhibiting weak points that may generate risks for BB, and of reducing losses and strengthening the culture of risks, BB uses the Technical Risk Recommendation (RTR), issued to the process or product management areas when the need for adoption of loss mitigation actions is identified, besides guaranteeing the fulfillment of the responsibilities defined in the risk management phases. In addition to the RTRs, BB also uses Technical Control Recommendations -RTC, Technical Security Recommendations -RTS, and the recommendations of internal and external audits.

Under Pillar I of Basel II, BB is in the process of preparing to become eligible to the use of advanced approaches to measure capital requirements for the coverage of market, credit and operational risk, having continuous monitoring included in BB’s risk and IT governance, with periodic reporting to members of senior management

In relation to Pillar II, in order to ensure there is sufficient capital to bear up under the strategies and their underlying risks and to comply with the rules related to prudential banking regulations, during the first half of 2011, Banco do Brasil developed a specific capital management policy, reviewed capital monitoring indicators and upgraded the capital planning process.

For purposes of compliance with Pillar III, Banco do Brasil published the required information about risk management, Required Referential


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Equity and Referential Equity, as provided for in Bacen Circular 3477/2009.

The risk management policies of Banco do Brasil are available at the website bb.com.br/ri.

Internal Controls

With the purpose of strengthening the processes related to the generation and disclosure of information to the market, mechanisms were implemented throughout the half to ensure control efficiency, in conformity with CVM Instruction No. 480/09.

For the launch of new products on the market, BB has a system and tools for keeping track of the prospecting, development, implementation and monitoring phases, which have undergone improvements in the 1st

half of 2011, aiming at making this process more secure.

A new method for management to work with abroad branches was implemented during the half, with the use of new instruments for assessing the controls existing at these units.

Banco do Brasil monitors and evaluates the most relevant processes used in all distribution network units, including its support units, such as credit, master file, opening of current accounts and preventing and fighting money laundering.

In the six-month period, 230,253 processes were verified to evaluate compliance with policies.

The purpose of this verification is to evaluate compliance with policies, standards and internal procedures in these processes, with results being reported to the respective managers so that they correct identified non-compliances and continuously improve processes.

Banco do Brasil evaluates the effectiveness of internal controls related to consolidated financial statements for each year. Regarding the consolidated financial statements for the first half, we concluded, with reasonable level of assurance, that Banco do Brasil's internal controls are adequate to its size, business complexity and risks it is exposed to.

Prevention and Avoidance of Money Laundering and Financing of Terrorism–PLD/FT

For Banco do Brasil, preventing and fighting against money laundering and financing of terrorism is a legal obligation and a commitment to the Country. In its internet website, BB discloses the policies adopted to


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prevent and avoid money laundering and financing of terrorism, and provides suggestions to customers on how to avoid being used by criminals in schemes of this nature.

In addition, BB invests to improve the mechanisms that prevent and combat money laundering and terrorism financing, and to train its employees. On-site training and internal certification in BB Prevention and Avoidance of Money Laundering and Financing of Terrorism are certified with Seal by Enccla - National Strategy for the Avoidance of Corruption and Money Laundering. The Enccla seal is granted by the Ministry of Justice to courses which should meet the requisites as defined in the National Program of Education and Training for the Avoidance of Money Laundering. - PNLD.

Additionally, from 2009 on, BB has addressed this issue in its external hiring selections.

Environment Security

In order to prevent the growth of organized crime, which also obtains capital by attacking bank facilities, Banco do Brasil permanently updates its units’ security devices around the country.

These environments' security management includes the evolution of technologies to respond to attacks and also the functions of environment monitoring and control.

Investments in security together with constant training of professionals contribute to the protection of customers, employees and society in general, as it reduces the financial return of criminal actions.

Crisis Management and Business Continuity

To guarantee the perpetuity of the Organization is one of the commitments of Banco do Brasil with the society and the country.

Banco do Brasil monitors, via media and the capillarity of its network in Brazil and the world, situations that may pose a risk to people and businesses.

Managers at several organizational levels are advised to prepare themselves to respond to situations that represent a threat to life, environment, business and the company's image, through an interdisciplinary process denominated crisis management and business continuity.


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TECHNOLOGY

Banco do Brasil sees Information Technology as a strategic factor in operating effectiveness and a key instrument for competitive distinctiveness; for this reason, it continuously invests in improving and modernizing its IT facilities, not only from the technical point of view but also from the governance and management points of view.

The major BB IT actions include new technological integration models that will permit obtaining maximum benefit from different platforms used, the online monitoring of business events that will allow real time management, a new approach to investment, with segregation into tiers and architecture guided to service, that will allow a high level of components reutilization and greater agility in developing new solutions.

In line with the "Retail Transformation Program", Banco do Brasil acts to modernize its technological architecture, with emphasis on the new business platform interface to be used by retail agencies, optimizing service time spent with our customers.

The development of IT solutions to support sales and the relationship with customers by providing information for the active monitoring of business, controllership and product and services management are the key elements for transforming the Retail area.

In order to comply with regulatory requirements, BB strongly invests in the preparation of a solid corporate technological environment, similar to the ongoing solutions to support Basel II processes in market, credit and operating segments.

New technological solutions are also being developed for our branches abroad and for corporate management.

A new and modern Data Processing Center (Datacenter) is being built in Brasília, Distrito Federal, to modernize our technological infrastructure, supporting business continuity with security and high availability. Its conclusion is expected for 2012.

In addition, a new processing architecture with site segregation and specialization, which adjusts infrastructure to the characteristics of each business, offers the means for greater assertiveness and investment effectiveness.

In order to improve these processes governance, BB started the implementation of a new IT Governance model that is adequate to the current and future needs of the Conglomerate.


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The main focus of this new model is to improve management processes of the BB IT area, in order to guarantee its alignment with the Corporate Strategy.

The new IT Governance model is prepared based on best practices and standards to increase IT area effectiveness and also its process control, ensuring technological sustainability and the perpetuity of Banco do Brasil. It will be implemented during 2011 and the first half of 2012.

LOGISTICS

Since the beginning of 2011, to further improve service processes, Banco do Brasil follows up all ATMs operation in the ATMs Environment Monitoring Centers, on a centralized basis, to ensure customers' satisfaction with this channel.

It also started to monitor, using image devices, ATM rooms in large cities. The project intends to provide, in addition to maintaining cleaner rooms and providing more equipment, a friendly environment that will allow customers to make good business.

One of the actions of the "Retail Transformation Program" includes the new setting of the branches. In the first half of 2011, BB adapted 102 premises to the new visual standard. It is a project designed to modernize the physical facilities of the branches, to offer greater comfort to clients, to install customer service environments with greater privacy and modern security devices. In 2011 it is expected that the new layout design will be expanded to as many as 565 branches.

ECOEFFICIENCY

Banco do Brasil emphasizes the Eco-efficiency Program, that aims to produce more with less, using fewer natural resources and less energy in the productive process, reducing waste and production and operation costs.

In May 2011, BB extended its selective collection program to all municipalities of Paraná State, where it operates, by forwarding waste to cooperatives and/or collectors associations.

It is worth mentioning that BB is a founding member of the Companies for Climate Program and of the Brazilian GHG Protocol Program, both targeting reflection on and proposition of actions to combat climatic changes.

In its 2011 emission inventory, based on 2010 information, BB included three new emission sources. In addition to including new sources, its


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inventory was verified by an independent party and received a golden seal, the greatest recognition level, from the GHG Brazilian Protocol Program.

Banco do Brasil has also put in place a number of steps to reduce the use of paper. Corporate systems were adjusted to preferably make double-face prints and campaigns were conducted to raise the awareness of employees. BB carries out initiatives geared toward the rationalization of input consumption and responsible disposal of waste. One of the divisions of the program provides for the reduction of 25% in water consumption in the main buildings of BB. Banco do Brasil has invested in new channels for processing transactions and for doing business with its customers. There is growing trend to employ channels that do not involve printing and, therefore, do not consume paper. Among such channels, we may point out the Internet, Customer Assistance, and Mobile Banking.

It is worth emphasizing the consolidation of the DDA - Authorized Direct Debit initiative, an option that allows the client to register as an electronic drawee, sparing with the need for issuance of paper bank payment slips. BB is a leader in the DDA service, and reached this position because it started providing this service for customers even before it was launched by the Brazilian Bank Federation (Febraban). This initiative, conducted only in the first half of 2011, permitted savings of 10,288,698 liters of water and 514,435 Kw (electricity), in addition to conserving 5,659 eucalyptus trees and avoiding the emission of 1,646 tons of CO2.

PEOPLE

TALENT AND CAREER MANAGEMENT

BB ended the 1st half of 2011 with 112,913 employees, as compared to 106,241 in the same period of 2010. Out of this staff, 5,852 new employees are approved in public contests, thus reinforcing BB’s commitment in improving working conditions and organizational climate to its employees, customer service and the country's development by means of generation of jobs and income.

Banco do Brasil offers to its employees the possibility of managing their professional trajectory and plan their careers. It has a Professional Rise Program and a Talent and Opportunity Bank (TAO) through which it


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identifies the most skilled employees to perform different functions in the company. In the first half of 2011, 16,608 employees were identified in TAO system and appointed to commissioned jobs.

CORPORATE UNIVERSITY

It is worth to emphasize that since 2002, Banco do Brasil maintains the Corporate University of Banco do Brasil (UniBB) to help its employees to discover and develop their talents, improve professionally and contribute to the good development of business. UniBB key role is to develop human and professional excellence by creating value in educational solutions, contributing to the improvement of organization performance and strengthening of Banco do Brasil institutional image. UniBB is a strategic resource to position Banco do Brasil in the financial industry and to strengthen its institutional image. Its actions are in line with the Corporate Strategy and contribute to put in place the BB's vision of future, achieve its strategic objectives and develop its beliefs and values, consolidating its commitment with shareholders, customers, employees and the society.

In the UniBB Portal, personal and professional development actions are disclosed and distance online training is available. This portal may be accessed both through Corporate Intranet and Internet in the address: http://uni.bb.com.br. It has an area that is open to the public and another area accessed only by our personnel.

Banco do Brasil Corporate University (UniBB) promoted, in the first half of 2011, 340,017 class trainings, self-trainings and on-site trainings, totaling 4,106 thousand hours. Average training hours per employee was 36.6 hours in the first half of 2011. Training opportunities were offered through 228 courses, of which 121 were self-instructional, 10 were on-site, 70 were class trainings and 27 were contracted in the market. In addition, external courses were contracted for punctual needs. These training actions use different teaching and supporting methods, such as: corporate TV, the web, press, booklets, etc.

In addition to skill trainings, BB offers improvement opportunities focused on continued education, such as scholarships for graduation, post-graduation (specialization, master degree and PhD) and foreign language courses. In the 1H11 BB had 8,636 scholarship employees, as graduation and post-graduation students, and 318 in foreign languages. General education at the end of the first half of 2011 was as follows: 23.0% of BB employees had completed specialization, master or PhD courses, 48.9% had completed degree courses, 27.6% had completed high school and 0.5% had completed the basic education.


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UniBB also encourages the development of educational spaces in all BB’s units and expands BB learning community by incorporating customers, suppliers, partners, members of subsidiaries, associates and associations related to BB. It offers professional education to this public through partnerships with renowned education providers and ensures that professional development internal needs are met.

LIBRARIES

To support teaching and learning, Banco do Brasil has corporate information units (libraries) that coordinate prospection, management, and dissemination of information and knowledge activities.

The community has access to the libraries' premises to study, research and also to consult our book collection. Providing services to the community is part of the BB’s social responsibility actions.

Information units' total collection comprises over 250 thousand books with emphasis on BB’s business areas. It also has books from other areas to contribute to the integral formation of the human being. In the first half of 2011, 136,814 book were lent to users. Facilities were visited by 3,512 people and the book collection increased due to 8,216 new acquisitions and 3,187 donations.

CERTIFICATIONS

In addition, BB allows its employees to take part in the Program for Internal Certification of Knowledge, as a training and professional qualification strategy. At the end of 1H11, 163.7 thousand certifications have been given out.

BB encourages employees to obtain legal investment certificates (CPA 10 and 20) and money laundering prevention and combat certificates (PLD). At the end of the first half of 2011, 64,230 thousand employees had CPA 10 and 20 certificates and 15,250 had PLD certificates. BB is the financial institution with the greatest number of employees holding legal certificates.

PERFORMANCE MANAGEMENT

Performance of BB employees is formally monitored and evaluated through a tool denominated "Performance Management through Competences" (GDP). It gathers, in a single model, items of the Balanced Scorecard (BSC), Management through Competence,


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Management through Results and 360 Degree Evaluation. Employees' performance is evaluated from five different perspectives: financial, customers, internal processes, organizational behavior and society. Evaluation is carried out by bosses, subordinated employees, peers (colleagues) and employees themselves (self-evaluation). In the first half of 2011, 108,241 employees had their performance followed up through this tool.

In addition, the Board of Directors, Audit Committee and Executive Board's performances are annually evaluated; this initiative is a good corporate governance practice allowing internal diagnosis and identification of opportunities for improvement actions.

REMUNERATION AND BENEFITS

The table below shows the remuneration and the benefits granted to the employees:

R$ million

1H11 1H10 ∆∆∆∆ (%)

Payroll¹ 6,316 5,627 12.2

Supplementary Pension² 139.7 100.6 38.9

Health Care Plans² 429.6 375.4 14.4

Profit-Sharing Plan³ 927.8 767.2 20.9

Training4 26 32 (19.0)

¹ Expenses with salaries, benefits, social charges and personnel provisions. ² Funding of supplementary pension and health care plans, pursuant to Notes 22.c and 27. ³ Amount set aside for Profit and Gain Sharing, as Statement of income for the year. 4 In accordance to Note 22.c

Banco do Brasil’s structure includes the Quality of Life at Work area, which develops and manages several programs aimed at improvement in the quality of life of employees, such as PCMSO (Program for Medical Control of Occupational Health), Sesmt (Specialized Services in Safety Engineering and in Occupational Medicine of BB), Tabas (Program for the Control of Smoking), Pavas (Program for Assistance to Holdup and Kidnapping Victims), Program for Recognition of Employees and the Quality of Life at Work Program.

In order to encourage dialogue, value ethical and human relations and contribute to the improvement of policies, processes and practices of the Personnel Management and Social Environment Responsibility areas, Banco do Brasil has since 2005 an institutional channel denominated "Ouvidoria Interna" (Internal Ombudsman) available to all its employees.


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The action of the Ombudsman aims at encouraging dialogue in the work environment and strengthen participative, democratic and transparent management by mediating conflicts and caring for principles and ethical conduct.

The Ombudsman develops instruments to permit getting close to employees, instruments for participation in seminars, work meetings, visits to BB’s Units, lectures, audio and video conferences in order to publicize its action (work methodology) and strengthen the employee-Board relationship.

On a half-annual basis, the Ombudsman forwards to BB’s Board of Officers, Executive Summaries on the problems indicated by employees in the Personnel Management and Social Environmental areas.

Banco do Brasil maintains a transparent and respectful dialogue process with the representatives of its employees. It maintains a Collective Labor Agreement of national sphere, holds permanent negotiations with the trade unions and organizes theme groups with the bankers' representatives to discuss in detail topics of interest to the workers and to the company.

Moreover, BB launched both a "collective labor agreement" website on the intranet and a specific blog on the topic, aiming at the refinement of the internal communication process in favor of the consolidation and dissemination of the culture of dialogue with the trade union entities, building up interaction and serious debate on the topics involved in the process between the company and its employees.

LEGAL INFORMATION

In compliance with CVM Instruction No. 381, Banco do Brasil reports that KPMG Auditores Independentes has not provided, to BB and subsidiaries, any services that could affect its independence in relation to audit work in the first semester of 2011.

In the engagement of services not related to external audits, Banco do Brasil adopts procedures based on the applicable legislation and on internationally accepted principles that preserve the independence of the auditor. These principles consist of: (i) the auditor should not audit his own work and (ii) the auditor should not act managerially before his client nor promote the interests of his client.

In Banco do Brasil, the contracting of services related to external audit should be preceded by the opinion of the Audit Committee.


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In compliance with article 8 of Bacen Circular 3.068/2001, Banco do Brasil confirms that it has the intention and financial capacity to hold until maturity the securities classified in the "Securities Held to Maturity" category. The financial capacity is backed by a cash flow forecast that does not take into consideration the possibility of selling these securities.

According to the provisions of CVM Resolution 488/05, BB explains that there was an increase of 3.7% in investments in relation to the 1st half of 2010, emphasizing the sum of investment in real estate (renovations and constructions), in the amount of R$ 272 million, in information technology (R$ 213 million) and in equipment (R$ 49 million).

In compliance with Article 243 of Law 6404/76, BB reports that investments in subsidiary and associated companies totaled R$ 19.7 billion as of June 30, 2011.

In accordance with criteria defined by the Brazilian Statute of Micro and Small Businesses (General Law of Micro and Small Businesses), 97.7% of BB's business clients are classified as micro and small businesses. The balance of funds used by SMEs reached R$ 35.4 billion in 1H11, representing a 4.4% increase as compared to the same period of 2010. The balance of working capital operations contracted by very small companies totaled R$ 4.2 billion, and of small companies totaled R$ 20.3 billion. Investment operations aimed at very small companies reached R$ 2.4 billion; for small companies, investments reached R$ 8.1 billion.

• Licitações-e, Banco do Brasil's public bidding portal, was the big winner of the V Prêmio 19 de Março (March 19 Award), granted during the VI Brazilian Congress of Auctioneers occurred in March in the city of Foz do Iguaçu (PR). Of the five awards granted to the category 'Electronic Trading Systems, Licitações-e won three: 'Greatest number of trading sessions conducted and completed in 2010'; '2010 Best Electronic Trading System'; and 'Best Interaction with the Supplier'.

• Ourocard, the Favorite Card of Brazilians according to the research conducted by Cardmonitor / Instituto Medida Certa from December 2010 to January 2011, was also elected as the best credit card

MAIN AWARDS RECEIVED IN THE PERIOD


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(Brand Force), according to the research CVA Solutions carried out in February and March 2011.

• Banco do Brasil was the winner of the X Prêmio e-Finance, (e-Finance Award), granted by Editora Executivos Financeiros, in the category GED-Gerenciador Eletrônico de Documentos (Electronic Document Manager), with the following cases: "Electronic Folder - Stage II" and "Servicing Center Europe - Electronic Management of Documents for the Europe Block".

• Also in the X Prêmio e-Finance, Banco do Brasil won in the category Market Innovation, with the following cases: Brasília Concept Sore and New York Convenience Room.

ACKNOWLEDGMENTS

We thank the dedication and diligence of our employees and collaborators, as well as the trust of shareholders, clients and company.

Further information: Investor Relations Website (www.bb.com.br/ri).

Balance Sheet

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Banco do Brasil S.A.

Financial StatementsIn thousands of Reais

BALANCE SHEET

Banco do Brasil BB-Consolidated

A S S E T S 06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

CURRENT ASSETS 479,955,357 423,727,363 399,702,519 547,740,373 476,495,166 443,267,211

Cash and Cash Equivalents (Note 6) 18,868,357 9,397,247 9,240,098 19,638,597 9,744,688 9,535,060

Short-term Interbank Investments (Note 7.a) 145,592,090 109,929,317 137,902,326 135,947,787 106,615,633 131,212,743

Open market investments 119,532,714 78,628,740 101,867,415 125,021,913 85,060,184 107,838,360 Interbank deposits 26,059,376 31,300,577 36,034,911 10,925,874 21,555,449 23,374,383

Securities and Derivative

Financial Instruments (Note 8) 35,313,213 40,722,362 37,282,900 83,346,340 76,342,346 69,296,900

Own portfolio 16,246,108 17,355,563 10,732,357 56,028,243 46,402,185 36,330,757 Subject to repurchase agreements 18,579,259 22,532,857 26,184,682 23,968,524 26,465,657 29,594,416

Deposits with the Brazilian Central Bank 16 15 16 16 15 16 Pledged in guarantee 107,732 130,860 47,787 2,531,680 2,217,127 2,304,023 Derivative financial instruments 380,098 703,067 318,058 817,877 1,257,362 1,067,688

Interbank Accounts 91,742,924 86,287,448 62,670,068 94,799,716 89,442,660 64,830,856

Payments and receipts pending settlement (Note 9.a) 3,165,477 129,007 3,343,306 3,166,223 129,007 3,343,625 Restricted deposits (Note 9.b) 88,174,502 85,796,265 59,018,578 91,198,924 88,902,532 61,148,827 Brazilian Central Bank deposits 86,258,821 83,928,847 57,243,465 89,283,243 87,035,114 59,373,714

National Treasury - rural credits receivable 69,750 74,520 104,641 69,750 74,520 104,641

National Housing Financing System 1,845,931 1,792,898 1,670,472 1,845,931 1,792,898 1,670,472 Interbank onlendings 7,708 2,718 1,211 38,268 38,828 27,860 Correspondent banks 395,237 359,458 306,973 396,301 372,293 310,544

Interdepartmental Accounts 118,524 258,144 109,576 118,524 258,144 109,576

Internal transfers of funds 118,524 258,144 109,576 118,524 258,144 109,576

Loan Operations (Note 10) 134,450,355 120,368,657 110,748,552 148,878,677 129,099,180 119,710,412

Public sector 4,017,312 3,229,361 2,335,290 4,271,759 880,256 2,554,574 Private sector 137,860,553 124,363,469 115,571,236 152,581,847 135,727,663 124,777,622 (Allowance for loan losses) (7,427,510) (7,224,173) (7,157,974) (7,974,929) (7,508,739) (7,621,784)

Lease Operations (Note 10) 18,618 18,227 51,359 1,569,997 1,799,814 1,771,865

Public sector 18,618 18,227 51,359 19,238 18,787 19,132 Private sector -- -- -- 1,665,255 1,815,796 1,882,592 (Allowance for lease losses) -- -- -- (114,496) (34,769) (129,859)

Other Receivables 52,383,068 55,245,556 40,356,253 61,414,218 61,658,370 45,408,983

Receivables from guarantees honored 79,955 75,303 73,125 80,291 75,303 73,125 Foreign exchange portfolio (Note 12.a) 13,675,614 9,936,710 11,271,514 14,278,376 10,291,956 12,257,825 Income receivable 1,251,809 1,431,206 1,322,145 1,034,464 913,332 648,367

Securities clearing accounts 43,507 78,741 77,607 364,525 382,996 409,440 Insurance, pension plan and capitalization (Note 21.a) -- -- -- 1,556,112 1,086,548 794,598 Sundry (Note 11.b) 37,998,849 44,611,607 28,344,083 44,877,659 49,880,444 32,026,002 (Provision for other losses) (666,666) (888,011) (732,221) (777,209) (972,209) (800,374)

Others Assets (Note 13) 1,468,208 1,500,405 1,341,387 2,026,517 1,534,331 1,390,816

Others assets 289,641 291,787 304,066 463,216 388,071 394,205 (Provision for devaluations) (171,050) (169,506) (163,096) (187,412) (177,233) (171,142)

Prepaid expenses 1,349,617 1,378,124 1,200,417 1,750,713 1,323,493 1,167,753

Balance Sheet

44


A S S E T S 06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

NON-CURRENT ASSETS 336,175,795 313,769,814 292,885,247 356,404,757 334,677,042 312,438,418

LONG-TERM RECEIVABLES 306,061,270 284,935,139 268,468,925 337,390,045 314,906,723 293,883,597

Short-term Interbank Investments (Note 7.a) 10,479,034 4,785,325 4,336,471 11,617,605 963,157 1,329,922

Interbank deposits 10,479,034 4,785,325 4,336,471 11,617,605 963,157 1,329,922

Securities and Derivative

Financial Instruments (Note 8) 62,590,557 56,542,795 52,512,402 71,287,356 67,524,388 62,952,552

Own portfolio 22,985,577 30,617,318 24,257,225 31,405,524 39,315,949 32,788,047 Subject to repurchase agreements 37,310,721 23,145,800 26,614,506 37,317,812 24,860,036 27,945,096

Deposits with the Brazilian Central Bank 19,614 42 43,019 19,614 42 43,019 Pledged in guarantee 2,101,124 2,648,397 1,475,050 2,104,766 2,982,132 2,027,011 Derivative financial instruments 173,521 131,238 122,602 439,640 366,229 149,379

Interbank Accounts 97,208 83,378 25,892 97,208 83,378 25,892

Restricted deposits (Note 9.b) 53,544 46,644 -- 53,544 46,644 --

National Treasury - rural credits receivable 53,544 46,644 -- 53,544 46,644 -- Interbank onlendings 43,664 36,734 25,892 43,664 36,734 25,892

Loan Operations (Note 10) 176,920,162 170,927,298 157,376,724 193,602,560 188,627,319 169,364,706

Public sector 3,570,439 3,921,148 3,661,142 3,414,641 6,380,810 3,590,270 Private sector 181,881,533 175,609,950 162,837,614 199,105,269 191,171,151 175,250,068

(Allowance for loan losses) (8,531,810) (8,603,800) (9,122,032) (8,917,350) (8,924,642) (9,475,632)

Lease Operations (Note 10) 18,896 26,246 -- 1,781,240 2,055,899 2,622,540

Public sector 18,896 26,246 -- 19,238 27,034 34,012 Private sector -- -- -- 1,859,328 2,185,322 2,705,104 (Allowance for lease losses) -- -- -- (97,326) (156,457) (116,576)

Other Receivables 53,670,049 50,524,101 53,321,792 56,290,929 53,303,233 56,478,100

Foreign exchange portfolio (Note 12.a) -- 1,585,804 -- -- 1,585,804 --

Income receivable 30,889 30,228 30,634 30,948 30,305 29,182 Specific credits (Note 11.a) 1,086,093 1,029,638 978,009 1,086,093 1,029,638 978,009 Insurance, pension plan and capitalization (Note 21.a) -- -- -- 17,502 22,022 21,120

Sundry (Note 11.b) 53,097,289 48,469,480 53,136,975 55,708,818 51,235,371 56,282,761 (Provision for other losses) (544,222) (591,049) (823,826) (552,432) (599,907) (832,972)

Others Assets (Note 13) 2,285,364 2,045,996 895,644 2,713,147 2,349,349 1,109,885

Prepaid expenses 2,285,364 2,045,996 895,644 2,713,147 2,349,349 1,109,885

Permanent Assets 30,114,525 28,834,675 24,416,322 19,014,712 19,770,319 18,554,821

Investments 19,737,301 17,641,326 13,085,225 8,001,662 8,127,754 6,865,521

Investments in subsidiary and associated companies (Note 14.a) 19,705,794 17,606,546 13,049,309 6,966,059 7,115,534 5,909,879 In Brazil 17,984,247 16,598,375 12,044,153 6,651,547 7,115,534 5,909,879 Abroad 1,721,547 1,008,171 1,005,156 314,512 -- -- Others Investments (Note 14.b) 76,706 86,135 87,233 1,113,527 1,096,635 1,023,321 (Provision for losses) (45,199) (51,355) (51,317) (77,924) (84,415) (67,679)

Property and Equipment in Use (Note 15) 4,575,102 4,610,729 4,040,260 5,030,465 4,903,927 4,259,386

Land and buildings in use 3,892,878 3,687,187 3,375,105 4,009,699 3,707,685 3,392,468 Other property and equipment in use 6,915,816 6,823,602 6,505,246 7,721,514 7,394,339 6,969,318

(Accumulated depreciation) (6,233,592) (5,900,060) (5,840,091) (6,700,748) (6,198,097) (6,102,400)

Leased Assets (Note 15) -- -- -- 710 818 895

Leases assets -- -- -- 1,412 1,520 1,689 (Accumulated depreciation) -- -- -- (702) (702) (794)

Intangible Assets (Note 16) 5,612,503 6,327,609 6,965,830 5,771,491 6,451,532 7,051,600

Intangible assets 10,292,579 10,099,437 9,757,675 10,583,267 10,259,044 9,871,520 (Accumulated amortization) (4,680,076) (3,771,828) (2,791,845) (4,811,776) (3,807,512) (2,819,920)

Deferred Charges 189,619 255,011 325,007 210,384 286,288 377,419

Organization and expansion costs 2,040,394 2,061,656 1,928,080 2,073,828 2,154,516 2,041,268

(Accumulated amortization) (1,850,775) (1,806,645) (1,603,073) (1,863,444) (1,868,228) (1,663,849)

TOTAL ASSETS 816,131,152 737,497,177 692,587,766 904,145,130 811,172,208 755,705,629

Balance Sheet

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L I A B I L I T I E S / S H A R E H O L D E R S ' E Q U I T Y 06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

CURRENT LIABILITIES 554,643,276 505,211,636 494,284,796 596,153,900 532,710,235 519,470,423

Deposits (Note 17.a) 287,945,680 284,318,438 254,863,139 296,487,535 290,696,257 261,485,318

Demand deposits 59,881,055 63,295,580 58,796,157 61,138,134 63,502,759 59,025,332 Savings deposits 89,216,638 89,287,840 81,540,814 89,216,638 89,287,840 81,540,812 Interbank deposits 13,686,477 19,664,373 11,603,876 9,375,732 17,434,462 8,820,484

Time deposits 125,161,510 111,660,899 102,680,757 136,756,977 120,061,375 111,855,739 Other deposits -- 409,746 241,535 54 409,821 242,951

Money Market Borrowing (Note 17.c) 168,330,031 120,389,184 145,494,688 182,936,612 134,252,629 157,393,100

Own portfolio 53,429,447 43,663,028 50,309,560 63,978,663 52,879,938 59,178,358 Third-party portfolio 114,900,584 76,726,156 95,185,128 118,082,228 80,107,269 98,213,637 Subject to repurchase agreements with free movement -- -- -- 875,721 1,265,422 1,105

Funds from Acceptance and Issue of Securities (Note 19) 6,475,059 1,772,857 1,722,859 6,852,012 2,621,208 2,031,371

Funds from housing bonds, mortgage, of credit and similar 4,137,350 483,439 30,222 4,382,059 838,765 352,338 Foreign securities 2,337,709 1,289,418 1,692,637 2,469,953 1,782,443 1,679,033

Interbank Accounts 3,182,563 18,109 3,029,471 3,188,322 18,109 3,033,762

Receipts and payments pending settlement (Note 9.a) 3,170,850 486 3,018,839 3,176,609 486 3,023,130 Correspondent banks 11,713 17,623 10,632 11,713 17,623 10,632

Interdepartmental Accounts 1,700,014 3,671,766 1,757,030 1,756,825 3,687,786 1,783,214

Thrid-party funds in transit 1,690,451 3,667,418 1,742,171 1,747,260 3,683,438 1,768,333

Internal transfers of funds 9,563 4,348 14,859 9,565 4,348 14,881

Borrowings (Note 18.a) 6,023,194 13,103,563 13,816,700 7,652,238 6,957,419 9,826,474

Domestic loans - other institutions -- -- -- 34,720 48,585 127,781 Foreign borrowing 6,023,194 13,103,563 13,816,700 7,617,518 6,908,834 9,698,693

Domestic Onlending – Official Institutions (Note 18.b) 20,680,861 20,487,941 11,581,288 22,258,099 21,821,275 12,371,797

National Treasury -- -- 2,073,619 30,463 25,419 2,073,619 BNDES 9,303,540 9,129,773 5,568,650 10,143,995 9,896,077 6,034,523 Caixa Econômica Federal 196,840 147,079 29,516 196,840 147,079 29,516 Finame 3,447,867 3,168,319 3,234,424 4,154,187 3,709,930 3,559,060 Other institutions 7,732,614 8,042,770 675,079 7,732,614 8,042,770 675,079

Foreign Onlending (Note 18.b) 11,030 112,178 317,009 10,592 11,238 12,787

Foreign onlendings 11,030 112,178 317,009 10,592 11,238 12,787

Derivative Financial Instruments (Note 8.d) 1,255,977 2,426,655 1,049,096 3,178,506 3,979,755 2,384,698

Derivative financial instruments 1,255,977 2,426,655 1,049,096 3,178,506 3,979,755 2,384,698

Other Liabilities 59,038,867 58,910,945 60,653,516 71,833,159 68,664,559 69,147,902

Collection of taxes and contributions 3,679,105 232,021 2,846,543 3,747,044 296,980 2,895,613 Foreign exchange portfolio (Note 12.a) 12,037,858 11,458,085 15,342,817 12,618,361 11,905,011 16,321,036 Shareholders and statutory distributions 2,169,629 1,826,050 1,760,573 2,325,573 1,991,682 1,884,735

Taxes and social security (Note 20.b) 16,534,866 19,041,535 15,527,514 19,349,896 21,085,197 17,288,548 Securities clearing accounts 224,219 185,325 18,391 644,168 1,675,612 1,167,653 Expenses of technical provisions for insurance, pension plan and capitalization (Note 21.b)

-- -- -- 7,290,255 5,152,564 4,379,174

Financial and development funds (Note 20.a) 1,471,625 1,469,280 1,441,501 1,471,625 1,469,280 1,441,501 Subordinated debts (Note 20.c) 39,435 14,941 -- 39,435 740,479 687,685 Hybrid capital and debt instruments (Note 20.d) 39,788 55,746 -- 39,788 55,746 -- Other liabilities (Note 20.e) 22,842,342 24,627,962 23,716,177 24,307,014 24,292,008 23,081,957

Balance Sheet

46


L I A B I L I T I E S / S H A R E H O L D E R S' E Q U I T Y 06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

NON-CURRENT LIABILITIES 207,211,775 181,789,800 158,916,059 253,372,258 228,021,290 196,903,324

LONG-TERM LIABILITIES 206,937,578 181,507,564 158,706,119 253,082,659 227,721,771 196,676,532

Deposits (Note 17.a) 97,667,111 84,368,330 81,042,233 99,663,608 86,154,411 82,475,508

Interbank deposits 2,434,254 2,358,347 2,500,207 2,177,468 1,563,640 1,615,779

Time deposits 95,232,857 82,009,983 78,542,026 97,486,140 84,590,771 80,859,729

Money Market Borrowing (Note 17.c) 7,779,173 5,869,643 6,864,228 9,938,818 7,922,326 9,209,469

Own portfolio 2,291,380 1,896,616 2,155,092 4,427,127 3,915,215 4,451,894 Third-party portfolio 5,487,793 3,973,027 4,709,136 5,487,793 3,973,027 4,709,136 Subject to repurchase agreements with free movement -- -- -- 23,898 34,084 48,439

Funds from Acceptance and Issue of Securities (Note 19) 6,947,628 5,258,702 5,285,026 15,568,086 10,864,899 10,200,792

Funds from housing bonds, mortgage, of credit and similar -- -- -- 3,408,317 1,852,461 581,603 Funds from debentures -- -- -- 1,603,349 1,623,056 1,666,979 Foreign securities 6,947,628 5,258,702 5,285,026 10,556,420 7,389,382 7,952,210

Borrowings (Note 18.a) 9,671,813 2,285,851 3,830,983 2,046,359 1,640,255 2,189,337

Domestic loans - official institutions -- -- -- 23,400 44,865 9,282

Foreign borrowing 9,671,813 2,285,851 3,830,983 2,022,959 1,595,390 2,180,055

Domestic Onlending – Official Institutions (Note 18.b) 27,091,990 26,765,071 22,367,301 29,094,610 28,942,750 24,140,611

National Treasury 1,568,930 1,512,821 -- 1,572,680 1,524,071 -- BNDES 15,179,459 15,807,991 15,055,980 16,262,097 17,082,350 16,214,993 Caixa Econômica Federal -- -- 112,119 -- -- 112,119 Finame 10,343,601 9,444,259 7,199,202 11,259,833 10,336,329 7,813,499

Foreign Onlending (Note 18.b) 289,559 413,962 437,304 76,247 85,897 90,754

Foreign onlendings 289,559 413,962 437,304 76,247 85,897 90,754

Derivative Financial Instruments (Note 8.d) 579,926 466,762 148,804 1,111,943 1,316,885 853,205

Derivative financial instruments 579,926 466,762 148,804 1,111,943 1,316,885 853,205

Other Liabilities 56,910,378 56,079,243 38,730,240 95,582,988 90,794,348 67,516,856

Foreign exchange portfolio 14,444,884 17,600,976 -- 14,444,884 17,600,976 --

Taxes and social security (Note 20.b) 4,910,695 4,049,364 4,904,665 6,396,862 6,527,922 7,019,531 Securities clearing accounts 994,008 1,191,321 1,410,211 1,011,997 -- 79,511

Expenses of technical provisions for insurance, pension plan and capitalization (Note 21.b)

-- -- -- 31,681,843 27,216,851 22,541,624

Financial and development funds (Note 20.a) 2,106,402 2,099,107 2,287,315 2,106,402 2,099,107 2,287,315 Special operations 10,213 -- 2,258 10,213 -- 2,258 Subordinated debts (Note 20.c) 24,277,924 19,945,681 18,411,878 27,115,409 22,671,637 20,651,944 Hybrid capital and debt instruments (Note 20.d) 2,326,832 3,315,537 3,643,393 2,326,511 3,305,647 3,643,049 Other liabilities (Note 20.e) 7,839,420 7,877,257 8,070,520 10,488,867 11,372,208 11,291,624

DEFERRED INCOME 274,197 282,236 209,940 289,599 299,519 226,792

SHAREHOLDERS' EQUITY (Note 24) 54,276,101 50,495,741 39,386,911 54,618,972 50,440,683 39,331,882

Capital 33,122,569 33,077,996 26,028,096 33,122,569 33,077,996 26,027,932

Local residents 27,677,567 27,427,230 27,427,230 27,677,567 27,427,230 27,427,066

Domiciled abroad 5,445,002 5,650,766 5,650,766 5,445,002 5,650,766 5,650,766 (Unpaid capital) -- -- (7,049,900) -- -- (7,049,900)

Revaluation Reserves 5,960 6,241 6,372 5,960 6,241 6,372

Revenue Reserves 20,705,329 16,944,324 12,972,258 20,650,421 16,889,416 12,917,350

Assets Valuation Adjustments (Note 8.f) 442,244 467,435 411,376 442,244 467,435 411,376

(Treasury Shares) (1) (255) (31,191) (1) (452) (31,191)

Minority Participation -- -- -- 397,779 47 43

TOTAL LIABILITIES 816,131,152 737,497,177 692,587,766 904,145,130 811,172,208 755,705,629

See the accompanying notes to the financial statements.

Statement of Income

47

Banco do Brasil S.AFinancial Statements

In thousands of Reais

STATEMENT OF INCOME


1st half 2011 1st half 2010 1st half 2011 1st half 2010

INCOME FROM FINANCIAL INTERMEDIATION 42,097,733 33,774,129 48,102,799 38,565,365

Loans (Note 10.b) 26,763,832 22,295,406 29,739,278 24,316,980 Leases (Note 10.i) 11,316 21,877 1,211,514 1,591,280 Securities (Note 8.b) 12,076,339 10,185,396 13,085,002 10,839,056 Derivative financial instruments (Note 8.e) (842,079) 125,575 (1,290,518) (261,540) Foreign exchange portfolio (Note 12.b) 913,127 -- 1,011,987 53,242 Compulsory deposits (Note 9.c) 3,175,198 1,145,875 3,338,656 1,191,565 Financial income of insurance, pension plan and capitalization (Note 21.e) -- -- 1,006,880 834,782

EXPENSES FROM FINANCIAL INTERMEDIATION (28,594,896) (22,937,377) (32,943,155) (26,668,888)

Market norrowing (Note 17.d) (22,282,326) (16,029,568) (24,313,766) (17,548,179) Borrowings and onlendings (Note 18.c) (1,500,812) (1,911,907) (1,611,181) (1,900,093) Lease operations (Note 10.i) (8,665) (18,937) (897,318) (1,146,529) Foreign exchange portfolio (Note 12.b) -- (2,179) -- -- Financial expenses of insurance, pension plan and capitalization (Note 21.e) -- -- (642,395) (589,881) Allowance for loan losses (Notes 10.f and 10.g) (4,803,093) (4,974,786) (5,478,495) (5,484,206)

NET INCOME FROM FINANCIAL INTERMEDIATION 13,502,837 10,836,752 15,159,644 11,896,477

OTHER OPERATING INCOME/EXPENSES (4,072,217) (3,152,652) (4,931,795) (3,684,312)

Service fee (Note 22.a) 4,043,126 3,683,605 5,958,063 5,428,053 Bank fee (Note 22.b) 2,318,689 2,128,819 2,537,084 2,300,968 Personnel expenses (Note 22.c) (6,244,437) (5,727,624) (6,802,448) (6,125,473) Other administrative expenses (Note 22.d) (5,686,509) (5,644,767) (6,333,984) (6,315,076) Tax expenses (Note 25.c) (1,612,494) (1,403,541) (2,103,174) (1,807,732) Equity in the earnings/(loss) of associated and subsidiary companies (Note 14) 1,390,934 1,422,095 (159,373) 78,709 Results from insurance, pension plan and capitalization (Note 21.e) -- -- 1,179,539 908,865 Other operating income (Note 22.e) 6,335,980 5,288,189 6,989,976 5,989,411 Other operating expenses (Note 22.f) (4,617,506) (2,899,428) (6,197,478) (4,142,037)

OPERATING INCOME 9,430,620 7,684,100 10,227,849 8,212,165

NON-OPERATING INCOME (Note 23) 108,945 172,609 192,306 346,024

Income 169,218 214,943 293,906 426,300 Expenses (60,273) (42,334) (101,600) (80,276)

INCOME BEFORE TAXATION AND PROFIT SHARING 9,539,565 7,856,709 10,420,155 8,558,189

INCOME AND SOCIAL CONTRIBUTION TAXES (Note 25) (2,478,095) (2,069,947) (3,202,627) (2,714,779)

EMPLOYEE PROFIT SHARING (799,103) (655,578) (927,813) (767,154)

NET INCOME (Note 24.g) 6,262,367 5,131,184 6,289,715 5,076,256

Earnings attributable to the parent company 6,262,367 5,131,184 6,262,367 5,076,276 Minority interest earnings/(losses) -- -- 27,348 (20)

EARNINGS PER SHARE (Note 24.e)Weighted average number of shares - basic 2,860,725,975 2,570,298,221 Basic earnings per share (R$) 2.19 2.00 Weighted average number of shares - diluted 2,874,233,334 2,588,525,717 Diluted earnings per share (R$) 2.18 1.98


Statement of Changes in Shareholders’ Equity

48

Banco do Brasil S.A

Financial Statements


STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

Banco do Brasil Revenue reservesEquity

evaluation Retained

Realized Capital Revaluation adjustments Treasuary earnings

E V E N T S capital reserves reserves Legal Statutory shares (loss) in the Total

reserves reserves Associated and parent company

subsidiary companies

Balances at 12.31.2009 18,566,919 5,188 6,746 2,296,291 15,005,148 212,286 57,878 (31,191) -- 36,119,265

Capital increase - merger of subsidiaries 274 -- -- -- -- -- -- -- -- 274

Capital increase – capitalization of reserves 7,418,087 (5,188) -- -- (7,412,899) -- -- -- -- --

Capital increase - "C" Bonus subscription 42,816 -- -- -- -- -- -- -- -- 42,816

Equity valuation adjustments (Note 8.f) -- -- -- -- -- 86,084 55,128 -- -- 141,212

Net income -- -- -- -- -- -- -- -- 5,131,184 5,131,184

Appropriations - Reserves -- -- -- 256,560 3,271,319 -- -- -- (3,527,879) --

- Dividends (Note 24.f) -- -- -- -- (444,161) -- -- -- (564,785) (1,008,946)

- Interest on own capital (Note 24.f) -- -- -- -- -- -- -- -- (1,043,527) (1,043,527)

Prior-year adjustments - conformity with the Law n.° 11,638/2007 -- -- -- -- -- -- -- -- 2,191 2,191

Expired dividends and interest on own capital -- -- -- -- -- -- -- -- 2,442 2,442

Realization of revaluation reserve in subsidiary/associated companies (Note 24.c) -- -- (374) -- -- -- -- -- 374 --

Balances at 06.30.2010 26,028,096 -- 6,372 2,552,851 10,419,407 298,370 113,006 (31,191) -- 39,386,911

Changes in the period 7,461,177 (5,188) (374) 256,560 (4,585,741) 86,084 55,128 -- -- 3,267,646

Balances at 12.31.2010 33,077,996 -- 6,241 2,884,196 14,060,128 353,686 113,749 (255) -- 50,495,741

Capital increase - "C" Bonus subscription (Note 24.b) 44,573 -- -- -- -- -- -- -- -- 44,573

Equity valuation adjustments (Note 8.f) -- -- -- -- -- 8,033 (33,224) -- -- (25,191)

Disposal of treasury shares -- -- -- -- (254) -- -- 254 -- --

Net income -- -- -- -- -- -- -- -- 6,262,367 6,262,367

Appropriations - Reserves -- -- -- 313,118 3,897,165 -- -- -- (4,210,283) --

- Dividends (Note 24.f) -- -- -- -- (449,024) -- -- -- (595,322) (1,044,346)

- Interest on own capital (Note 24.f) -- -- -- -- -- -- -- -- (1,460,601) (1,460,601)

Expired dividends/interest on own capital -- -- -- -- -- -- -- -- 3,558 3,558

Realization of revaluation reserve in subsidiary/associated companies (Note 24.c) -- -- (281) -- -- -- -- -- 281 --

Balances at 06.30.2011 33,122,569 -- 5,960 3,197,314 17,508,015 361,719 80,525 (1) -- 54,276,101

Changes in the period 44,573 -- (281) 313,118 3,447,887 8,033 (33,224) 254 -- 3,780,360


Banco do Brasil

Statement of Changes in Shareholders’ Equity

49

Banco do Brasil S.A



STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

BB-Consolidated Revenue reservesEquity

evaluation Retained

Realized Capital Revaluation adjustments Treasuary earnings Minority

E V E N T S capital reserves reserves Reserva Reservas shares (loss) in the interest Total

Legal Estatutárias Associated and parent company

subsidiary companies

Balances at 12.31.2009 18,566,919 5,188 6,746 2,296,291 15,005,148 212,286 57,878 (31,191) -- 141 36,119,406

Capital increase - merger of subsidiaries 274 -- -- -- -- -- -- -- -- -- 274

Capital increase – capitalization of reserves 7,418,087 (5,188) -- -- (7,412,899) -- -- -- -- -- --

Capital increase - "C" Bonus subscription 42,816 -- -- -- -- -- -- -- -- -- 42,816

Equity valuation adjustments (Note 8.f) -- -- -- -- -- 86,084 55,128 -- -- -- 141,212

Net income -- -- -- -- -- -- -- -- 5,076,276 (20) 5,076,256

Unrealized results -- -- -- -- (54,908) -- -- -- 54,908 -- --

Appropriations - Reserves -- -- -- 256,560 3,271,319 -- -- -- (3,527,879) -- --

- Dividends (Note 24.f) -- -- -- -- (444,161) -- -- -- (564,785) -- (1,008,946)

- Interest on own capital (Note 24.f) -- -- -- -- -- -- -- -- (1,043,527) -- (1,043,527)

Prior-year adjustments - conformity with the Law n.° 11,638/2007 -- -- -- -- -- -- -- -- 2,191 -- 2,191

Expired dividends/interest on own capital -- -- -- -- -- -- -- -- 2,442 -- 2,442

Realization of revaluation reserve in subsidiary/associated companies (Note 24.c) -- -- (374) -- -- -- -- -- 374 -- --

Reciprocal participation in subsidiaries (164) -- -- -- -- -- -- -- -- -- (164)

Change in minority interest (Note 24.j) -- -- -- -- -- -- -- -- -- (78) (78)

Balances at 06.30.2010 26,027,932 -- 6,372 2,552,851 10,364,499 298,370 113,006 (31,191) -- 43 39,331,882

Changes in the period 7,461,013 (5,188) (374) 256,560 (4,640,649) 86,084 55,128 -- -- (98) 3,212,476

Balances at 12.31.2010 33,077,996 -- 6,241 2,884,196 14,005,220 353,686 113,749 (452) -- 47 50,440,683

Capital increase - "C" bonus subscription (Note 24.b) 44,573 -- -- -- -- -- -- -- -- -- 44,573

Equity valuation adjustments (Note 8.f) -- -- -- -- -- 8,033 (33,224) -- -- -- (25,191)

Disposal of treasury shares -- -- -- -- (254) -- -- 254 -- -- --

Net income -- -- -- -- -- -- -- -- 6,262,367 27,348 6,289,715

Appropriations - Reserves -- -- -- 313,118 3,897,165 -- -- -- (4,210,283) -- --

- Dividends (Note 24.f) -- -- -- -- (449,024) -- -- -- (595,322) -- (1,044,346)

- Interest on own capital (Note 24.f) -- -- -- -- -- -- -- -- (1,460,601) -- (1,460,601)

Expired dividends/interest on own capital -- -- -- -- -- -- -- -- 3,558 -- 3,558

Realization of revaluation reserve in subsidiary/associated companies (Note 24.c) -- -- (281) -- -- -- -- -- 281 -- --

Reciprocal participation in subsidiaries -- -- -- -- -- -- -- 197 -- -- 197

Change in minority interest (Note 24.j) -- -- -- -- -- -- -- -- -- 370,384 370,384

Balances at 06.30.2011 33,122,569 -- 5,960 3,197,314 17,453,107 361,719 80,525 (1) -- 397,779 54,618,972

Changes in the period 44,573 -- (281) 313,118 3,447,887 8,033 (33,224) 451 -- 397,732 4,178,289


Banco do Brasil

Statement of Cash Flows

50




STATEMENT OF CASH FLOWS



CASH FLOWS FROM OPERATING ACTIVITIES

Income before income and social contribution taxes 9,539,565 7,856,709 10,420,155 8,558,189

Adjustment to income (loss) before tax 4,301,454 3,619,071 11,991,347 9,083,902

Provision for credits, lease and other credits (Notes 10.f and 10.g) 4,803,093 4,974,786 5,478,495 5,484,206 Depreciation and amortization (Note 22.d) 1,602,059 1,558,880 1,643,381 1,585,731 Impairment assessment result (Notes 15 and 16) (3,443) 338 (2,975) 1,395 Income from holdings in subsidiaries and affiliates (Note 14.a) (1,390,934) (1,422,095) 159,373 (78,709) (Income)/ loss on the sale of assets (Note 23) (3,500) (32,170) 14,995 (3,083) Income on the sale of investments (Note 23) (91,914) (116,350) (171,664) (213,716) Capital (gain)/loss (Note 23) 17,797 3,568 (1,698) (94,559) Foreign currency translation results (Note 14.a) (96,478) (2,599) (152,525) (4,802) Provision/(reversal) for devaluation of other assets (Note 23) 3,675 1,669 7,799 1,718 Amortization of goodwill (Note 14.c) 143,325 90,413 292,086 90,413 Expenses with civil, labor and tax provisions (Note 28.b) 506,917 97,389 598,784 236,092 Expenses of technical provisions for insurance, pension plan and capitalization (Note 21.e) -- -- 5,330,348 3,612,338 Adjustment of actuarial assets/liabilities (Note 27) (1,826,548) (1,437,224) (1,826,548) (1,437,224) Effect of changes in foreign exchange rates in cash and cash equivalents 589,529 (102,442) 600,968 (100,460) Minority interest results -- -- (27,348) 20 Other adjustments 47,876 4,908 47,876 4,542

Equity variations

Short-term interbank deposits (43,566,842) 22,509,201 (37,724,490) 32,785,008 Trading securities and derivative financial instruments 577,413 498,615 (4,563,637) (7,795,630) Interbank and interdepartmental accounts (4,136,984) (34,488,379) (3,992,014) (36,513,124) Loan operations (24,723,199) (29,825,396) (27,419,516) (32,253,375) Lease operations 6,959 9,416 540,471 205,192 Other receivables net of deferred taxes 1,841,252 (3,464,078) 482,971 (7,620,981) Other receivables (207,346) (296,073) (850,440) (141,206) Income and social contribution taxes paid (1,974,552) (1,509,001) (3,023,800) (2,436,098) Deposits 16,926,023 5,829,408 15,018,006 6,396,999 Money market borrowing 49,850,377 2,838,105 50,700,475 5,781,382 Funds from acceptance and issue of securities 6,391,128 4,436,388 8,933,991 4,869,844 Borrowings and onlendings 599,881 10,742,591 1,421,655 10,568,191 Other liabilities (5,251,622) (36,332) (3,628,664) 10,891,866 Deferred income (8,039) (38,972) (9,920) (38,807) CASH PROVIDED BY (USED IN) OPERATIONS 10,165,468 (11,318,727) 18,296,590 2,341,352

CASH FLOWS FROM INVESTING ACTIVITIES

Securities available for sale (1,701,453) 486,839 (4,765,105) (4,851,464) Securities held to maturity (554,166) 5,232,593 (1,247,479) 3,389,603 Dividends received from subsidiary/associated companies 735,264 1,161,284 -- -- (Acquisition)/sale of property, plant and equipment in use and leased (422,960) (461,315) (528,837) (486,827) (Acquisition)/ sale of investments (509,496) (302,880) 4,041 78,557 Acquisition of intangible assets/ deferred assets (359,531) (2,388,924) (405,694) (2,425,336) Net cash of assets and liabilities from ownership interest in Banco Patagonia (Note 2.a) (764,819) -- (327,356) -- CASH PROVIDED /(USED IN) INVESTING ACTIVITIES (3,577,161) 3,727,597 (7,270,430) (4,295,467)

CASH FLOWS FROM FINANCING ACTIVITIES

Change in minority interest -- -- 397,732 -- Subordinated debts 4,356,737 2,024,309 3,742,728 2,786,389 Hybrid capital and debt instruments (1,004,664) 126,608 (995,095) 127,246 Disposal of treasury shares 254 42,815 254 42,815 Dividends and interest on own capital paid (2,090,355) (2,480,792) (2,090,355) (2,480,792) CASH PROVIDED /(USED IN) FINANCING ACTIVITIES 1,261,972 (287,060) 1,055,264 475,658

Net variation of cash and cash equivalents 7,850,279 (7,878,190) 12,081,424 (1,478,457)

At the beginning of the period 32,576,359 49,702,511 25,147,713 37,874,982 Effect of changes in foreign exchange rates in cash and cash equivalents (589,529) 102,442 (600,968) 100,460 At the end of the period 39,837,109 41,926,763 36,628,169 36,496,985 Increase in cash and cash equivalents 7,850,279 (7,878,190) 12,081,424 (1,478,457)


51




STATEMENT OF ADDED VALUE



Balance % Balance % Balance % Balance %

Income 45,068,504 36,669,005 52,744,452 43,302,963

Income from Financial Intermediation 42,097,733 33,774,129 48,102,799 38,565,365

Income from service and bank fee 6,361,815 5,812,424 8,495,147 7,729,021

Allowance for loan losses (4,803,093) (4,974,786) (5,478,495) (5,484,206)

Other income (expenses) 1,412,049 2,057,238 1,625,001 2,492,783

Income from Financial Intermediation (23,791,803) (17,962,591) (27,464,660) (21,184,682)

Inputs Purchased from Third Parties (3,393,445) (3,321,565) (3,812,110) (3,809,859)

Materials, electric power and other (234,207) (224,827) (246,137) (232,142)

Expenses with outsourced services (569,004) (515,399) (617,940) (589,258)

Others (2,590,234) (2,581,339) (2,948,033) (2,988,459)

Communications (Note 22.d) (594,095) (598,527) (641,490) (642,942)

Data processing (Note 22.d) (421,887) (534,730) (329,928) (565,466)

Transport (Note 22.d) (362,211) (321,058) (381,726) (338,668)

Security services (Note 22.d) (359,642) (325,961) (365,348) (327,947)

Financial system services (Note 22.d) (241,293) (266,887) (319,885) (304,847)

Advertising and publicity (Note 22.d) (144,460) (132,176) (182,874) (188,310)

Others (466,646) (402,000) (726,782) (620,279)

Gross Added Value 17,883,256 15,384,849 21,467,682 18,308,422

Depreciation and amortization (Note 22.d) (1,602,059) (1,558,880) (1,643,381) (1,585,731)

Wealth Created by the Entity 16,281,197 13,825,969 19,824,301 16,722,691

Wealth Received in Transfer 1,390,934 1,422,095 (159,373) 78,709

Equity in the earnings (loss) of subsidiary and associated companies 1,390,934 1,422,095 (159,373) 78,709

Added Value to be Distributed 17,672,131 100.00 15,248,064 100.00 19,664,928 100.00 16,801,400 100.00

Wealth Distributed 17,672,131 100.00 15,248,064 100.00 19,664,928 100.00 16,801,400 100.00

Personnel 6,246,194 35.34 5,642,143 37.00 6,858,883 34.88 6,091,571 36.26

Salaries and fees 3,965,842 3,594,905 4,327,025 3,843,837

Employee profit sharing 799,103 655,578 927,813 767,154

Benefits and training programs (Note 22.c) 856,299 831,224 929,316 890,784

FGTS (Government Severance Indemnity Fund for Employees) 250,288 224,136 281,350 246,478

Other charges 374,662 336,300 393,379 343,318

Taxes, Rates and Contributions 4,887,935 27.66 4,214,563 27.64 6,177,178 31.41 5,323,583 31.69

Federal 4,580,845 3,945,016 5,748,890 4,962,918

State 521 556 1,333 567

Municipal 306,569 268,991 426,955 360,098

Interest on Third Parties' Capital 275,635 1.55 260,174 1.71 339,152 1.72 309,990 1.85

Rent (Note 22.d) 275,635 260,174 339,152 309,990

Interest on Capital (Note 24.e) 6,262,367 35.45 5,131,184 33.65 6,289,715 31.98 5,076,256 30.21

Interest on own capital of the union 864,462 681,423 864,462 681,423

Interest on own capital of other shareholders 596,139 362,104 596,139 362,104

Federal Government dividends 618,101 658,841 618,101 658,841

Dividends from other shareholders 426,245 350,105 426,245 350,105

Retained earnings 3,757,420 3,078,711 3,757,420 3,023,803

Minority interest in retained earnings -- -- 27,348 (20)

See the accompanying notes to financial statements.

Notes to the financial statements

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1 – The Bank and its Operations

Banco do Brasil S.A. is a publicly listed company established under private law, with both public and private shareholders, and subject to the requirements of Brazilian corporate legislation. Its purpose is to carry out all asset, liability and accessory banking operations, to provide banking services, to intermediate and originate financial transactions in various forms, including foreign exchange transactions and supplementary activities, with an emphasis on insurance, private pension, capitalization, securities brokerage, administration of credit/debit cards, consortiums, investment funds and management portfolios, and to practice any activities permitted for the institutions that are part of the National Finance System. It is also the main financial agent of the Brazilian Federal Government and is therefore required to carry out the functions attributed to it by law, specifically those of article 19 of Law 4595/1964.

2 – Company Restructuring

a) Acquisitions

EuroBank

On 04.25.2011, Banco do Brasil S.A., within its internationalization strategy, signed the Stock Purchase Agreement to acquire 100% of the capital of EuroBank, for the price of US$ 6.0 million. EuroBank, a privately held company headquartered in Florida (United States), has a network of three branches located in the cities of Coral Gables, Pompano Beach and Boca Raton.

On 05.31.2011, the stockholders meeting approved the operation. The consummation is contingent upon the approvals of the regulatory agencies in Brazil and United States.

Banco Patagonia S.A.

On 04.7.2011, Banco do Brasil S.A. filed a request, at the Comisión Nacional de Valores da Argentina, the capital market regulatory agency of that country, for authorization to hold, in Argentina, a Mandatory Takeover Bid for the acquisition of shares of Banco Patagonia, to increase its share position from 51% to 75% of the total capital and voting capital, as approved by the central banks of Brazil and of Argentina.

On 04.12.2011, after the approvals by the regulatory agencies of Brazil and Argentina, the Bank acquired the controlling interest of Banco Patagonia, relating to 366,825,016 shares (51% of the capital stock and of the voting capital) for the price of R$ 764,819 thousand (US$ 482,040 thousand), through a cash payment, as follows, resulting in the value of US$ 1.3141 per share:

R$ thousand

Amount paid 764,819

Value of shareholders equity (1) 782,319

Value of the equity corresponding to 51% 398,983

Dividends 47,188

Value of goodwill 318,648

(1) Net of values related of unrealized results, revaluation reserves, assets valuation adjustments, and dividends, with incorporation of the income accounts

The values of the investment and of goodwill were determined with a basis on the adjusted balance sheet of Banco Patagonia of March 31, 2011. The goodwill will be allocated to the cash unit generated after completion of the process of determining the fair value of the net assets of Banco Patagonia.

Visa Vale - Increase in Participation

On 01.24.2011, the deal, in which the subsidiary BB Banco de Investimento S.A. (BB BI) acquired part of the shares owned by the Companhia Brasileira de Soluções e Serviços – CBSS (Visa Vale), was made, increasing its share from 45% to 49,99%.


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Resumo dos valores envolvidos na transação: R$ mil

Visa Vale

Price for the share aquisition 85.529

Equity Value corresponding to the acquired share (4,99%) 9.887

Goodwill value for the acquisition 75.641

b) Corporate Reorganizations in the area of Insurance, Open Pension Plan, Capitalization and Reinsurance

Brasilcap Capitalização S.A. (Brasilcap)

On 01.06.2010, the Bank announced that the subsidiary BB Seguros Participações S.A. (BB Seguros) and Grupo Icatu (Icatu), entered into a Memorandum of Understanding with a view to forming a strategic alliance in the Brazilian market to develop and sell capitalization products.

On 01.24.2011, BB Seguros signed Purchase and Sale Agreement to acquire all of the shareholding (16.67% ON) owned by Sul América Capitalização S.A. (Sulacap) in Brasilcap by the amount of R$ 137,000 thousand. The deal is subject to approval by the regulatory bodies. Upon completion of the transaction, BB Seguros’ ownership interest will increase from 49.99% to 66.66%.

The BB Seguros and Mapfre Partnership

On 05.05.2010, Banco do Brasil announced that BB Seguros and the insurance Group Mapfre entered into a Partnership Agreement (Agreement) to form a strategic alliance in the field of personal insurance, casualties, and vehicles effective for 20 years.

Based on the Agreement, as of 06.30.2011, the Bank through BB Seguro and Mapfre, called Grupo Segurador Banco do Brasil e Mapfre, started to act together. The Bank set up the holding companies BB Mapfre SH1 Participações S.A., whose branch of activity aggregates personal, property and agricultural insurance, and Mapfre BB SH2 Participações S.A., focused on casualty and vehicle insurance, with separate legal identities under private law, with majority interest of the Mapfre Group in the voting capital and shared governance.

The companies present the following configuration:

BB Mapfre SH1 Participações S.A. Mapfre BB SH2 Participações S.A.

% Total Capital

% Common % Preferred % Total Capital % Common % Preferred

BB Seguros Participações S.A. 74.99 49.99 100 50 49 51

Mapfre 25.01 50.01 -- 50 51 49

The subscribed of capital in SH1 by BB Seguros and Mapfre was made with transfer of the investiments in insurance companies Companhia de Seguros Aliança do Brasil, Mapfre Vera Cruz Vida e Previdência S.A. and Vida Seguradora S.A., as well as holdings BB Aliança Participações S.A. e Mapfre Participações Ltda. The subscribed of capital in SH2 by BB Seguros and Mapfre was made with transfer of the investiments in insurance companies Aliança do Brasil Seguros S.A., Brasilveículos Companhia de Seguros, Mapfre Vera Cruz Seguradora S.A. and Mapfre Riscos Especiais Seguradora S.A., as well as holding BB Aliança REV Participações S.A. and Mapfre Assistência S.A.

In order to equalize the intended equity interest in both holdings created due to “Agreement”, BB Seguros subscribed capital on amount of R$ 332,614 thousand. The transaction was based on book values of the companies.

c) Partnership

Partnership with Bradesco S.A. in the card segment

On 03.14.2011, Banco do Brasil and Banco Bradesco celebrated a Memorandum of Understanding for establishment of holding company Elo Participações, that consolidates joint businesses related to electronic payment methods. Banco do Brasil owns 49.99% of the shares and Banco Bradesco, 50.01%.


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On 03.30.2011, was launched officially a Brazilian brand of credit, debit and pre-paid cards, referred as Elo, managed by Elo Serviços, controlled by Elo Participações.

On 05.20.2011, the financial resources was provided by Banco do Brasil to Elo Participações S.A. in amount of R$ 9,200 thousand.

3 – Presentation of the Financial Statements

The Financial Statements have been prepared in accordance with the accounting guidelines derived from Brazilian corporation law, the rules and instructions issued by the National Monetary Council (CMN), Brazilian Central Bank (Bacen), the National Council of Private Insurance (CNSP), the Superintendence of Private Insurance (Susep), the National Health Agency (ANS) and the Brazilian Securities Commission (CVM), when applicable.

The preparation of financial statements in accordance with accounting practices adopted in Brazil, applicable to financial institutions, requires that Management use discernment in the determination and recording of accounting estimates, when applicable. Significant assets and liabilities subject to these estimates and assumptions include the residual value of property, plant and equipment, the allowance for loan losses, deferred tax assets, provision for labor, tax and civil claims, appreciation of derivative financial instruments, assets and liabilities relating to post-employment benefits for employees and other provisions. The final amounts of transactions involving these estimates are only known upon their settlement.

The financial statements includes operations of Banco do Brasil in Brazil and abroad (Banco do Brasil), and consolidated financial statements also includes operations of financial and non-financial subsidiaries in Brazil and abroad, Special Purpose Entities, including the Investment Funds which the Bank controls directly or indirectly, and investments in subsidiaries and associated companies, in accordance with Bacen requirements (BB-Consolidated).

In the preparation of these financial statements, amounts resulting from transactions between consolidated companies, including the ownership interest held by one in another, balances of balance sheet accounts, revenues, expenses and unrealized profits, net of tax effects, were eliminated. Non-controlling interest in net equity and income was separately disclosed in the financial statements. The balances of balance sheet and income accounts of ownership interest where control is shared with other shareholders were consolidated proportionally to the ownership held in the capital. Leasing operations were considered from the funding method's standpoint, and the amounts were reclassified from the heading of leased assets to the heading of leasing operations, after deduction of residual amounts received in advance.

Since 2008, the Committee for Accounting Pronouncements (CPC) has issued accounting standards and interpretations aligned with the international accounting standards approved by CVM. Bacen accepted the following pronouncements, applied in full by the Bank: CPC 01 – Reduction in Recoverable Value of Assets, CPC 03 - Statement of Cash Flows (DFC), CPC 05 – Disclosure on Related Parties, CPC 10 – Share-Based Payment, CPC 24 – Subsequent Event and CPC 25 - Provisions, Contingent Liabilities and Contingent Assets. The adoption of CPC 10 - Share-Based Payment did not cause effects in financial statements of the Bank.

The Bank has also applied the following pronouncements which do not conflict with the Bacen rules, as established by Article 22, § 2 of Law 6385/1976: CPC 09 – Statement of Value Added, CPC 12 – Adjustment at Present Value, CPC 19 – Investment in Joint Venture, CPC 22 – Information by segment, CPC 24 – Subsequent events, CPC 33 –Employee Benefits and CPC 41 – Income per share.

Pronouncements CPC 07 - Government Subsidies and Assistance, CPC 17 - Construction Contracts, CPC 29 - Biological Assets and Agricultural Produce and CPC 35 - Separate Statements, which do not conflict with the Bacen rules, may be applied by the Bank as events or transactions covered by the aforementioned CPCs take place.

The application of other provisions which depend on Bacen’s regulations reflects, basically, in immaterial adjustments or in changes in the way of disclosure, except the following pronouncements that may result in significant impacts on the financial statements:


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CPC 04 - Intangible Assets and CPC 15 - Business Combination – a) reclassification of intangible assets identified on the acquisitions of Banco Nossa Caixa and Banco Votorantim, which occurred in 2009 and of Banco Patagonia, occurred in April 2011, from the Investment Account to the Intangible Assets account in the group of Non-current Assets – Permanent; b) derecognition of goodwill amortization expenses due to expectations of future profitability arising from the acquisitions; and c) recognition of amortization expenses of intangible assets with definite useful lives, identified in the acquisitions.

CPC 38 - Financial Instruments: Recognition and Measurement - adjustment in the allowance for loan losses, due to the adoption of the incurred loss criterion.

These financial statements were approved by the Executive Board of Directors on 08.03.2011.


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Shareholding interest included in the consolidated financial statements, segregated by business segments

% of Total Share

06.30.2011 12.31.2010 06.30.2010

Banking Segment Activity

BB Leasing S.A. – Arrendamento Mercantil (1) (5) Leasing 100% 100% 100%

Banco do Brasil – AG. Viena (1) (5) Banking 100% 100% 100%

BB Leasing Company Ltd. (1) (5) Leasing 100% 100% 100%

BB Securities LLC. (1) (5) Broker 100% 100% 100%

BB Securities Ltd. (1) (5) Broker 100% 100% 100%

Brasilian American Merchant Bank (1) (5) Banking 100% 100% 100%

BB USA Holding Company, Inc. (1) (5) Holding 100% 100% 100%

Besc Distribuidora de Títulos e Valores Mobiliários S.A. (1) (5) Asset Management 99.62% 99.62% 99.62%

Banco Patagonia S.A. (1) (5) Multiple Bank 51% -- --

Banco Votorantim S.A. (2) (5) Multiple Bank 50% 50% 50%

Investment Segment

BB Banco de Investimento S.A. (1) (5) Banco de Investimento 100% 100% 100%

Kepler Weber S.A. (2) (5) Indústria 17.54% 17.56% 17.57%

Companhia Brasileira de Securitização – Cibrasec (3) (6) Aquisição de Créditos 12.12% 12.12% 12.12%

Neoenergia S.A. (2) (5) Energia 11.99% 11.99% 11.99%

Segment of Fund Management

BB Gestão de Recursos – Distribuidora de Títulos e Valores Mobiliários S.A.

(1) (5) Asset Management 100% 100% 100%

Segment of Insurance, Private Pension Fund and Capitalization

BB Seguros Participações S.A. (1) (5) Holding 100% 100% 100%

BB Corretora de Seguros e Administradora de Bens S.A. (1) (5) Broker 100% 100% 100%

Nossa Caixa Capitalização S.A. (1) (5) Capitalization 100% 100% 100%

BB Aliança Participações S.A. (3) (5) Holding 74.99% 100% 100%

Companhia de Seguros Aliança do Brasil (3) (5) Insurance Company 74.99% 100% 100%

Brasilprev Seguros e Previdência S.A. (3) (5) Insurance Company/ Pension 74.99% 74.99% 74.99%

BB Mapfre SH1 Participações S.A (3) (5) Holding 74.99% -- --

Mapfre Vera Cruz Vida e Previdência S.A. (3) (5) Insurance Company/ Pension 74.99% -- --

Mapfre Participações Ltda. (3) (5) Holding 74.99% -- --

Vida Seguradora S.A. (3) (5) Insurance Company 74.99% -- --

BB Aliança Rev Participações S.A. (3) (5) Holding 50% 100% --

Brasilveículos Companhia de Seguros (3) (5) Insurance Company 50% 100% 70%

Mapfre BB SH2 Participações S.A. (3) (5) Holding 50% -- --

Mapfre Vera Cruz Seguradora S.A. (3) (5) Insurance Company 50% -- --

Mares Mapfre Riscos Especiais S.A. (3) (5) Insurance Company 50% -- --

Mapfre Assistência S.A. (3) (5) Prestação de Serviço 50% -- --

Aliança do Brasil Seguros S.A. (3) (5) Seguradora 50% 100% 100%

Brasilcap Capitalização S.A. (3) (5) Capitalização 49.99% 49.99% 49.99%

Seguradora Brasileira de Crédito à Exportação – SBCE (3) (5) Seguradora 12.09% 12.09% 12.09%

Brasilsaúde Companhia de Seguros (4) Seguradora/Saúde -- -- 49.92%

Segment of Payment Methods

BB Administradora de Cartões de Crédito S.A. (1) (5) Service Rendering 100% 100% 100%

BB Elo Cartões Participações S.A. (1) (5) Holding 100% 100% 100%

Elo Participações S.A. (2) (5) Holding 49.99% -- --

Companhia Brasileira de Soluções e Serviços CBSS – Visa Vale

(3) (5) Service Rendering 49.99% 45% 40.35%

Cielo S.A. (2) (5) Service Rendering 28.74% 28.74% 23.61%

Tecnologia Bancária S.A. – Tecban (3) (6) Service Rendering 13.53% 13.53% 13.53%

Other Segments

Ativos S.A. Securitizadora de Créditos Financeiros (1) (5) Credit Acquisition 100% 100% 100%

Ativos S.A. Gestão de Cobrança e Recuperação de Crédito (1) (5) Credit Acquisition 100% 100% --

BB Administradora de Consórcios S.A. (1) (5) Consortium 100% 100% 100%

BB Tur Viagens e Turismo Ltda. (1) (6) Tourism 100% 100% 100%

BB Money Transfers Inc. (1) (5) Service Rendering 100% 100% 100%

Cobra Tecnologia S.A. (1) (6) IT 99.97% 99.99% 99.94%

BV Participações S.A. (2) (5) Holding 50% 50% 50%

(1) Subsidiaries.

(2) Joint control, included proporcionally in consolidation.

(3) Affiliated companies, included proporcionally in consolidation, as established by Bacen.

(4) Sold in fiscal year 2010.

(5) Financial Statements for consolidation on June/2011.

(6) Financial Statements for consolidation on May/2011.


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The following investment funds were also consolidated: BV Financeira FIDC I, BV Financeira FIDC II, BV Financeira FIDC III, Fundo de Investimento Sedna Referenciado DI and Votorantim G&K Fundo de Investimento em Participações, as well as special-purpose entity located abroad Dollar Diversified Payment Rights Finance Company, entities that are directly or indirectly controlled by the Bank.

For purposes of comparing the financial statements, a reclassification at Banco do Brasil and BB-Consolidated was carried out on 1st half 2011, of R$ 312,823 thousand from the grouping of Service Revenue to the grouping of Income from Bank Fees, pursuant to Bacen Circular Letter 3,490, of March 3, 2011, which altered the function of accounting titles and subtitles for recording income from tariffs.

4 – Description of significant accounting policies

a) Statement of income

Income and expenses are determined on the accrual basis of accounting. The formalized transactions with post-fixed financial charges are recorded at the restated value, calculated pro rata die, based on the variations in the agreed contractual indices, and the transactions with fixed financial charges are recorded at their redemption value, adjusted to reflect unearned income or unexpired expenses. Foreign-currency indexed transactions are adjusted to the balance sheet date based on agreed contractual indices.

b) Cash and cash equivalents

Cash and cash equivalents are represented by available funds in local currency, foreign currency, investments in gold, investments in repurchase agreements - own operations, interbank deposits and investments in foreign currencies, with high liquidity and insignificant risk of change in value, with maturity not exceeding 90 days.

c) Short-term interbank investments

Short-term interbank investments are recorded at their investment or acquisition amount, plus income accrued up to the balance sheet date and adjustment to allowance for losses when applied.

d) Securities

The securities purchased for the Bank's portfolio are recorded at the actual amount paid, including brokerage charges and fees, and are classified based on management’s intention, in three different categories, according to Bacen Circular 3068/2001:

Trading Securities: these are securities purchased to be actively and frequently traded. They are adjusted monthly to market value. Their increases and decreases in value are recorded in income and expense accounts for the period;

Securities available for sale: these are securities that may be traded at any time, but are not acquired to be actively and frequently traded. They are adjusted monthly to market value and their increases and decreases in value are recorded, net of tax effects, in a separate shareholders' equity account.

Securities held to maturity: these are securities that the Bank owns and has the financial ability to hold to maturity. These securities are not adjusted to market value. The financial capacity is supported by a cash flow projection that does not consider the possibility of sale of these securities.

The mark-to-market methodology used for securities was established following consistent, verifiable criteria, which consider the average price of trading on the day of calculation or, if not available, the daily adjustment of future market transactions reported by Anbima, BM&FBovespa or the net expected realizable value obtained through pricing models, using future interest rate curves, foreign exchange rates, and price and currency index, all consistent with prices adopted during the year.

Income accrued on the securities, irrespective of the category in which they are classified, is appropriated on a pro rata die basis on the accrual basis of accounting until the date of maturity or final sale, according to the exponential or straight-line method, based on the contractual remuneration and purchase price, and recorded directly in the statement of income for the period.


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Losses with securities classified as available for sale and held to maturity, if considered not to be temporary, are recorded directly in expense for the period and a new cost basis for the asset is determined.

Upon sale, the difference between the sale amount and the cost of purchase plus accrued income is considered as a result of the transaction and is recorded on the date of the transaction as a gain or loss on securities.

e) Derivative financial instruments

Derivative financial instruments are recorded at market value at each monthly trial balance and balance sheet date. Increases or decreases in value are recorded in income or expense accounts of the respective financial instruments.

The mark-to-market methodology used for derivative financial instruments was established following consistent and verifiable criteria, which consider the average price of trading on the date of calculation or, if not available, pricing models that estimate the expected net realizable value.

Derivative financial instruments used to offset, in whole or in part, the risks arising from exposure to variations in financial asset or liability market values are considered hedge instruments and are classified according to their nature:

Market Risk Hedge - increases or decreases in value of the financial instruments, as well as of the hedged item, are recorded in income/expenses accounts for the period; and

Cash Flow Hedge - the effective portion of the increases or decreases in value of the derivative financial instruments classified in this category are recorded, net of tax effects, in a separate Shareholders' Equity account. The effective amount is that in which the variation of the hedged item, directly related to the corresponding risk, is offset by the variation in the financial instrument used for hedge, considering the accumulated effect of the transaction. Other variations in these instruments are recorded directly in the statement of income/expenses for the period.

f) Loan and lease operations, advances on foreign exchange contracts, other receivables with loan characteristics and allowance for loan losses

Loans, leases, advances on foreign exchange contracts and other receivables with loan characteristics are classified according to Management's judgment with respect to the level of risk, taking into consideration market conditions, past experience and specific risks in relation to the operation, to borrowers and guarantors, observing the parameters established by CMN Resolution 2682/1999, which requires periodic analyses of the portfolio and its classification into nine levels, ranging from AA (minimum risk) to H (maximum risk), as well as the classification of operations more than 15 days overdue as non-performing.

Income from loans overdue for more than 60 days, regardless of their risk level, will only be recognized as income when effectively received.

Operations classified at level H, which remain in this classification for 180 days, are written off against the existing allowance.

Renegotiated operations are maintained, at a minimum, at the same level at which they were rated. The renegotiations of loans already written off against the allowance are rated as level H and any gains from renegotiation are recognized as income when effectively received.

Allowance for loan losses, considered sufficient by management, satisfies the minimum requirement established by the aforesaid CMN Resolution nº 2,682/1999 (Note 10.e).


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g) Taxes

Taxes are calculated based on the rates shown in the table below:

Taxes Rate

Income Tax (15% + additional 10%) 25%

Social Contribution on Net Income (CSLL) (1) 15%

Social Integration Program (PIS/Pasep) (2) 0.65%

Contribution to Social Security Financing – Cofins (2) 4%

Tax Services of any kind – ISSQN Up to 5%

(1) For non-financial firms, the CSLL rate is 9%.

(2) For non-financial firms that have opted for the non-cumulative regime of calculation, the PIS/PASEP rate is 1.65% and Cofins rate is 7.6%.

Deferred tax assets (tax credits) and deferred tax liabilities are recorded by applying the current rates of taxes on their respective bases. For recording, maintaining, and writing off tax credits the Bank follows the established criteria by CMN Resolution n.º 3,059/2002, and amended by CMN Resolution n.º 3,355/2006, and they are supported by a study of their capacity for realization.

h) Prepaid expenses

Refer to the application of funds in payments made in advance, for which the benefits or the services will occur in subsequent periods. Prepaid expenses are recorded at cost and amortized as being incurred.

i) Permanent assets

Investment - the investments in subsidiaries and associated companies with significant influence or with ownership interest of 20% or more of the voting shares, and in other companies which are part of a group or are under common control are evaluated by the equity method based on the shareholders’ equity of the subsidiary or associated company.

Goodwill, premium paid over the book value of the investment acquired due a future profitability expectation, is based on financial economic evaluations which substantiate the purchase price of business and is amortized based on annual income projections of those evaluations. Goodwill is tested for impairment annually.

The statements of the branches and subsidiaries abroad are adapted to the prevailing accounting criteria in Brazil and translated into Brazilian Reais using current exchange rates, in conformity with Bacen Circulars 2397/1993 and 2571/1995, and their impacts are recorded in the statement of income for the period.

Other permanent investments are stated at cost, less allowance for losses and the impairment, if applicable.

Property and equipment – Property and equipment are stated at cost less depreciation, calculated using the straight-line method at the following annual rates: buildings and improvements - 4%; vehicles - 20%; data processing system – 20% and others - 10% (Note 15).

Deferred – Deferred assets are recorded at cost of acquisition or formation, net of accrued amortization. They are composed mainly of expenditures with restructuring the company, and the expenditures, up to 09.30.2008, with third party properties, as a result of opening branches, which are amortized according to rates based on rental terms, as well as expenditures on the acquisition and development of information systems, which are amortized at 20% per annum (p.a.).

Intangible – Intangible assets consist of rights that have as their object intangible assets intended for the maintenance of the company or that are exercised for that purpose, including goodwill acquired.

An asset meets the criteria for identification as an intangible asset, when it is separable, i.e. it can be separated from the entity and sold, transferred or licensed, rented or exchanged, individually or jointly with a contract, related assets or liabilities, regardless of the intention for use by the entity; or results from contractual rights or other legal rights, regardless of whether these rights are transferable or separable from the entity or other rights and obligations.


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Intangible assets that have a defined useful life refer to disbursements for acquisition of the right to provide bank services (payroll acquisitions), and are amortized over contracted periods, and acquisition/development of software, amortized on the straight-line basis at the rate of 20% per year starting from the date of availability for use, and adjusted by impairment, when applicable (Note 16). The amortization of intangible assets is recorded in "Other Administrative Expenses".

j) Reduction of the recoverable amount of non-financial assets (impairment)

An impairment loss is recognized if the carrying value of an asset or its cash-generating unit exceeds its recoverable value. A Cash-generating unit is the smallest identifiable group of assets that generates cash flows, which are largely independent of the cash flows from other assets or groups of assets. Losses through impairment are recognized in income/expenses for the period.

From 2008, losses of non-financial assets, excluding tax credits and other assets are reviewed at least annually to determine whether there is any indication of loss through impairment loss.

Taking into account the materiality and relevance of the involved amounts, the main assets that have their recoverable amounts tested are: Buildings, Data processing systems (property, plant and equipment) and Rights due to payroll acquisition (intangible assets) and Goodwill for expected future earnings generated upon the acquisition of entities (investment).

The calculation of the recoverable amounts of the tested items employs the following assumptions:

1- for the calculation of the recoverable amounts of buildings, appraisal reports (for properties of significant value) and estimates (for the other properties);

2- for data processing equipment (mainframes and automatic teller machines), both the market value and the amount recoverable over time by use in the entity's transactions are considered. The methods applied consider the cash flow projections of the economic benefits arising from the use of each asset over its useful life, discounted to present value;

3- the model for evaluating losses arising from the devaluation of the Negotiation Relationship Allowance (for rights resulting from payroll acquisition) is based on monitoring contract performance. That model was prepared starting from the contribution margins of relationships with individuals linked to each contract; and

4- the goodwill impairment testing methodology, which corresponds to the excess amount paid on the acquisition of investments arising from expected future profitability, consists of two stages:

i) to measure the expected result of cash-generating unit in present value, and ii) to exclude the identified assets from this result.

The remaining balance, if greater than the goodwill, indicates that there is no need to form impairment. If lower, the difference between both will be the amount impaired. To measure this result, the assumptions adopted are based on usual market rates and on financial economic studies. The estimate involves several assumptions of a subjective kind, such as current and past performance and expected growth in the respective market and across the macroeconomic environment.

The value in use of cash-generating unit related to the segment of Insurance, Pension and Capitalization is sensitive to perpetuity growth and discount rates. Indices related to the growth rate are based on the macroeconomic scenario developed by Banco do Brasil. Discount rate, used by the Bank, is determined by the cost of own capital ascertained by CAPM (Capital Asset Pricing Model) model denominated in Brazilian currency in the unit form. For the Banking Segment sensitivity falls upon the Gross Domestic Product and National Amplified Consumer Price Index.

In the case of goodwill in the acquisition of Banco Nossa Caixa, merged in November 2009, the methodology consisted of comparing the present value of the projected income of Banco do Brasil by the corporate and retail agencies of the State of São Paulo (cash generating unit), isolating the profitability compared with and without Banco Nossa Caixa. As from the difference identified, the amounts were projected based on the profitability growth premises to Banco do Brasil, discounted by the capital opportunity cost.

k) Employee benefits

Employee benefits related to short-term benefits for current employees are recognized on the accrual basis as the services are provided. Post-employment benefits, comprising supplementary retirement


61

benefits and medical assistance for which the Bank is responsible, were assessed as of 06.30.2011 in accordance with criteria established by CVM Resolution n.º 600/2009 (Note 27). As of 06.30.2010, the evaluations are performed twice a year and not per year as on 12.31.2009.

In defined-contribution plans, the actuarial risk and the investment risk are borne by the plan participants. Accordingly, cost accounting is based on each period's contribution amount representing the Bank's obligation. Consequently, no actuarial calculation is required when measuring the obligation or expense, and there are neither actuarial gains nor losses.

In defined benefit plans, the actuarial risk and the investment risk value of plan assets fall either partially or fully on the sponsoring entity. Accordingly, cost accounting requires the measurement of plan obligations and expenses, with a possibility of actuarial gains and losses, leading to record a liability when the amount of the actuarial exceeds the value of plan assets, or an asset when the amount of assets exceeds the value of plan obligations. In the latter instance, the asset should be recorded only when there is evidence that it can effectively reduce the contributions from the sponsor or refundable in future.

The portion of gains or losses recognized in income of the Bank corresponds to the excess of the Bank that did not fit in the corridor divided by the average remaining working time of the employees who participate in the plan. The corridor is the greater of:

1- 10% of the total actuarial obligation present present value of the defined benefit, and 2- 10% of the fair value of plan assets.

The Bank, as permitted by CVM Resolution n.º 600/2009, adopted the procedure of recognizing actuarial gains/losses in the period in which was performed.

Since the contributions to be paid by the Bank in some cases will endure after the employee’s retirement, the Banks obligation related to the retiree are evaluated by the present actuarial value of the contributions to be paid over the expected period when the plan participants and beneficiaries will be linked to the plan. Such obligations are evaluated and recognized under the same criteria used for defined benefit plans.

The actuarial asset recognized in the balance sheet (Note 27) refers to the actuarial gains and its implementation must occur by the end of the plan. There may be partial completion of actuarial assets, conditioned upon satisfying the requirements of the Supplementary Law n.º 109/2001 and Resolution CGPC n.º 26/2008.

l) Operations related to insurance, pension and capitalization activities

Statement of Income/Expenses

Insurance premiums and selling expenses are recorded upon the issuance of policies or billings and are recognized in income/expenses, according to the elapsed coverage period. Revenues from premiums and the corresponding selling expenses, related to present risks without the issuing of respective policies are recognized in the statement of income/expenses based on estimates.

Income from insurance premiums of unelapsed risks is deferred for the validity period of the insurance policies, by means of the formation of provision for unearned premiums, based on the net retention of earned premiums issued.

Accepted coinsurance, retrocession and DPVAT convention (Personal injuries caused by motor vehicles) operations are recorded based on information received from similar companies, IRB Brasil Resseguros S.A. and the Seguradora Lider - DPVAT, respectively.

The revenue from pension plans, life insurance plans with living benefits and capitalization plans are recognized in the statement of income when effectively received, as a contra-entry to the recognition of technical provisions, except the revenue to cover risks in cases of combined pension plans, which must be recognized by the duration of the risk, regardless of your receipt. The selling costs are deferred on the issuing of the contract or policy and allocated to income/expenses on a straight-line basis, over the average estimated period for their recovery, except the ones related to capitalization.

Other income and expenses are determined on the accrual basis of accounting.


62

Technical Provisions

Rules and procedures for the formation of technical provisions are regulated by the Resolutions 162/2006, 181/2007, 195/2008 and 204/2009 of the National Council of Private Insurance (CNSP) and Regulatory Resolutions 75/2004 and 160/2007of the National Supplementary Health Agency (ANS), and calculated in accordance with the specific actuarial technical notes approved by the Superintendence of Private Insurance (Susep) and the National Supplementary Health Agency (ANS).

Insurance

Provision for Unearned Premiums (PUP) represents the portions of premiums that will be allocated to income over the course of the insurance policies, as calculated on a pro rata die basis.

Provision for Unearned Premiums for Present Risks but Not Yet Issued (PUP-PRNI) represents the adjustment for the Provision for Unearned Premiums given the existence of risks assumed by the insurance company where the policy covering the risk has not yet been formally issued, except for health plan insurance.

Provision for Premium Deficiency: represents the need for coverage of possible deficiencies of the Provision for Unearned Premiums due to the expectations of payment and re-assessment of claims incurred.

Provision for Unsettled Loss Claims represents the estimated probable payments of claims, judicial or otherwise, gross reinsurance and net of recoveries of coinsurance ceded, monetarily restated for indexed insurance determined based on notices received up to the balance sheet date, adjusted by the estimate for Claims Incurred but Not Enough Reported (IBNER).

Provision for Claims Incurred but not Reported (IBNR) represents the amount expected of claims incurred but not reported until the base date of the financial statements.

Premium Complementary Provision (PCP), has as object to maintain the company protected in monthly transactions, keeping the amount of the technical premium provisions (PUP and PUP-PRNI) higher or equal to the daily average of the month of calculation.

Pension plan

Mathematical Provision for Future Benefit Payments - Represents the sum of the premiums and contributions transferred by the participants, net of the loading rate, plus the financial income earned from the investments of the resources. This provision refers to participants whose perception of the benefits has not yet started.

Provision for benefits granted: refers to those already receiving the benefits.

Provisions for a Deficiency in Contributions and in Premiums are formed to meet the possible adverse changes in the technical risks made in the mathematical provisions of benefits granted and to be granted, resulting from the trend for a higher survival rate of participants and the calculation is made using the Mitigated AT 2000 Male/Female mortality table and related assumptions, considering all the effective plans.

Provision for Financial Fluctuation: is formed to account for the potential impacts of unfavorable variations in future rates of funds earmarked for the payment of benefits and redemptions to participants, considering the minimum remuneration guaranteed in existing contracts.

Capitalization

Mathematical Reserve for Redemption is calculated on the face value of the notes, restated based on actuarial technical notes approved by Susep.

Provisions for Redemption of Overdue and Prepaid Notes: are recorded at the values of the notes with finalized and rescinded capitalization periods, restated in the period between the date of the right to redemption and effective settlement.


63

Provision for Unrealized Draws for Prizes are calculated on the face value of the notes, based on actuarial technical notes approved by Susep. The write-off of the provision for unrealized draws for prizes is recorded by the amount equivalent to the lapsed risk, i.e., the balance of provision for unrealized draws for prizes represents the defrayed amounts of prize draws not yet executed.

Provision for Draws for Prizes Payable is formed at the amounts of the notes payable from draws for prizes, restated for the period between the date of the draw and the effective settlement.

m) Contingent assets and liabilities and legal obligations

The recognition, measurement and disclosure of contingent assets and liabilities and legal obligations are made in accordance with the criteria defined in CMN Resolution n.º 3,823/2009 (Note 28).

Contingent assets are only recognized in the financial statements upon the existence of evidence guaranteeing their realization usually represented by the final judgment of the lawsuit and by the confirmation of the capacity for its recovery by receipt or offsetting by another receivable.

Contingent liabilities are recognized in the financial statements when, based on the opinion of legal advisor and Management, the risk of loss of legal or administrative proceedings is considered probable, with a probable outflow of financial resource for the settlement of obligation and when the amounts involved are measurable with sufficient assurance, being quantified when judicial noticed and revised monthly as follow:

Aggregated – cases that are similar and recurring in nature and whose values are not considered relevant. Provisions are based on statistical data for groups of cases, type of judicial body (Special Civil Court or Common Court) and plaintiff. For labor claims and civil claims related to economic plans, provisions are based on the average payments for cases closed in the last 24 and 12 months, respectively, for calculating the value of the obligations; and

Individual – cases considered unusual or whose value is considered relevant by our legal counsel. Provisions are based on: the amount claimed; probability of an unfavorable decision; evidence presented; evaluation of legal precedents; other facts raised during the process; judicial decisions made during the course of the case; and the classification and the risk of loss of legal actions.

Contingent liabilities considered as possible losses are not recognized in the balance sheet and only need to be disclosed in the notes to the financial statements, while those classified as remote do not require provisioning or disclosure.

Legal obligations (fiscal and social security) are derived from tax obligations provided in the legislation, regardless of the probability of success of lawsuits in progress, which have their amounts recognized in full in the financial statements.

n) Earnings per share

The disclosure of earnings per share is executed according to the criteria defined in Resolution CVM 636/2010. Bank's basic earnings per share were calculated by dividing the net profit attributable to shareholders by the weighted average number of total shares, excluding treasury shares. For the calculation of diluted earnings per share it was added the weighted average number of potential subscription of shares from the exercise of warrants "C" (Note 24.j).

5 – Information by Segment

The information by segment was compiled with a basis on the reports used by Management in the appraisal of the segment's performance, decision making regarding the allocation of funds for investment and other purposes, considering the regulatory environment and the similarities between goods and services.

The operations of Banco do Brasil are basically divided into five segments: banking, investments, fund management, insurance (insurance, pension and capitalization) and payment methods. In addition, the Bank participates in other economic activities, such as leasing and operating support, that were aggregated in "Other".


64

Intersegment transactions are conducted under normal market conditions, substantially under the terms and conditions for comparable transactions, including interest rates and collateral. These transactions do not involve abnormal payment risks.

a) Banking Segment

Responsible for the most significant portion of Banco do Brasil, preponderantly obtained in Brazil, involves a large diversity of products and services, such as deposits, loans and services that are made available to customers by means of a wide variety of distribution channels, located in the country and abroad.

The operations of the banking segment include business with the retail, wholesale and government markets, carried out by network and customer service teams, and business with micro-entrepreneurs and the informal sector, performed through banking correspondents.

b) Investment Segment

In this segment, deals are performed in the domestic capital market, with activity in the intermediation and distribution of debts in the primary and secondary markets, besides equity interest and the rendering of financial services.

The operations income of the segment is obtained by means of revenues accrued in investments in securities minus expenses with funding to third parties. The existing equity interests are concentrated at our associated and subsidiary companies. Financial service fee income results from economic/financial advisory services, underwriting, fixed and variable income.

c) Segment of Fund Management

Responsible for operations inherent to the purchase, sale and custody of securities, portfolio management, institution, organization and management of investment funds and clubs. Revenues mainly derived from commissions and management fees charged to investors for services rendered.

d) Segment of Insurance, Private Pension Fund, and Capitalization

In this segment, products and services offered are related to life, property and automobile insurance, complementary private pension plans and capitalization plans.

Income comes mainly from revenues from insurance premiums issued, contributions for private pension plans, capitalization bonds and investments in securities, net of commercialization expenses, technical provisions and expenses related to benefits and redemptions.

e) Segment of Payment Methods

Such segment is mainly responsible for funding, transmission, processing services and financial settlement of operations in electronic means.

Revenues are originated mainly from commissions and management fees charged to commercial and banking establishments for the services rendered described in previous paragraph, besides income from rent, installation and maintenance of electronic terminals.

f) Other segments

Other segments comprise the operational support and consortium segments, which have not been aggregated by not being individually representative.

Their revenues are originated mainly from provision of services not covered in previous segments, such as: credit recovery, consortium administration, development, manufacture, commercialization, rent and integration of digital electronic systems and equipment, peripherals, programs, inputs and computing supplies, intermediation of air tickets, lodging and organization of events.


65

R$ thousand

1st half 2011

BB-Consolidated Banking InvestmentFund

ManagementInsurance

and RelatedPayment methods

Other Segments

Intersegment transactions

Total

Income 60,561,587 594,177 536,037 2,454,300 941,939 656,368 (842,414) 64,901,994

Income from loans and leases 30,950,792 -- -- -- -- -- -- 30,950,792

Income from operations with securities and derivative financial instruments

11,826,903 110,163 31,978 19,683 100,476 10,138 (304,857) 11,794,484

Income from foreign exchange operations and Compulsory

4,350,648 -- -- -- 52 (64) 7 4,350,643

Financial results from insurance operations, pension and capitalization

-- -- -- 981,766 -- -- 25,114 1,006,880

Income from service fees 4,232,670 179,171 501,010 232,515 810,094 426,481 (423,878) 5,958,063

Income from tariffs, rates and commissions 2,520,502 16,582 -- -- -- -- -- 2,537,084

Equity in the (earnings)/loss of subsidiary and associated companies

(159,247) 3,130 490 (3,746) -- -- -- (159,373)

Results from Insurance, Pension Plan and Capitalization Operations

-- -- -- 1,151,761 -- -- 27,778 1,179,539

Others Income 6,839,319 285,131 2,559 72,321 31,317 219,813 (166,578) 7,283,882

Expenses (52,125,384) (375,183) (110,925) (1,729,979) (501,918) (480,864) 842,414 (54,481,839)

Expenses of Market funding (24,337,949) (190,182) -- -- -- (20,108) 234,473 (24,313,766)

Loans, assignments, transfers and leases (2,508,377) -- -- -- (47) (75) -- (2,508,499)

Allowance for loan losses (5,479,777) (11) (73) -- -- 1,366 -- (5,478,495)

Restatement and interest of technical reserves

-- -- -- (642,395) -- -- -- (642,395)

Personnel Expenses (6,523,553) (19,947) (25,495) (110,381) (44,416) (82,119) 3,463 (6,802,448)

Other administrative expenses (4,510,650) (27,328) (12,810) (450,838) (90,977) (101,008) 503,007 (4,690,604)

Depreciation (465,609) (1,189) -- (3,737) (4,723) (3,446) -- (478,704)

Amortization of deferred (69,580) -- -- (10,874) (1,082) (2,494) -- (84,030)

Amortization of intangible assets (1,080,533) -- -- (31) -- (82) -- (1,080,646)

Revenues / (Expenses) from impairment 3,039 -- -- -- (64) -- -- 2,975

Other expenses(1) (7,152,395) (136,526) (72,547) (511,723) (360,609) (272,898) 101,471 (8,405,227)

Profit before tax and participations 8,436,203 218,994 425,112 724,321 440,021 175,504 -- 10,420,155

Income tax and social contribution (2,530,537) (24,817) (169,701) (272,072) (146,636) (58,864) -- (3,202,627)

Profit sharing (894,294) (21) (206) (10,207) (648) (22,437) -- (927,813)

Net Income 5,011,372 194,156 255,205 442,042 292,737 94,203 -- 6,289,715

Earnings attributable to the parent company 4,984,019 194,156 255,205 442,042 292,737 94,208 -- 6,262,367

Minority interest earnings/(losses) 27,353 -- -- -- -- (5) -- 27,348

Balance Sheets

Assets 861,442,726 6,764,028 909,051 45,044,796 2,490,998 5,420,395 (17,926,864) 904,145,130

Investment in subsidiaries and associate companies

10,760,678 3,593,109 62 507,175 -- -- (7,894,965) 6,966,059

Liabilities 806,612,163 3,972,611 775,158 41,391,132 1,912,096 2,628,727 (7,765,729) 849,526,158

(1) As standards of the Central Bank of Brazil, from January 2011, was recognized amortization of goodwill (Note 14.c) of R$ 101,821 thousand in the security Insurance and Related.


66

R$ thousand

1st half 2010

BB-Consolidated Banking InvestmentFund

ManagementInsurance

and RelatedPayment methods

Other segments

Intersegment transactions

Total

Income(1)

49,970,494 479,014 451,984 2,086,150 708,890 555,161 (554,022) 53,697,671

Income from loans and leases 26,004,236 -- -- -- -- -- (95,976) 25,908,260

Income from operations with securities and derivative financial instruments

10,577,386 41,272 21,966 13,303 51,257 6,554 (134,222) 10,577,516

Income from foreign exchange operations and Compulsory

1,244,807 -- -- -- -- -- -- 1,244,807

Financial results from insurance operations, pension and capitalization

-- -- -- 810,772 -- -- 24,010 834,782

Income from service fees 3,744,207 207,464 429,776 220,172 637,293 368,477 (179,336) 5,428,053

Income from tariffs, rates and commissions 2,300,981 -- -- -- -- -- (13) 2,300,968

Equity in the (earnings)/loss of subsidiary and associated companies

69,057 11,728 (2,076) -- -- -- -- 78,709

Results from Insurance, Pension Plan and Capitalization Operations

-- -- -- 908,865 -- -- -- 908,865

Others Income 6,029,820 218,550 2,318 133,038 20,340 180,130 (168,485) 6,415,711

Expenses (43,122,313) (222,806) (83,815) (1,385,979) (348,375) (434,240) 458,046 (45,139,482)

Expenses of Market funding (17,556,412) (90,714) -- -- -- (22,622) 121,569 (17,548,179)

Loans, assignments, transfers and leases (3,046,543) -- -- -- (28) (51) -- (3,046,622)

Allowance for loan losses (5,484,895) (12) (76) -- -- 777 -- (5,484,206)

Restatement and interest of technical reserves

-- -- -- (589,881) -- -- -- (589,881)

Personnel Expenses (5,911,281) (15,260) (23,734) (88,489) (28,612) (60,570) 2,473 (6,125,473)

Other administrative expenses (4,449,784) (27,823) (10,292) (382,143) (70,865) (103,941) 315,503 (4,729,345)

Depreciation (431,551) (144) -- (2,383) (3,686) (3,563) -- (441,327)

Amortization of deferred (88,878) -- -- (6,550) (1,000) (1,457) -- (97,885)

Amortization of intangible assets (1,046,419) -- -- (49) -- (51) -- (1,046,519)

Revenues / (Expenses) from impairment (470) -- -- -- (925) -- -- (1,395)

Other expenses (5,106,080) (88,853) (49,713) (316,484) (243,259) (242,762) 18,501 (6,028,650)

Profit before tax and participations 6,848,181 256,208 368,169 700,171 360,515 120,921 (95,976) 8,558,189

Income tax and social contribution(2) (2,132,762) (82,059) (149,974) (223,306) (124,708) (43,038) 41,068 (2,714,779)

Profit sharing (747,539) (97) (241) (6,323) -- (12,954) -- (767,154)

Net Income(3)

3,967,880 174,052 217,954 470,542 235,807 64,929 (54,908) 5,076,256

Earnings attributable to the parent company 3,967,880 174,052 217,954 470,542 235,807 64,949 (54,908) 5,076,276

Minority interest earnings/(losses) -- -- -- -- -- (20) -- (20)

Balance Sheets

Assets 721,817,858 4,929,528 804,966 32,239,898 1,716,612 4,440,865 (10,244,098) 755,705,629

Investment in subsidiaries and associate companies

8,276,950 2,193,020 20,826 558,538 -- -- (5,139,455) 5,909,879

Liabilities 683,293,813 2,979,504 675,138 28,972,167 1,308,471 2,574,212 (3,429,558) 716,373,747

(1) Includes intersegment transactions in the amount of R$ 95,976 thousand, related to the elimination of unrealized results in the BB-Consolidated, due to the credit cession of the Banco do Brasil to Ativos S.A.

(2) were activated in BB-Consolidated the amount of R$ 41,068 thousand (highlighted on intersegment transactions) relating to tax credits incident to unrealized results (previous section).

(3) Includes intersegment transactions in the amount of R$ 54,908 thousand, related to unrealized results, net of tax.


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6 – Cash and Cash Equivalents

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Cash and Cash Equivalents 18,868,357 9,397,247 9,240,098 19,638,597 9,744,688 9,535,060

Local currency 18,067,310 8,559,836 7,038,718 18,639,516 8,848,327 7,295,099

Foreign currency 801,047 837,411 2,201,380 986,029 883,681 2,227,792

Investments in gold -- -- -- 13,052 12,680 12,169

Interbank Investments (1)

20,968,752 23,179,112 32,686,665 16,989,572 15,403,025 26,961,925

Subject to repurchase agreements – held position 158,767 149,794 4,588,167 980,478 513,055 7,275,120


Investments in foreign currency 2,249,797 461,614 103,234 2,312,275 505,278 132,446

Total Cash and Cash Equivalents 39,837,109 32,576,359 41,926,763 36,628,169 25,147,713 36,496,985

(1) Refer to investments whose maturity is less than or equal to 90 days.

7 – Short-term Interbank Investments

a) Breakdown

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Open Market Investments 119,532,714 78,628,740 101,867,415 125,021,913 85,060,184 107,838,360

Sales Pending Settlement – Held Position 158,767 149,794 4,588,167 1,286,408 1,419,922 7,112,106

Financial treasury bills -- -- -- 166,400 3,193 552,603

National treasury bills 100,000 88,409 -- 474,345 201,371 418,411

National treasury notes -- -- 4,368,750 520,055 1,135,054 5,797,888

Others securities 58,767 61,385 219,417 125,608 80,304 343,204

Sales Pending Settlement – Financed Position 115,423,947 78,478,946 97,279,248 118,918,942 82,375,105 100,726,254

Financial treasury bills 105,202,962 52,794,239 88,405,746 105,127,160 52,794,239 88,405,746

National treasury bills 6,720,983 19,735,808 4,806,805 10,223,718 22,644,595 7,694,073

National treasury notes 3,499,998 5,889,416 3,934,436 3,568,060 6,876,788 4,494,174

Others securities 4 59,483 132,261 4 59,483 132,261

Sales Pending Settlement – Sold Position -- -- -- 866,563 1,265,157 --

Federal Government securities – National Treasury -- -- -- 866,563 1,265,157 --

Sales Pending Settlement – Clearing House 3,950,000 -- -- 3,950,000 -- --

Interbank Deposits 36,538,410 36,085,902 40,371,382 22,543,479 22,518,606 24,704,305

Total 156,071,124 114,714,642 142,238,797 147,565,392 107,578,790 132,542,665

Current assets 145,592,090 109,929,317 137,902,326 135,947,787 106,615,633 131,212,743

Non-current assets 10,479,034 4,785,325 4,336,471 11,617,605 963,157 1,329,922

b) Income from short-term interbank investiments

R$ thousand



Income from Money Market 6,507,638 5,337,080 6,885,062 5,601,177

Held position 143,401 599,177 226,825 646,300

Financed position 6,364,237 4,737,903 6,605,589 4,942,953

Sold position -- -- 52,648 11,924

Income from Interbank Investiments 576,124 593,356 237,886 249,885

Total 7,083,762 5,930,436 7,122,948 5,851,062


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8 – Securities and Derivative Financial Instruments

a) Securities

R$ thousand

Banco do Brasil

06.30.2011 12.31.2010 06.30.2010

Maturity in days

Market Value Total Total Total

Without maturity

0-30 31-180 181-360More

than 360Cost

ValueMarket

valueMark to Market

Costvalue

Market value

Mark to Market

Costvalue

Market value

Mark to Market

1 – Trading securities 302 3,312,746 79,542 53,354 13,037,862 16,490,424 16,483,806 (6,618) 17,866,247 17,838,046 (28,201) 18,500,483 18,497,101 (3,382)

Federal Government Bonds -- 3,312,746 27,999 51,494 12,945,696 16,344,195 16,337,935 (6,260) 17,699,142 17,671,585 (27,557) 18,364,377 18,361,977 (2,400)

Financial treasury bills -- -- 8,601 1,856 4,622,676 4,633,390 4,633,133 (257) 4,873,609 4,873,406 (203) 11,178,532 11,178,470 (62)

National treasury bills -- 3,312,746 19,398 -- 6,314,984 9,651,530 9,647,128 (4,402) 10,347,881 10,323,823 (24,058) 5,191,052 5,169,495 (21,557)

Treasury notes -- -- -- 49,638 2,008,036 2,059,275 2,057,674 (1,601) 2,477,652 2,474,356 (3,296) 1,994,793 2,014,012 19,219

Corporate bonds 302 -- 51,543 1,860 92,166 146,229 145,871 (358) 167,105 166,461 (644) 136,106 135,124 (982)

Debentures -- -- 51,543 1,860 92,166 145,895 145,569 (326) 166,820 166,183 (637) 136,106 135,124 (982)

Shares 302 -- -- -- -- 334 302 (32) 285 278 (7) -- -- --

2 - Securities available for sale 287,577 1,149,990 5,025,168 8,479,827 54,968,120 69,559,935 69,910,682 350,747 67,816,316 68,191,309 374,993 57,444,996 57,730,900 285,904

Federal Government Bonds -- 760,894 3,493,386 5,426,458 36,232,407 45,588,911 45,913,145 324,234 52,110,127 52,408,709 298,582 45,553,230 45,846,569 293,339

Financial treasury bills -- -- 2,295,337 1,223,671 25,704,116 29,225,487 29,223,124 (2,363) 36,166,255 36,163,404 (2,851) 35,937,091 35,933,096 (3,995)

National treasury bills -- 756,697 1,163,901 411,323 2,437,417 4,780,975 4,769,338 (11,637) 5,848,901 5,840,177 (8,724) 3,343,983 3,335,635 (8,348)

Treasury notes -- -- 6,631 1,526,552 1,762,407 3,324,156 3,295,590 (28,566) 3,843,060 3,830,620 (12,440) 3,711,553 3,703,934 (7,619)

Agricultural debt securities -- 120 1,413 482 7,445 10,683 9,460 (1,223) 10,883 9,479 (1,404) 12,170 10,656 (1,514)

Brazilian foreign debt securities -- 874 24,397 83,435 2,523,048 2,271,716 2,631,754 360,038 2,430,777 2,751,243 320,466 2,511,445 2,823,521 312,076

Foreign Government bonds -- 3,203 1,707 2,180,995 3,708,952 5,890,181 5,894,857 4,676 3,732,128 3,732,680 552 945 934 (11)

Others -- -- -- -- 89,022 85,713 89,022 3,309 78,123 81,106 2,983 36,043 38,793 2,750

Corporate bonds 287,577 389,096 1,531,782 3,053,369 18,735,713 23,971,024 23,997,537 26,513 15,706,189 15,782,600 76,411 11,891,766 11,884,331 (7,435)

Debentures -- -- 1,486 901,890 16,923,633 17,757,325 17,827,009 69,684 12,300,926 12,359,315 58,389 9,736,721 9,723,516 (13,205)

Promissory notes -- 169,715 895,961 2,056,530 -- 3,126,048 3,122,206 (3,842) 1,402,858 1,401,478 (1,380) 1,015,541 1,015,500 (41)

Credit Notes -- -- -- -- 20,127 20,340 20,127 (213) 25,384 25,150 (234) 25,354 24,682 (672)

Shares in investment funds 234,103 -- 2,488 -- 753,642 1,056,852 990,233 (66,619) 327,121 330,839 3,718 244,058 248,349 4,291

Shares 53,474 -- -- -- -- 9,182 53,474 44,292 9,182 53,956 44,774 9,182 37,237 28,055

Rural Product Bills - Commodities -- 61,929 318,453 94,949 1,666 483,908 476,997 (6,911) 449,498 447,231 (2,267) 462,413 459,063 (3,350)

Certificate of deposit -- 156,020 313,394 -- -- 468,189 469,414 1,225 299,933 300,614 681 89,269 89,536 267

Others -- 69 -- -- 1,036,645 1,049,180 1,038,077 (11,103) 891,287 864,017 (27,270) 309,228 286,448 (22,780)


69

Banco do Brasil

06.30.2011 12.31.2010 06.30.2010

Maturity in days

Market value Total Total Total

Without maturity

0-30 31-180 181-360 More than 360

Cost value

Market value

Mark to Market

Cost value

Market value

Mark to Market

Cost value

Market value

Mark to Market

3 - Securities held to maturity -- 499 3,484,178 22,904 7,289,410 10,955,663 10,796,991 (158,672) 10,401,497 10,233,634 (167,863) 13,126,641 12,956,621 (170,020)

Federal Government Bondss -- 499 3,484,178 22,904 7,164,954 10,665,104 10,672,535 7,431 10,121,705 10,130,543 8,838 12,855,030 12,865,103 10,073

Financial treasury bills -- -- 3,468,672 -- 7,061,796 10,530,536 10,530,468 (68) 9,979,376 9,979,358 (18) 12,702,737 12,702,753 16

National treasury notes -- -- -- -- 22,512 24,338 22,512 (1,826) 23,515 21,341 (2,174) 22,729 20,172 (2,557)

Brazilian foreign debt securities -- 499 15,506 22,904 80,646 110,230 119,555 9,325 118,814 129,844 11,030 129,564 142,178 12,614

Corporate bonds -- -- -- -- 124,456 290,559 124,456 (166,103) 279,792 103,091 (176,701) 271,611 91,518 (180,093)

Others -- -- -- -- 124,456 290,559 124,456 (166,103) 279,792 103,091 (176,701) 271,611 91,518 (180,093)

Total 287,879 4,463,235 8,588,888 8,556,085 75,295,392 97,006,022 97,191,479 185,457 96,084,060 96,262,989 178,929 89,072,120 89,184,622 112,502

R$ thousand

Banco do Brasil

06.30.2011 12.31.2010 06.30.2010

Maturity in days


Without maturity

0-30 31-180 181-360 More than 360

Cost value

Market value

Mark to Market

Cost value

Marketvalue

Mark to Market

Cost value

Marketvalue

Mark to Market

Total by portfolio 287,879 4,463,235 8,588,888 8,556,085 75,295,392 97,006,022 97,191,479 185,457 96,084,060 96,262,989 178,929 89,072,120 89,184,622 112,502

Own portfolio 287,879 4,463,235 1,628,838 6,919,235 25,771,841 38,909,727 39,071,028 161,301 47,646,615 47,802,700 156,085 34,893,612 34,817,057 (76,555)

Subject to repurchase agreements -- -- 6,889,695 1,636,850 47,365,420 55,867,020 55,891,965 24,945 45,657,058 45,680,975 23,917 52,611,924 52,801,693 189,769

Deposits with the Brazilian Central Bank -- -- 16 -- 19,614 19,684 19,630 (54) 102 57 (45) 43,087 43,035 (52)

Pledged in guarantee -- -- 70,339 -- 2,138,517 2,209,591 2,208,856 (735) 2,780,285 2,779,257 (1,028) 1,523,497 1,522,837 (660)

R$ thousand

Banco do Brasil

06.30.2011 12.31.2010 06.30.2010

Maturity in years


Without maturity

Due in upUp to one year

Due from1 to 5 years

Due from5 to 10 years

Due after10 years

Cost value

Marketvalue

Cost value

Marketvalue

Cost value

Market value

Total by category 287,879 21,608,208 62,620,255 8,862,019 3,813,118 97,006,022 97,191,479 96,084,060 96,262,989 89,072,120 89,184,622

1 - Trading securities 302 3,445,642 11,841,020 1,196,842 -- 16,490,424 16,483,806 17,866,247 17,838,046 18,500,483 18,497,101

2 - Securities available for sale 287,577 14,654,985 43,598,158 7,661,158 3,708,804 69,559,935 69,910,682 67,816,316 68,191,309 57,444,996 57,730,900

3 - Securities held to maturity -- 3,507,581 7,181,077 4,019 104,314 10,955,663 10,796,991 10,401,497 10,233,634 13,126,641 12,956,621


70

R$ thousand

Banco do Brasil

06.30.2011 12.31.2010 06.30.2010

Book value Book value Book value

Current Non-

currentTotal Current

Non-current

Total Current Non-

currentTotal

Total by portfolio 34,933,115 62,417,036 97,350,151 40,019,295 56,411,557 96,430,852 36,964,842 52,389,800 89,354,642

Own portfolio 16,246,108 22,985,577 39,231,685 17,355,563 30,617,318 47,972,881 10,732,357 24,257,225 34,989,582

Subject to repurchase agreements 18,579,259 37,310,721 55,889,980 22,532,857 23,145,800 45,678,657 26,184,682 26,614,506 52,799,188

Deposits with the Brazilian Central Bank 16 19,614 19,630 15 42 57 16 43,019 43,035

Pledged in guarantee 107,732 2,101,124 2,208,856 130,860 2,648,397 2,779,257 47,787 1,475,050 1,522,837

R$ thousand

Banco do Brasil

06.30.2011 12.31.2010 06.30.2010

Total by category

Trading Securities 16,483,806 17% 17,838,046 18% 18,497,101 21%

Securities available for sale 69,910,682 72% 68,191,309 71% 57,730,900 64%

Securities held to maturity 10,955,663 11% 10,401,497 11% 13,126,641 15%

Portfolio book value 97,350,151 100% 96,430,852 100% 89,354,642 100%

Mark-to-market - Category 3 (158,672) (167,863) (170,020)

Portfolio market value 97,191,479 96,262,989 89,184,622


71

R$ thousand

BB-Consolidated

06.30.2011 12.31.2010 06.30.2010

Maturity in days


Without maturity

0-30 31-180 181-360More

than 360Cost

valueMarket

valueMark to Market

Costvalue

Market value

Mark to Market

Costvalue

Market value

Mark to Market

1 - Trading securities 3,694,319 6,107,526 1,326,872 3,047,745 41,414,052 55,608,634 55,590,514 (18,120) 50,134,629 50,444,872 310,243 44,852,491 44,829,714 (22,777)

Federal Government Bonds 33,734 5,692,227 947,402 1,478,430 35,315,117 43,431,077 43,466,910 35,833 39,282,334 39,463,240 180,906 35,817,066 35,922,898 105,832

Financial treasury bills 22,518 1,621,003 89,296 58,546 10,767,375 12,560,548 12,558,738 (1,810) 10,198,197 10,196,181 (2,016) 15,891,861 15,889,948 (1,913)

National treasury bills -- 3,515,531 242,464 185,081 10,297,993 14,263,486 14,241,069 (22,417) 13,386,869 13,356,100 (30,769) 7,867,031 7,835,737 (31,294)

National Treasury notes -- -- 29,017 1,174,208 13,221,399 14,452,039 14,424,624 (27,415) 13,345,239 13,557,280 212,041 9,242,572 9,376,270 133,698

Agricultural debt securities -- 2,739 32,304 60,327 291,849 386,677 387,219 542 27,232 27,808 576 33,181 35,445 2,264

Brazilian foreign debt securities -- 118 6,014 -- 796 7,398 6,928 (470) 148,250 146,878 (1,372) 219,862 223,013 3,151

Foreign Government bonds 612 27,961 35,416 -- 619,881 611,228 683,870 72,642 965,407 965,901 494 1,463,008 1,463,399 391

Others 10,604 524,875 512,891 268 115,824 1,149,701 1,164,462 14,761 1,211,140 1,213,092 1,952 1,099,551 1,099,086 (465)

Corporate bonds 3,660,585 415,299 379,470 1,569,315 6,098,935 12,177,557 12,123,604 (53,953) 10,852,295 10,981,632 129,337 9,035,425 8,906,816 (128,609)

Debentures -- 132,834 138,678 99,530 2,845,247 3,201,916 3,216,289 14,373 2,735,435 2,755,386 19,951 2,590,898 2,604,307 13,409

Promissory notes -- 84,677 -- 10,227 -- 94,982 94,904 (78) 15,569 15,560 (9) 142,356 143,095 739

Shares 1,804,451 -- -- -- -- 1,871,365 1,804,451 (66,914) 1,596,607 1,735,699 139,092 1,307,428 1,285,742 (21,686)

Shares in investment funds 1,782,059 10,399 2,056 612 108,945 1,894,443 1,904,071 9,628 1,316,704 1,313,689 (3,015) 805,372 805,405 33

Rural Product Bills - Commodities -- 111,833 87,412 40,418 45,043 280,830 284,706 3,876 228,948 233,191 4,243 177,981 178,902 921

Certificate of deposit 15,637 25,894 107,226 1,410,979 2,665,887 4,226,004 4,225,623 (381) 3,875,813 3,875,705 (108) 3,106,503 3,106,577 74

Eurobonds -- -- 12,237 -- 15,673 28,415 27,910 (505) 52,479 51,221 (1,258) 18,867 19,006 139

Others 58,438 49,662 31,861 7,549 418,140 579,602 565,650 (13,952) 1,030,740 1,001,181 (29,559) 886,020 763,782 (122,238)


72

R$ thousand

BB-Consolidated

06.30.2011 12.31.2010 06.30.2010

Maturity in days


Without maturity

0-30 31-180 181-360More

than 360Cost

value Market

valueMark to Market

Costvalue

Market value

Mark to Market

Costvalue

Market value

Mark to Market

2 – Securities available for sale 2,267,956 1,256,709 6,295,531 8,662,307 61,399,749 79,508,572 79,882,252 373,680 74,697,382 75,142,337 444,955 66,827,610 67,153,469 325,859

Federal Government Bonds 144,370 854,560 4,138,735 5,433,044 40,421,191 50,679,068 50,991,900 312,832 55,218,970 55,543,130 324,160 51,787,164 52,132,385 345,221

Financial treasury bills 104,746 -- 2,295,337 1,230,257 25,848,842 29,481,609 29,479,182 (2,427) 36,511,087 36,508,115 (2,972) 36,294,794 36,290,730 (4,064)

National Federal Treasury Bills -- 756,697 1,163,901 411,323 3,023,040 5,368,100 5,354,961 (13,139) 5,901,449 5,892,693 (8,756) 7,213,732 7,193,274 (20,458)

National Treasury notes -- -- 19,450 1,526,552 4,708,585 6,347,834 6,254,587 (93,247) 6,476,073 6,437,014 (39,059) 5,394,256 5,394,366 110

Agricultural debt securities -- 120 1,413 482 7,445 10,683 9,460 (1,223) 10,883 9,479 (1,404) 12,170 10,656 (1,514)

Brazilian foreign debt securities -- 874 25,104 83,435 2,608,240 2,325,318 2,717,653 392,335 2,487,934 2,840,743 352,809 2,575,026 2,920,437 345,411

Foreign Government bonds -- 96,869 633,530 2,180,995 4,136,017 7,040,512 7,047,411 6,899 3,732,823 3,733,347 524 1,620 1,603 (17)

Others 39,624 -- -- -- 89,022 105,012 128,646 23,634 98,721 121,739 23,018 295,566 321,319 25,753

Corporate bonds 2,123,586 402,149 2,156,796 3,229,263 20,978,558 28,829,504 28,890,352 60,848 19,478,412 19,599,207 120,795 15,040,446 15,021,084 (19,362)

Debentures -- -- 234,380 980,496 17,954,857 19,088,801 19,169,733 80,932 13,538,724 13,610,789 72,065 10,883,119 10,857,329 (25,790)

Promissory notes -- 169,715 895,961 2,131,917 -- 3,201,435 3,197,593 (3,842) 1,402,858 1,401,478 (1,380) 1,015,541 1,015,500 (41)

Credit Notes -- -- -- -- 20,127 20,340 20,127 (213) 25,384 25,150 (234) 25,354 24,682 (672)

Shares in investment funds 1,056,156 -- 2,488 -- 1,527,607 2,587,297 2,586,251 (1,046) 1,385,856 1,420,284 34,428 998,316 1,008,697 10,381

Shares 1,064,761 -- -- -- -- 1,031,589 1,064,761 33,172 1,033,506 1,102,641 69,135 598,230 603,767 5,537

Rural Product Bills - Commodities -- 61,929 318,453 94,949 1,666 483,908 476,997 (6,911) 449,498 447,231 (2,267) 462,413 459,063 (3,350)

Certificate of deposit -- 156,020 325,548 20,426 65,570 566,340 567,564 1,224 395,030 395,711 681 190,878 191,124 246

Others 2,669 14,485 379,966 1,475 1,408,731 1,849,794 1,807,326 (42,468) 1,247,556 1,195,923 (51,633) 866,595 860,922 (5,673)

3 – Securities held to maturity -- 70,457 3,522,851 234,008 13,915,333 17,903,413 17,742,649 (160,764) 16,655,934 16,496,200 (159,734) 19,049,202 18,918,964 (130,238)

Federal Government Bonds -- 70,457 3,522,851 234,008 13,651,501 17,473,478 17,478,817 5,339 16,376,142 16,393,109 16,967 18,777,591 18,827,446 49,855

Financial treasury bills -- -- 3,468,672 -- 7,079,129 10,547,876 10,547,801 (75) 9,979,376 9,979,358 (18) 12,704,160 12,704,176 16

National treasury notes -- -- 38,661 211,104 6,436,961 6,690,793 6,686,726 (4,067) 6,111,845 6,118,121 6,276 5,725,368 5,727,643 2,275

National treasury bills -- 69,958 -- -- 54,749 124,551 124,707 156 166,081 165,760 (321) 218,461 253,411 34,950

Agricultural debt securities -- -- 12 -- 16 28 28 -- 26 26 -- 38 38 --

Brazilian foreign debt securities -- 499 15,506 22,904 80,646 110,230 119,555 9,325 118,814 129,844 11,030 129,564 142,178 12,614

Corporate bonds -- -- -- -- 263,832 429,935 263,832 (166,103) 279,792 103,091 (176,701) 271,611 91,518 (180,093)

Certificate of deposit -- -- -- -- 139,376 139,376 139,376 -- -- -- -- -- -- --

Others -- -- -- -- 124,456 290,559 124,456 (166,103) 279,792 103,091 (176,701) 271,611 91,518 (180,093)

Total 5,962,275 7,434,692 11,145,254 11,944,060 116,729,134 153,020,619 153,215,415 194,796 141,487,945 142,083,409 595,464 130,729,303 130,902,147 172,844


73

R$ thousand

BB-Consolidated

06.30.2011 12.31.2010 06.30.2010

Maturity in days


Without maturity

0-30 31-180 181-360More

than 360Cost

valueMarket

valueMark to Market

Costvalue

Market value

Mark to Market

Costvalue

Market value

Mark to Market

Total by portfolio 5,962,275 7,434,692 11,145,254 11,944,060 116,729,134 153,020,619 153,215,415 194,796 141,487,945 142,083,409 595,464 130,729,303 130,902,147 172,844

Own portfolio 5,957,110 7,336,987 3,139,813 10,305,728 60,531,379 87,027,771 87,271,017 243,246 84,982,319 85,556,083 573,764 69,023,207 68,986,061 (37,146)

Subject to repurchase agreements 4,320 -- 6,906,388 1,636,850 52,740,764 61,300,096 61,288,322 (11,774) 51,275,370 51,328,012 52,642 57,330,804 he trend 211,213

Deposits with the Brazilian Central Bank -- -- 16 -- 19,614 19,684 19,630 (54) 102 57 (45) 43,087 43,035 (52)

Pledged in guarantee 845 97,705 1,099,037 1,482 3,437,377 4,673,068 4,636,446 (36,622) 5,230,154 5,199,257 (30,897) 4,332,205 4,331,034 (1,171)

R$ thousand

BB-Consolidated

06.30.2011 12.31.2010 06.30.2010

Maturity in years


Without maturity

Due in up Up to one year

Due from 1 to 5 years

Due from 5 to 10 years

Due after 10 years

Cost value

Market value

Cost value

Market value

Cost value

Market value

Total by category 5,962,275 30,524,006 87,940,993 18,442,941 10,345,200 153,020,619 153,215,415 141,487,945 142,083,409 130,729,303 130,902,147

1 - Trading securities 3,694,320 10,482,143 32,950,809 6,713,927 1,749,315 55,608,634 55,590,514 50,134,629 50,444,872 44,852,491 44,829,714

2 - Securities available for sale 2,267,955 16,214,548 46,853,511 10,660,064 3,886,174 79,508,572 79,882,252 74,697,382 75,142,337 66,827,610 67,153,469

3 - Securities held to maturity -- 3,827,315 8,136,673 1,068,950 4,709,711 17,903,413 17,742,649 16,655,934 16,496,200 19,049,202 18,918,964


74

R$ thousand

BB-Consolidated

06.30.2011 12.31.2010 06.30.2010

Book value Book value Book value

CurrentNon-

currentTotal Current

Non-current

Total CurrentNon-

currentTotal

Total by portfolio 82,528,463 70,847,716 153,376,179 75,084,984 67,158,159 142,243,143 68,229,212 62,803,173 131,032,385

Own portfolio 56,028,243 31,405,524 87,433,767 46,402,185 39,315,949 85,718,134 36,330,757 32,788,047 69,118,804

Subject to repurchase agreements 23,968,524 37,317,812 61,286,336 26,465,657 24,860,036 51,325,693 29,594,416 27,945,096 57,539,512

Deposits with the Brazilian Central Bank 16 19,614 19,630 15 42 57 16 43,019 43,035

Pledged in guarantee 2,531,680 2,104,766 4,636,446 2,217,127 2,982,132 5,199,259 2,304,023 2,027,011 4,331,034

R$ thousand

BB-Consolidated

06.30.2011 12.31.2010 06.30.2010

Total by category

Trading securities 55,590,514 36% 50,444,872 35% 44,829,714 34%

Securities available for sale 79,882,252 52% 75,142,337 53% 67,153,469 51%

Securities held to maturity 17,903,413 12% 16,655,934 12% 19,049,202 15%

Portfolio book value 153,376,179 100% 142,243,143 100% 131,032,385 100%

Mark-to-market - category 3 (160,764) (159,734) (130,238)

Portfolio market value 153,215,415 142,083,409 130,902,147

b) Income from operations with securities

R$ thousand



Applications of interbank liquidity (Note 7.b) 7,083,762 5,930,436 7,122,948 5,851,062

Fixed income securities 4,992,015 3,976,125 5,777,957 4,692,637

Variable income securities 562 278,835 184,097 295,357

Total 12,076,339 10,185,396 13,085,002 10,839,056

c) Reclassification of securities

On June 30th 2011, Banco Votorantim reclassified R$ 1,383,710 thousand (market value) securities of foreign governments from the category "Trading securities" to the category "Securities available for sale", as a result of the Administration intention’s review about the securities above. This reclassification has not impacted the results and equity on this date.

d) Derivative financial instruments

The Bank uses derivative financial instruments to manage, at the consolidated level, its positions and to meet clients' needs, classifying its own positions as both hedge (market risk and risk of cash flow) and trading, both with limits and approved by committees at the Bank. The hedge strategy of the equity positions is in line with the macroeconomic analyses and is approved by the Executive Board of Directors.

In the options market, active or long positions have the Bank as holder, while passive or short positions have the Bank as writer.

The models used to manage risks with derivatives are reviewed periodically and the decisions made follow the best risk/return relationship, estimating possible losses based on the analysis of macroeconomic scenarios.

The Bank uses appropriate tools and systems to manage the derivatives. Trading in new derivatives, standardized or not, is subject to a previous risk analysis.


75

Risk analysis of the subsidiaries is undertaken on an individual basis and its management at the consolidated level.

The Bank uses statistical methods and simulations to measure the risks of its positions, including derivatives, using models of values at risk sensibility and stress analysis.

Risks

The main risks inherent to derivative financial instruments resulting from the business dealings of the bank and its subsidiaries are credit, market and operating risks.

Credit risk is the exposure to loss in the event of default by a counterparty to a transaction. The credit exposure in futures contracts is minimized due to daily settlement in cash. The swap contracts, recorded in Cetip are subject to credit risk if the counterparty is not able or willing to perform its contractual obligations, while the swap contracts registered in the BM&FBovespa are not subject to the same risk, given that the Bank operations in Brazil that have the same stock exchange as guarantor.

Total credit exposure in swaps is R$ 1,308,755 thousand (R$ 1,004,041 at 12.31.2010 and R$ 973,844 thousand at 06.30.2010). The swap operations in negotiations associated with the operation to capture and/or application of R$ 189,107 thousand (R$ 418,170 thousand at 12.31.2010 and R$ 531,599 thousand at 06.30.2010) are recorded at values updated as changes incurred from their indices (curve), and are not at market value, as permitted by Bacen Circular n.º. 3,150/2002.

Market risk is the possibility of losses caused by changes in the behavior of interest rates and exchange rates, stock prices and commodities.

Market liquidity risk is the possibility of loss resulting from the inability to perform a transaction within a reasonable time and without significant loss of value due to the size of the transaction in the volume usually negotiated.

Operational risk indicates the probability of financial losses resulting from failures or inadequacy of people, processes and systems, or factors such as catastrophes or criminal activities.


76

Breakdown of the Portfolio of Derivatives for Trading by Index R$ thousand


By index 06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Counter-party Notional

valueCost

valueMarket

valueNotional

valueCost

valueMarket

valueNotional

valueCost

ValueMarket

valueNotional

valueCost

valueMarket

valueNotional

valueCost

valueMarket

valueNotional

valueCost

valueMarket

value

Futures contracts

Purchase commitments

7,065,756 -- -- 16,135,641 -- -- 12,645,950 -- -- 27,594,938 -- -- 38,023,623 -- -- 17,861,752 -- --

Interbank deposits 1,054,310 -- -- 2,350,234 -- -- 2,264,745 -- -- 14,005,767 -- -- 18,277,199 -- -- 6,860,689 -- --

Currencies 4,197,491 -- -- 7,438,974 -- -- 2,175,890 -- -- 4,951,154 -- -- 8,508,156 -- -- 2,722,321 -- --

T-Note -- -- -- -- -- -- -- -- -- -- -- -- 27,059 -- -- 221 -- --

Index -- -- -- -- -- -- 1,846 -- -- 114,230 -- -- 144,478 -- -- 75,051 -- --

Foreign exchange coupon

92,487 -- -- 96,899 -- -- 102,948 -- -- 6,562,630 -- -- 4,371,617 -- -- 102,948 -- --

Libor 1,716,085 -- -- 6,249,420 -- -- 8,098,363 -- -- 1,716,085 -- -- 6,249,420 -- -- 8,098,364 -- --

Commodities 5,383 -- -- 114 -- -- 2,158 -- -- 7,371 -- -- 114 -- -- 2,158 -- --

SCC (1) -- -- -- -- -- -- -- -- -- 237,701 -- -- 445,580 -- -- -- -- --

Sales commitments 15,093,071 -- -- 13,633,413 -- -- 12,849,590 -- -- 64,275,253 -- -- 61,710,441 -- -- 34,008,764 -- --

Interbank deposits 13,246,501 -- -- 7,862,213 -- -- 3,628,398 -- -- 56,035,882 -- -- 50,604,157 -- -- 24,137,376 -- --

Currencies 115,170 -- -- 74,736 -- -- 511,809 -- -- 340,612 -- -- 584,523 -- -- 1,110,368 -- --

T-Note -- -- -- -- -- -- -- -- -- 19,097 -- -- 294,059 -- -- -- -- --

Index -- -- -- -- -- -- -- -- -- 316 -- -- -- -- -- -- -- --

BGI (2) -- -- -- -- -- -- 522,179 -- -- 2,238 -- -- -- -- -- 70 -- --

Foreign exchange coupon

99,170 -- -- 224,469 -- -- 8,160,855 -- -- 5,995,091 -- -- 3,896,696 -- -- 522,179 -- --

Libor 1,631,399 -- -- 5,455,137 -- -- 26,349 -- -- 1,631,399 -- -- 5,455,137 -- -- 8,205,957 -- --

Commodities 831 -- -- 16,858 -- -- -- -- -- 14,931 -- -- 432,339 -- -- 32,814 -- --

SCC (1) -- -- -- -- -- -- -- -- -- 235,687 -- -- 443,530 -- -- -- -- --

Forward operations

Asset position 2,312,837 204,451 148,728 1,604,041 117,790 80,095 2,451,598 86,809 65,689 2,342,499 205,192 149,469 1,621,408 118,059 80,364 2,485,280 86,985 65,865

Term bonds 40,861 40,861 40,861 -- -- -- -- -- -- 40,861 40,861 40,861 -- -- -- -- -- --

Tern currencies 2,269,693 163,525 107,804 1,604,041 117,790 80,095 2,451,598 86,809 65,689 2,299,355 164,266 108,545 1,621,408 118,059 80,364 2,485,280 86,985 65,865

Term commodities 2,283 65 63 -- -- -- -- -- -- 2,283 65 63 -- -- -- -- -- --

Liability position 5,051,029 (626,338) (433,211) 4,515,069 (453,906) (261,984) 4,128,635 (279,092) (110,503) 5,080,691 (626,771) (576,896) 4,532,436 (453,991) (262,069) 4,162,317 (283,843) (115,254)

Term Bonds 40,861 (40,861) (40,861) -- -- -- -- -- -- 40,861 (40,861) (40,861) -- -- -- -- -- --

Tern currencies 4,992,806 (584,454) (390,552) 4,515,069 (453,906) (261,984) 4,128,635 (279,092) (110,503) 5,022,468 (584,887) (534,237) 4,532,436 (453,991) (262,069) 4,162,317 (283,843) (115,254)

Term commodities 17,362 (1,023) (1,798) -- -- -- -- -- -- 17,362 (1,023) (1,798) -- -- -- -- -- --

(1) foreign exchange swap with periodic adjustments

(2) live cattle futures contract


77

R$ thousand


By index 06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Notional value

Costvalue

Market value

Notional value

Costvalue

Market value

Notional value

Costvalue

Market value

Notional value

Costvalue

Market value

Notional value

Costvalue

Market value

Notional value

Costvalue

Market value

Option market 896,489 (683,253) (712,534) 55,135,530 (1,631,686) (1,657,222) 655,702 (459,789) (498,679) 583,098,241 (2,231,326) (1,605,652) 562,698,675 (2,537,305) (2,729,059) 353,409,221 (1,525,649) (1,558,311)

Purchase - Purchase options

246 2 1 26,015,428 771,159 328,272 3,260 72 4 154,935,751 81,186 65,980 287,109,956 965,731 591,433 157,456,731 364,025 342,237

Foreign currency 246 2 1 26,014,195 771,137 328,255 -- -- -- 2,563,967 32,471 12,081 29,097,215 829,980 405,253 -- -- --

Interbank Market -- -- -- -- -- -- -- -- -- 6 33 47 75 676 172,115 -- -- --

Interbank deposit -- -- -- -- -- -- -- -- -- 152,053,040 36,515 48,910 255,422,659 94,017 988 149,138,408 58,210 51,466

Flexible Currency Options -- -- -- -- -- -- -- -- -- 265,883 10,406 4,164 2,387,799 14,388 5,635 8,153,107 289,856 276,802

Shares -- -- -- 1,233 22 17 3,260 72 4 51,370 1,742 775 22,639 26,242 7,014 36,663 6,082 6,072

Commodities -- -- -- -- -- -- -- -- -- 1,485 19 3 179,569 428 428 128,553 9,877 7,897

Sold – Purchase options

1,683 24 43 -- -- -- -- -- -- 124,239,424 37,209 45,278 -- -- -- -- -- --

Foreign currency 1,683 24 43 -- -- -- -- -- -- 1,279,127 16,907 32,571 -- -- -- -- -- --

Interbank Market -- -- -- -- -- -- -- -- -- 6 56 34 -- -- -- -- -- --

Interbank deposit -- -- -- -- -- -- -- -- -- 122,764,452 15,868 8,657 -- -- -- -- -- --

Flexible Currency Options -- -- -- -- -- -- -- -- -- 29,929 1,309 1,309 -- -- -- -- -- --

Shares -- -- -- -- -- -- -- -- -- 164,650 3,034 2,676 -- -- -- -- -- --

Commodities -- -- -- -- -- -- -- -- -- 1,260 35 31 -- -- -- -- -- --

Purchase – Sales options

133,478 (39,030) (33,719) 26,125,270 (833,951) (382,245) -- -- -- 187,417,590 (116,110) (91,952) 26,125,270 (833,951) (381,156) -- -- --

Foreign currency 96,265 (2,390) (678) 26,062,984 (772,919) (329,123) -- -- -- 2,423,569 (26,443) (9,850) 26,062,984 (772,919) (328,034) -- -- --

Interbank Market -- -- -- -- -- -- -- -- -- 16 (217) (296) -- -- -- -- -- --

Prefixed 36,579 (36,579) (32,997) 61,020 (61,020) (53,113) -- -- -- 36,579 (36,579) (32,997) 61,020 (61,020) (53,113) -- -- --

Interbank deposit -- -- -- -- -- -- -- -- -- 184,803,180 (51,002) (47,805) -- -- -- -- -- --

Flexible Currency Options -- -- -- -- -- -- -- -- -- 41,887 (287) (287) -- -- -- -- -- --

Shares -- -- -- 1,266 (12) (9) -- -- -- 105,270 (1,160) (491) 1,266 (12) (9) -- -- --

Commodities 634 (61) (44) -- -- -- -- -- -- 7,089 (422) (226) -- -- -- -- -- --

Sold – Sales options 761,082 (644,249) (678,859) 2,994,832 (1,568,894) (1,603,249) 652,442 (459,861) (498,683) 116,505,476 (2,233,611) (1,624,958) 249,463,449 (2,669,085) (2,939,336) 195,952,490 (1,889,674) (1,900,548)

Foreign currency 9,443 (169) (169) 722,743 (9,774) -- -- -- -- 2,081,455 (18,104) (36,240) 6,733,259 (53,081) (34,982) -- -- --

Interbank Market -- -- -- -- -- -- -- -- -- 12 (51) (24) -- -- -- -- -- --

Prefixed 642,201 (642,201) (678,113) 1,549,346 (1,549,346) (1,603,198) 469,579 (456,809) (497,692) 2,125,076 (2,125,076) (1,547,400) 1,549,346 (2,616,309) (2,761,189) 1,352,531 (1,230,970) (1,261,091)

Interbank deposit -- -- -- -- -- -- -- -- -- 110,752,312 (19,141) (2,645) 236,843,565 (82,892) (81,348) 183,951,258 (60,155) (56,095)

Flexible Currency Options -- -- -- -- -- -- -- -- -- 1,252,434 (63,990) (32,435) 3,336,174 26,137 (58,261) 10,648,701 (598,549) (583,362)

Shares -- -- -- -- -- -- -- -- -- 179,000 (4,855) (5,152) 195,700 66,808 (3,393) -- -- --

Commodities 109,438 (1,879) (577) 722,743 (9,774) (51) 182,863 (3,052) (991) 115,187 (2,394) (1,062) 805,405 (9,748) (163) -- -- --


78

R$ thousand


By index 06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Notional value

Costvalue

Market value

Notional value

Costvalue

Market value

Notional value

Costvalue

Market value

Notional value

Costvalue

Market value

Notional value

Costvalue

Market value

Notional value

Costvalue

Market value

Swap contracts

Asset position 9,935,165 271,222 372,751 5,591,833 298,564 352,544 9,033,169 186,896 234,190 15,824,505 764,586 748,301 10,538,133 4,221,717 646,390 15,007,353 581,161 584,822

Interbank Deposit 5,239,122 243,596 342,782 4,258,842 279,437 322,793 5,942,083 165,138 206,080 6,317,296 437,468 433,783 5,165,842 1,187,885 456,829 7,163,672 334,138 253,958

Foreign currency 678,486 7,408 15,122 372,717 7,656 8,863 1,753,991 14,657 19,092 1,395,150 12,930 15,209 451,735 84,261 9,653 3,833,341 19,259 70,942

Prefixed 3,997,602 17,255 9,933 939,886 9,350 15,981 1,316,013 5,224 6,131 5,805,432 181,254 175,180 2,610,490 1,772,446 72,154 2,480,336 63,401 87,412

IPCA 19,955 2,963 4,914 20,388 2,121 4,907 21,082 1,877 2,887 1,312,415 32,123 23,836 759,170 456,478 13,374 877,468 87,886 85,504

IGPM -- -- -- -- -- -- -- -- -- 497,571 68,080 70,198 430,287 487,065 76,560 638,934 72,564 83,093

Commodities -- -- -- -- -- -- -- -- -- 505 102 102 883,164 1,288 8,751 13,602 3,913 3,913

Others -- -- -- -- -- -- -- -- -- 496,136 32,629 29,993 237,445 232,294 9,069 -- -- --

Liability position 7,869,670 (605,717) (649,996) 12,058,868 (403,165) (565,504) 10,112,535 (238,862) (308,841) 16,843,776 (1,881,214) (1,803,103) 21,209,610 (7,775,421) (1,482,882) 17,443,465 (869,771) (941,393)

Interbank Deposit 3,466,558 (485,530) (525,403) 5,747,367 (382,395) (412,172) 3,724,006 (120,689) (132,664) 5,077,251 (1,009,345) (927,548) 7,580,800 (2,139,544) (832,262) 6,590,246 (271,007) (179,295)

Foreign currency 1,015,444 (6,892) (20,242) 1,345,047 109,394 (34,061) 2,039,514 15,535 (46,583) 1,051,342 (21,376) (34,800) 1,482,214 (245,392) (36,047) 5,451,103 (462,855) (625,083)

Prefixed 2,705,545 (110,678) (92,736) 4,608,961 (126,826) (110,588) 3,828,850 (124,658) (119,550) 6,942,472 (617,558) (619,771) 6,501,271 (1,905,687) (370,347) 4,579,505 (124,058) (122,372)

TMS 678,780 (1,852) (10,850) 278,804 (93) (5,438) 286,971 (1,328) (2,322) 678,780 (1,852) (10,850) 278,804 93 (5,438) 286,971 (1,328) (2,322)

TR 3,343 (765) (765) 78,689 (3,245) (3,245) 233,194 (7,722) (7,722) 9,294 (1,337) (1,629) 78,689 3,245 (3,244) 233,194 (7,722) (7,722)

IGPM -- -- -- -- -- -- -- -- -- 408,635 (51,573) (55,294) 445,000 (595,558) (57,103) 268,000 (982) (2,491)

IPCA -- -- -- -- -- -- -- -- -- 2,654,398 (177,950) (152,794) 2,404,363 (2,844,016) (160,459) 25,000 185 (77)

Commodities -- -- -- -- -- -- -- -- -- 451 (36) (39) 2,395,441 (625) (16,023) 9,446 (2,004) (2,031)

Others -- -- -- -- -- -- -- -- -- 21,153 (187) (378) 43,028 (47,937) (1,959) -- -- --

Other derivative financial instruments

Asset position 1,844,863 31,806 32,096 4,337,549 71,129 73,394 6,376,549 136,849 140,777 2,520,480 31,806 239,389 4,998,557 71,129 292,231 7,124,652 136,165 202,849

Foreign currency 1,844,863 31,806 32,096 4,337,549 71,129 73,394 6,376,549 136,849 140,777 2,520,480 31,806 239,389 4,998,557 71,129 292,231 7,124,652 136,165 202,849

Liability position 1,981,509 (36,268) (40,118) 4,831,590 (71,448) (80,435) 10,525,315 (219,466) (223,723) 2,309,419 (36,777) (177,934) 5,883,741 (74,259) (214,423) 10,663,191 (219,414) (224,558)

Foreign currency 1,981,509 (36,268) (40,118) 4,831,590 (71,448) (80,435) 10,525,315 (219,466) (223,723) 2,309,419 (36,777) (177,934) 5,883,741 (74,259) (214,423) 10,663,191 (219,414) (224,558)


79

Breakdown of the credit derivatives portfolio by maturity (notional value) R$ thousand

Banco do Brasil BB-Consolidado

0 – 30 31-180 181-360More

than 36006.30.2011 12.31.2010 06.30.2010 0 – 30 31-180 181-360

More than 360

06.30.2011 12.31.2010 06.30.2010

Futures contracts 3,039,531 7,086,736 972,461 11,060,099 22,158,827 29,769,054 25,495,540 9,113,543 25,542,105 16,022,915 41,191,628 91,870,191 99,734,064 51,870,516

Forward operations 1,366,122 2,933,381 2,159,336 905,027 7,363,866 6,119,110 6,580,233 1,369,923 2,974,587 2,173,232 905,448 7,423,190 6,153,844 6,647,597

Option market 8,054 182,931 299,855 405,649 896,489 55,135,530 655,702 114,629,556 398,287,031 50,021,656 20,159,997 583,098,241 562,698,675 350,013,273

Swap contracts 1,153,883 3,117,898 2,175,508 11,357,546 17,804,835 17,650,701 19,145,704 1,536,446 8,557,569 3,363,092 19,211,174 32,668,281 31,747,743 32,450,818

Credit derivatives -- -- -- -- -- -- -- 2,512,990 -- -- -- 2,512,990 2,771,813 5,812,132

Others 1,031,157 1,937,854 806,827 50,534 3,826,372 9,169,139 16,901,864 1,165,690 2,348,760 1,096,164 219,285 4,829,899 10,882,298 17,787,843

Breakdown of the credit derivative portfolio by notional value, trading market and counterpart R$ thousand

Banco do Brasil BB-Consolidado

Futurescontracts

Forward operations

Option market

Swap contracts

OthersFutures

contracts

Forward operations

Optionmarket

Swapcontracts

Credit derivatives

Others

BM&FBovespa 18,811,343 81,722 896,489 -- -- 88,522,707 81,722 583,098,241 -- -- --

Over-the-counter

Financial Institutions 3,347,484 -- -- 5,818,135 3,826,372 3,347,484 59,324 -- 17,597,336 2,512,990 4,028,122

Client -- 7,282,144 -- 11,986,700 -- -- 7,282,144 -- 15,070,945 -- 801,777

Breakdown of the credit derivative portfolio R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Notional value

Market value

Notional value

Market value

Notional value

Market value

Notional value

Marketvalue

Notional value

Market value

Notional value

Market value

Asset position – Transferred risk -- -- -- -- -- -- 1,789,802 9,100 1,012,217 13,173 1,582,618 21,290

Credit swaps – Derivatives with Banks -- -- -- -- -- -- 1,646,961 9,100 1,012,217 13,173 1,582,618 21,290

Others -- -- -- -- -- -- 142,841 -- -- -- -- --

Liability position – Received risk -- -- -- -- -- -- 723,188 (15,606) 1,759,596 (16,774) 4,229,514 (7,308)

Credit swaps – Derivatives with Banks -- -- -- -- -- -- 655,662 (15,606) 1,759,596 (16,774) 4,229,514 (7,308)

Others -- -- -- -- -- -- 67,526 -- -- -- -- --


80

The portfolio of credit derivatives is composed exclusively of purchases and sales carried out by Banco Votorantim. Currently the portfolio is composed of customers whose risk is rated as investment grade and, as counterparty, contains the main international market leaders for this product. For the sale of protection is approved credit limit, for both the client and for the counterparty risk, according to the approval of the committees and forums of credit. To limit credit risk allocation is made to the client by the reference value (notional) of derivatives, considering the amounts deposited as collateral. For the purpose of mitigating the risk, transactions are performed in portfolio trading with client sovereign risk, especially Brazil. In this case, we consider the potential future exposure to allocate out of the counterparty. The portfolio of credit derivatives did not generate impacts in the PEPR - Portion related exposures weighted by risk factor for calculating the Basel index, since information from Banco Votorantim were not included in the calculation, as per determination of the Central Bank of Brazil (Note 29.f).

Breakdown of margin given as guarantee for transactions with derivative financial instruments R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Financial treasury bills 1,644,414 2,040,492 896,344 1,664,897 2,061,512 940,777

National treasury notes -- -- -- 895,436 960,706 704,478

National treasury bills -- -- -- 113,245 10,507 413,796

Foreign government securities -- -- -- 939,727 792,678 1,180,416

Eurobonds -- -- -- 439,578 517,672 465,074

Others -- -- -- 18,277 116,618 --

Total 1,644,414 2,040,492 896,344 4,071,160 4,459,693 3,704,541

Portfolio of derivatives designated as hedge of market risk R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Hedging instruments

Assets 332,241 337,107 331,620 13,581,381 11,705,985 16,061,964

Future -- -- -- 7,043,770 5,064,318 3,869,997

Swap 332,241 337,107 331,620 3,773,035 3,891,982 5,228,423

Options -- -- -- 2,764,576 2,749,685 6,963,544

Liabilities -- -- -- 41,998,650 39,601,301 41,512,765

Future -- -- -- 25,103,236 20,237,546 18,106,828

Swap -- -- -- 13,648,608 15,626,860 15,054,110

Options -- -- -- 3,246,806 3,736,895 8,351,827

Purpose of Hedge items

Assets -- -- -- 32,615,701 29,497,069 27,316,411

Loan Operations -- -- -- 19,857,835 17,213,846 14,539,072

Securities and derivative financial instruments -- -- -- 9,757,624 9,308,980 9,562,009

Lease operations -- -- -- 2,021,294 2,271,714 2,230,222

Foreign Investments -- -- -- 328,096 345,022 370,041

Other assets -- -- -- 650,852 357,507 615,067

Liabilities 332,379 337,188 332,008 3,812,408 2,945,841 2,730,738

Other liabilities 332,379 337,188 332,008 3,812,408 2,945,841 2,730,738

The Bank, in order to hedge against possible fluctuations in interest and exchange rates issued securities on the international capitals market, contracted derivative operations to offset the exposure to the market value changes. The hedge was assessed as effective, in accordance with the provisions of Central Bank Circular n.º 3,082/2002, which require evidence of hedge effectiveness between 80% and 125%.


81

Derivative financial instruments segregated by current and long-term R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Current Non-

currentCurrent

Non-current

Current Non-

currentCurrent

Non-current

Current Non-

currentCurrent

Non-current

Assets

Fixed-term options 135,480 13,248 73,418 6,677 61,689 4,000 136,221 13,248 73,678 6,686 61,735 4,130

Options market 44 -- 328,272 -- 4 -- 106,895 4,363 571,351 20,082 338,015 4,222

Swap contracts 212,491 160,260 227,983 124,561 119,513 114,677 454,251 294,050 398,242 248,148 447,720 137,102

Credit derivatives -- -- -- -- -- -- 9,100 -- 13,173 -- -- --

Other derivative financial instruments 32,083 13 73,394 -- 136,852 3,925 111,410 127,979 200,918 91,313 220,218 3,925

Total 380,098 173,521 703,067 131,238 318,058 122,602 817,877 439,640 1,257,362 366,229 1,067,688 149,379

Liabilities

Fixed-term options (372,670) (60,541) (218,803) (43,181) (94,816) (15,687) (516,332) (60,564) (218,888) (43,181) (99,202) (16,052)

Options market (298,188) (414,390) (1,703,779) (281,715) (498,683) -- (1,165,859) (551,051) (2,532,492) (788,000) (1,613,515) (287,033)

Swap contracts (546,101) (103,895) (426,100) (139,404) (246,851) (61,990) (1,328,077) (475,026) (1,043,116) (439,766) (462,401) (478,992)

Credit derivatives -- -- -- -- -- -- (15,606) -- (16,774) -- -- --

Other derivative financial instruments (39,018) (1,100) (77,973) (2,462) (208,746) (71,127) (152,632) (25,302) (168,485) (45,938) (209,580) (71,128)

Total (1,255,977) (579,926) (2,426,655) (466,762) (1,049,096) (148,804) (3,178,506) (1,111,943) (3,979,755) (1,316,885) (2,384,698) (853,205)


82

e) Income from derivative financial instruments

R$ thousand


1st half/2011 1st half/2010 1st half/2011 1st half/2010

Swap (159,494) 78,346 (401,495) 32,130

Forward (291,221) (975) (290,526) (7,356)

Options (59,915) (32,357) (57,941) (19,223)

Future (250,484) 135,803 (340,366) (119,065)

Credit derivatives -- -- 6,399 8,370

Others (80,965) (55,242) (206,589) (156,396)

Total (842,079) 125,575 (1,290,518) (261,540)

f) Equity Valuation Adjustment of securities and derivatives recognized in the Shareholders' equity

R$ thousand

1st half 2011 1st half 2011

Opening balanceNet change in the

quarterClosing balance Opening balance

Net change in the quarter

Closing balance

Securities available for sale

Multiple Bank 374,799 (24,052) 350,747 191,270 94,491 285,761

Subsidiaries and affiliates 158,148 (47,736) 110,412 65,256 89,513 154,769

Tax effects (65,512) 46,597 (18,915) 13,638 (42,792) (29,154)

Total 467,435 (25,191) 442,244 270,164 141,212 411,376

9 – Interbank accounts

a) Payments and receipts pending settlement

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Assets

Rights with participants of settlement systems

Bank Checks and other instruments 1,114,679 128,997 1,130,086 1,115,047 128,997 1,130,110

Documents sent by other participants 2,050,798 10 2,213,220 2,051,176 10 2,213,515

Total 3,165,477 129,007 3,343,306 3,166,223 129,007 3,343,625

Current assets 3,165,477 129,007 3,343,306 3,166,223 129,007 3,343,625

Liabilities

Obligations with participants of settlement systems

Bank Checks and other instruments 1,222,769 386 1,194,115 1,222,769 386 1,194,146

Remitted receipts 1,939,771 69 1,816,857 1,945,530 69 1,821,117

Other receipts 8,310 31 7,867 8,310 31 7,867

Total 3,170,850 486 3,018,839 3,176,609 486 3,023,130

Current liabilities 3,170,850 486 3,018,839 3,176,609 486 3,023,130


83

b) Restricted deposits

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Compulsory Deposits at the Central Bank of Brazil 86,258,821 83,928,847 57,243,465 89,283,243 87,035,114 59,373,714

Additional reserve requirements on deposits 30,624,725 29,283,429 20,130,663 31,891,653 30,639,918 20,130,663

Time deposits 18,447,766 15,177,844 10,136,543 20,144,465 16,866,606 10,136,543

Savings deposits 14,920,384 14,760,321 12,881,379 14,920,384 14,760,321 12,881,379

Demand deposits 14,825,919 17,308,041 13,702,568 14,884,105 17,367,209 15,832,817

Resources on rural credit (1) 7,440,027 7,399,212 208,902 7,440,027 7,399,212 208,902

Resources on microfinance -- -- 183,410 2,609 1,848 183,410

Housing Finance System 1,845,931 1,792,898 1,670,472 1,845,931 1,792,898 1,670,472

Fund for compensation of wage changes 1,973,091 1,926,986 1,798,209 1,973,091 1,926,986 1,798,209

Other 3,153 6,951 11,955 3,153 6,951 11,955

Provision for losses on loans tied (130,313) (141,039) (139,692) (130,313) (141,039) (139,692)

National Treasury - Rural credit 123,294 121,164 104,641 123,294 121,164 104,641

Total 88,228,046 85,842,909 59,018,578 91,252,468 88,949,176 61,148,827

Current assets 88,174,502 85,796,265 59,018,578 91,198,924 88,902,532 61,148,827

Non-current assets 53,544 46,644 -- 53,544 46,644 --

(1) Refers to funds deposited in the Central Bank, because of the failure transferring to rural credits, according to Resolution CMN nº 3745/2009. The funds were subject to special supply by the Central Bank and maintained by the Bank , if applied to rural credit until 08.01.2011, and recorded in borrowings and Transfers (Note 18.b).

c) Income on compulsory deposits

R$ thousand



Income Credit Linked to Central Bank 3,101,108 1,083,175 3,264,566 1,128,865

Additional reserve requirements on deposits 1,609,104 491,767 1,678,269 512,134

Resources of rural credit 40,815 -- 40,815 --

Requirements over the long term resources 914,014 188,607 1,008,307 213,930

Savings deposits 537,175 402,801 537,175 402,801

Income Credit Linked to SFH 65,249 50,373 65,249 50,373

Income Credit Linked to Rural Credit 8,841 12,327 8,841 12,327

Total 3,175,198 1,145,875 3,338,656 1,191,565


84

10 – Loan operations

a) Portfolio by modality

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Loan Operations 327,329,837 307,123,928 284,405,282 359,373,516 334,159,880 306,172,534

Loans and treasury discounted 149,448,208 141,461,847 131,988,352 160,143,119 149,036,753 138,460,097

Financing 89,062,661 85,267,041 78,679,717 109,641,603 104,006,325 93,646,288

Rural and agribusiness financing 83,642,720 76,972,710 71,374,708 84,288,448 77,639,334 71,703,644

Real estate financing 5,175,346 3,421,356 2,361,215 5,299,444 3,476,494 2,361,215

Financing of Infrastructure and development 902 974 1,290 902 974 1,290

Other receivables with loan characteristics 19,924,631 19,721,065 15,325,015 20,441,136 20,158,934 15,708,807

Credit card operations 10,659,017 10,623,969 7,838,306 10,659,017 10,623,969 7,838,306

Advances on foreign exchange contracts 8,963,783 8,785,982 7,168,030 9,330,408 9,054,882 7,381,114

Guarantees honored 79,955 75,303 73,125 80,291 75,303 73,125

Others 221,876 235,811 245,554 371,420 404,780 416,262

Lease operations 37,514 44,473 51,359 3,563,059 4,046,939 4,640,840

Total Loan Portfolio 347,291,982 326,889,466 299,781,656 383,377,711 358,365,753 326,522,181

Allowance for loan losses (16,565,476) (16,499,018) (17,005,165) (17,733,709) (17,314,731) (18,087,552)

(Allowance for loan losses) (15,959,320) (15,827,973) (16,280,006) (16,892,279) (16,433,381) (17,097,416)

(Allowance for other losses) (606,156) (671,045) (725,159) (629,608) (690,124) (743,701)

(Allowance for lease losses) -- -- -- (211,822) (191,226) (246,435)

Total Loan Portfolio Net of Provisions 330,726,506 310,390,448 282,776,491 365,644,002 341,051,022 308,434,629

b) Loan operations income

R$ thousand



Loan operations income 26,763,832 22,295,406 29,739,278 24,316,980

Loans and treasury discounted 17,276,962 14,111,638 18,360,076 14,676,983

Financing 4,368,613 3,838,155 5,968,761 5,214,533

Rural and agribusiness financing 2,910,187 2,364,185 2,939,823 2,376,454

Recovery of written-off loans (Note 10.k) 1,571,595 1,443,410 1,808,180 1,387,616

Income housing financing 203,044 100,867 204,043 100,867

Advances on foreign exchange contracts 153,496 138,777 204,932 257,749

Guarantees honored 11,397 4,919 11,420 4,934

Others 268,538 293,455 242,043 297,844

Lease Operations Income (Note 10.i) 11,316 21,877 1,211,514 1,591,280

Total 26,775,148 22,317,283 30,950,792 25,908,260


85

c) Breakdown of the loan portfolio by sector

R$ thousand


06.30.2011 % 12.31.2010 % 06.30.2010 % 06.30.2011 % 12.31.2010 % 06.30.2010 %

Public sector 7,587,751 2.2 7,150,509 2.2 5,996,432 2.0 7,686,400 2.0 7,261,066 2.0 6,144,844 1.8

Government 2,644,344 0.8 2,772,577 0.9 2,586,293 0.9 2,644,344 0.7 2,772,577 0.8 2,586,293 0.8

Direct administration 2,278,866 0.7 2,449,398 0.8 2,332,426 0.8 2,278,866 0.6 2,449,398 0.7 2,332,426 0.7

Indirect administration 365,478 0.1 323,179 0.1 253,867 0.1 365,478 0.1 323,179 0.1 253,867 0.1

Business entities 4,943,407 1.4 4,377,932 1.3 3,410,139 1.1 5,042,056 1.3 4,488,489 1.2 3,558,551 1.0

BB Group 10,371 -- 12,729 -- 3,184 -- -- -- -- -- -- --

Industry 3,017,405 0.9 2,480,426 0.8 1,838,697 0.5 3,085,570 0.8 2,553,541 0.7 1,919,394 0.4

Financial services 152,705 -- 114,766 -- 113,791 0.1 33,757 -- 126,428 -- 113,944 0.1

Other services 1,762,926 0.5 1,770,011 0.5 1,454,467 0.5 1,922,729 0.5 1,808,520 0.5 1,525,213 0.5

Private sector 339,704,231 97.8 319,738,957 97.8 293,785,224 98.0 375,691,311 98.0 351,104,687 98.0 320,377,337 98.2

Rural 60,999,425 17.6 57,331,133 17.5 55,073,039 19.6 61,915,087 16.2 57,987,817 16.2 55,401,976 18.0

Industry 105,075,679 30.2 98,973,789 30.3 90,264,274 28.7 111,708,752 29.0 105,234,145 29.4 95,610,954 28.0

Commerce 39,881,207 11.5 38,160,481 11.7 35,523,931 11.2 42,745,337 11.2 40,125,804 11.2 37,096,572 10.7

Financial services 928,563 0.3 1,425,713 0.4 1,405,056 0.4 1,067,903 0.3 1,172,864 0.3 1,416,186 0.4

Individuals 85,706,985 24.6 79,022,416 24.2 72,938,830 24.4 106,989,429 23.5 98,274,542 27.4 89,248,734 27.7

Housing 4,172,467 1.2 2,931,782 0.9 2,083,340 0.7 4,214,029 6.3 2,931,782 0.8 2,083,340 0.6

Other services 42,939,905 12.4 41,893,643 12.8 36,496,754 13.0 47,050,774 11.5 45,377,733 12.7 39,519,575 12.8

Total 347,291,982 100.0 326,889,466 100.0 299,781,656 100.0 383,377,711 100.0 358,365,753 100.0 326,522,181 100.0

d) Loan portfolio by risk level and maturity

R$ thousand

Banco do Brasil

Normal operations

06.30.2011 12.31.2010 06.30.2010

AA A B C D E F G HTotal

portfolioTotal

portfolioTotal

portfolio

Installments falling due

01 to 30 7,165,254 5,955,799 11,429,836 3,294,614 555,044 74,140 27,693 24,208 153,216 28,679,804 20,836,940 22,187,193

31 to 60 5,830,932 4,524,748 6,003,032 1,835,147 277,501 34,973 20,737 18,466 86,943 18,632,479 15,979,979 17,199,613

61 to 90 4,167,481 3,411,017 5,613,921 1,707,974 259,195 35,629 17,219 22,636 77,867 15,312,939 11,548,164 13,696,032

91 to 180 8,498,821 7,321,575 14,436,598 4,433,240 688,296 100,973 70,760 87,136 262,268 35,899,667 34,642,776 32,361,779

181 to 360 11,085,034 9,449,184 20,149,381 6,729,809 987,936 142,636 70,474 58,019 290,495 48,962,968 53,601,099 48,071,695

More than 360 60,964,282 31,992,493 66,254,124 19,712,484 4,806,960 707,330 452,141 330,100 3,015,854 188,235,768 178,651,910 150,950,091

Installments overdue

Up to 14 days 82.857 129.470 161.777 98.338 39.141 12.633 6.020 3.359 29.050 562.645 364.584 405.662

Others (1) 1.116.896 -- -- -- -- -- -- -- -- 1.116.896 1.286.169 2.673.326

Subtotal 98.911.557 62.784.286 124.048.669 37.811.606 7.614.073 1.108.314 665.044 543.924 3.915.693 337.403.166 316.911.621 287.545.391

(1) Operations with third party risk tied to government funds and programs, primarily Pronaf, Procera, FAT, BNDES and FCO. They include the amount of overdue installments in the total amount of R$ 50,574 thousand, which comply with rules defined in each program for reimbursement with the managers and do not imply a credit risk for the Bank.


86

R$ thousand

Abnormal operations

06.30.2011 12.31.2010 06.30.2010

AA A B C D E F G H Total

portfolio Total

portfolio Total

portfolio


01 to 30 -- -- 67,623 88,402 83,767 66,447 74,265 55,336 244,562 680,402 1,453,671 1,695,959

31 to 60 -- -- 30,325 31,243 27,304 21,832 25,902 20,120 95,187 251,913 305,142 381,709

61 to 90 -- -- 29,630 32,245 27,959 24,505 28,604 23,310 102,150 268,403 225,541 330,214

91 to 180 -- -- 80,413 85,398 77,966 65,513 77,534 61,983 286,531 735,338 645,523 902,177

181 to 360 -- -- 137,153 147,842 133,384 109,858 123,763 100,155 503,895 1,256,050 1,243,756 1,585,034

More than 360 -- -- 172,896 233,461 303,911 249,238 328,989 348,718 1,330,311 2,967,524 3,041,625 3,634,721


01 to 14 -- -- 4,025 17,481 13,727 11,142 11,089 8,296 41,287 107,047 97,459 135,359

15 to 30 -- -- 98,193 73,736 29,485 23,091 25,236 24,829 108,158 382,728 231,254 435,193

31 to 60 -- -- 3,813 116,990 45,528 37,238 36,511 37,492 145,192 422,764 439,403 443,346

61 to 90 -- -- 2 2,881 98,424 45,576 56,255 84,879 154,154 442,171 356,456 430,130

91 to 180 -- -- -- 1,494 4,126 80,838 302,027 93,534 362,408 844,427 672,074 1,045,743

181 to 360 -- -- -- 2 1,384 4,537 3,527 72,417 659,857 741,724 735,511 1,117,565

More than 360 -- -- -- 11 -- -- 3,151 7,215 777,948 788,325 530,430 99,115

Subtotal -- -- 624,073 831,186 846,965 739,815 1,096,853 938,284 4,811,640 9,888,816 9,977,845 12,236,265

Total 98,911,557 62,784,286 124,672,742 38,642,792 8,461,038 1,848,129 1,761,897 1,482,208 8,727,333 347,291,982 326,889,466 299,781,656

R$ thousand

BB-Consolidated

Normal operations

06.30.2011 12.31.2010 06.30.2010


portfolio Total

portfolio Total

portfolio


01 to 30 7,465,249 7,705,404 11,722,171 3,350,694 586,377 79,878 28,958 24,758 156,644 31,120,133 22,432,893 23,559,949

31 to 60 6,148,671 5,590,121 6,126,003 1,851,522 290,083 36,660 21,195 24,028 91,445 20,179,728 17,166,174 18,240,844

61 to 90 4,473,709 4,335,850 5,738,374 1,734,294 269,274 36,821 18,918 23,127 80,227 16,710,594 12,727,075 14,555,894

91 to 180 9,384,695 9,942,936 14,794,674 4,490,485 719,018 103,901 74,519 88,222 268,961 39,867,411 37,734,452 34,963,900

181 to 360 12,076,960 13,347,625 20,659,894 6,884,468 1,041,980 147,692 78,350 60,316 302,244 54,599,529 58,815,213 52,278,358

More than 360 64,614,095 44,168,190 67,720,054 19,886,830 5,084,152 716,814 497,762 338,835 3,052,529 206,079,261 195,901,412 165,432,405


Up to 14 days 83,542 181,074 166,298 99,723 41,203 12,727 7,680 3,370 29,168 624,785 383,515 424,390

Others (1) 1,116,896 1,748 -- -- -- -- -- -- -- 1,118,644 1,286,169 2,673,326

Subtotal 105,363,817 85,272,948 126,927,468 38,298,016 8,032,087 1,134,493 727,382 562,656 3,981,218 370,300,085 346,446,903 312,129,066

(1) Operations with third party risk tied to government funds and programs, primarily Pronaf, Procera, FAT, BNDES and FCO. They include the amount of overdue installments in the total amount of R$ 50,574 thousand, which comply with rules defined in each program for reimbursement with the managers and do not imply a credit risk for the Bank.


87

R$ thousand

Abnormal operations

06.30.2011 12.31.2010 06.30.2010


portfolio Total

portfolio Total

portfolio


01 to 30 -- -- 104,932 115,682 97,588 74,255 80,080 59,329 261,912 793,778 1,539,731 1,779,205

31 to 60 -- -- 65,103 55,865 39,969 28,744 31,584 23,654 107,090 352,009 388,131 458,838

61 to 90 -- -- 63,324 56,018 40,154 31,317 33,835 26,748 113,929 365,325 303,469 404,704

91 to 180 -- -- 177,216 154,995 113,885 85,362 92,515 71,896 319,768 1,015,637 863,354 1,113,419

181 to 360 -- -- 307,363 270,431 196,749 145,044 150,350 117,235 561,299 1,748,471 1,625,716 1,946,209

More than 360 -- -- 666,524 603,429 510,043 371,682 409,681 397,248 1,510,181 4,468,788 3,767,129 4,566,123


01 to 14 -- -- 12,352 30,372 20,036 14,402 13,479 9,830 46,230 146,701 124,169 162,615

15 to 30 -- -- 153,341 88,655 38,107 27,647 30,009 27,102 117,693 482,554 297,926 495,712

31 to 60 -- -- 21,839 163,834 60,276 45,224 42,162 41,425 159,510 534,270 498,757 509,797

61 to 90 -- -- 2 17,270 128,105 54,066 62,269 88,887 168,758 519,357 394,681 474,499

91 to 180 -- -- -- 6,866 22,965 107,957 327,665 108,673 404,489 978,615 739,169 1,145,493

181 to 360 -- -- -- 2 1,391 12,209 12,895 87,085 742,535 856,117 796,238 1,224,559

More than 360 -- -- -- 11 -- -- 3,248 7,289 805,456 816,004 580,380 111,942

Subtotal -- -- 1,571,996 1,563,430 1,269,268 997,909 1,289,772 1,066,401 5,318,850 13,077,626 11,918,850 14,393,115

Total 105,363,817 85,272,948 128,499,464 39,861,446 9,301,355 2,132,402 2,017,154 1,629,057 9,300,068 383,377,711 358,365,753 326,522,181

e) Allowance for loan losses by risk level

R$ thousand

Banco do Brasil

06.30.2011 12.31.2010 06.30.2010

Level of risk

% Provision

Value of loans

Value of allowance

Additional allowance(1)

Existent Allowance

Value of loans

Value of allowance


Existent Allowance

Value of loans

Value of allowance


Existent Allowance

AA 0 98,911,557 -- -- -- 90,617,509 -- -- -- 81,702,383 -- -- --

A 0.5 62,784,286 313,922 33,396 347,318 59,239,251 296,196 41 296,237 52,795,609 263,978 3,177 267,155

B 1 124,672,742 1,246,728 3,740 1,250,468 117,892,981 1,178,930 3,740 1,182,670 104,966,995 1,049,670 24,326 1,073,996

C 3 38,642,792 1,159,285 298,111 1,457,396 37,668,789 1,130,064 298,111 1,428,175 37,525,610 1,125,768 153,048 1,278,816

D 10 8,461,038 846,105 262,434 1,108,539 7,655,850 765,585 262,434 1,028,019 8,129,375 812,938 250,916 1,063,854

E 30 1,848,129 554,439 626,205 1,180,644 2,116,071 634,821 626,205 1,261,026 2,198,825 659,648 798,303 1,457,951

F 50 1,761,897 880,949 368,390 1,249,339 1,273,308 636,654 368,390 1,005,044 1,475,093 737,547 450,855 1,188,402

G 70 1,482,208 1,037,546 206,893 1,244,439 1,115,844 781,091 206,893 987,984 1,411,173 987,820 110,578 1,098,398

H 100 8,727,333 8,727,333 -- 8,727,333 9,309,863 9,309,863 -- 9,309,863 9,576,593 9,576,593 -- 9,576,593

Total 347,291,982 14,766,307 1,799,169 16,565,476 326,889,466 14,733,204 1,765,814 16,499,018 299,781,656 15,213,962 1,791,203 17,005,165


88

R$ thousand

BB-Consolidated

06.30.2011 12.31.2010 06.30.2010

Level of risk

% Provision

Value of loans

Value of allowance

Additional allowance

(1)

Existent Allowance

Value of loans

Value of allowance

Additional allowance (1)

Existent Allowance

Value of loans

Value of allowance

Additional allowance (1)

Existent Allowance

AA 0 105,363,817 -- -- -- 97,833,583 -- -- -- 86,326,399 -- -- --

A 0.5 85,272,948 426,365 38,451 464,816 78,894,697 394,473 41 394,514 68,141,003 340,705 3,177 343,882

B 1 128,499,464 1,284,995 4,780 1,289,775 120,646,719 1,206,467 3,740 1,210,207 109,307,943 1,093,079 24,326 1,117,405

C 3 39,861,446 1,195,843 298,202 1,494,045 38,350,191 1,150,506 298,111 1,448,617 38,280,433 1,148,413 153,048 1,301,461

D 10 9,301,355 930,136 264,743 1,194,879 8,013,281 801,328 262,434 1,063,762 8,610,467 861,047 250,916 1,111,963

E 30 2,132,402 639,721 626,205 1,265,926 2,239,113 671,734 626,205 1,297,939 2,462,127 738,638 798,303 1,536,941

F 50 2,017,154 1,008,577 368,390 1,376,967 1,404,747 702,374 368,390 1,070,764 1,600,123 800,062 450,855 1,250,917

G 70 1,629,057 1,140,340 206,893 1,347,233 1,204,624 843,237 206,893 1,050,130 1,597,605 1,118,324 110,578 1,228,902

H 100 9,300,068 9,300,068 -- 9,300,068 9,778,798 9,778,798 -- 9,778,798 10,196,081 10,196,081 -- 10,196,081

Total 383,377,711 15,926,045 1,807,664 17,733,709 358,365,753 15,548,917 1,765,814 17,314,731 326,522,181 16,296,349 1,791,203 18,087,552

(1) Refers to the additional provision to the minimum required by CMN Resolution nº. 2,682/1999, increased the experience of Management, by simulating on the loan portfolio, considering the history of default of operations in accordance with the good banking practice.

f) Changes in allowance for loan losses

Includes loans, leases and other receivables with characteristics of credit.

R$ thousand

Banco do Brasil


Value of allowance

Additional Provision

Existent Allowance

Value of allowance


Existent Allowance

Opening balance 14,733,204 1,765,814 16,499,018 14,835,607 2,776,300 17,611,907

Provision/(reversal) 4,966,650 33,355 5,000,005 6,040,773 (985,097) 5,055,676

Exchange variation on allowances - foreign

(7,681) -- (7,681) 2,325 -- 2,325

Loans written off (4,925,866) -- (4,925,866) (5,664,743) -- (5,664,743)

Closing balance 14,766,307 1,799,169 16,565,476 15,213,962 1,791,203 17,005,165

R$ thousand

BB-Consolidated


Value of allowance


Existent Allowance

Value of allowance


Existent Allowance

Opening Balance 15,548,917 1,765,814 17,314,731 15,835,315 2,782,065 18,617,380

Provision/(reversal) 5,634,761 41,850 5,676,611 6,556,129 (990,862) 5,565,267

Exchange variation on allowances - foreign

(12,467) -- (12,467) 3,299 -- 3,299

Loans written off (5,300,040) -- (5,300,040) (6,098,394) -- (6,098,394)

Added values(1) 54,874 -- 54,874 -- -- --

Closing balance 15,926,045 1,807,664 17,733,709 16,296,349 1,791,203 18,087,552

(1) Refers to the balance from Banco Patagonia


89

g) Changes in allowance for other doubtful accounts

Includes provisions for other receivables without characteristics of credit.

R$ thousand



Opening balance 808,015 909,630 881.992 980,272

Provision/(reversal) (196,912) (80,890) (198.116) (81,061)

Exchange variation on allowances - foreign (4) (150) (4) (150)

Compensation as losses / Other settings (6,367) 2,298 14.628 (9,416)

Added values(1) -- -- 1.533 --

Closing balance 604,732 830,888 700.033 889,645

(1) Refers to the balance from Banco Patagonia

h) Leasing portfolio by maturity

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Up to 1 year (1) 18,618 18,227 51,359 1,684,493 1,834,583 1,901,724

More than 1 year, up to 5 years 18,896 26,246 -- 1,870,209 2,203,085 2,726,201

Over 5 years -- -- -- 8,357 9,271 12,915

Total Present Value 37,514 44,473 51,359 3,563,059 4,046,939 4,640,840

(1) Includes amounts related to installments overdue.

i) Income from leasing operations

R$ thousand



Lease revenue 11,316 21,877 1,211,514 1,591,280

Leasing 11,316 21,877 1,211,514 1,591,136

Operating leases -- -- -- 144

Lease expenses (8,665) (18,937) (897,318) (1,146,529)

Leasing (8,665) (18,937) (896,344) (1,143,416)

Operating leases -- -- (58) (372)

Loss on disposal of leased assets -- -- (916) (2,741)

Total 2,651 2,940 314,196 444,751

j) Concentration of loans

R$ thousand

Banco do Brasil

06.30.2011% of credit

portfolio12.31.2010

% of credit portfolio

06.30.2010% of credit

portfolio

10 main debtors 30,065,756 8.7 28,093,555 8.6 27,297,746 9.1

50 largest debtors 29,682,283 8.5 28,788,465 8.8 29,832,086 10.0

100 largest debtors 21,883,640 6.3 21,141,242 6.5 19,225,174 6.4


90

k) Supplementary information

R$ thousand



Renegotiated loans 9,992,960 11,947,151 13,020,365 13,801,428

Income from recovery of loans previously written off as loss 1,571,595 1,443,410 1,808,180 1,387,616

Loans written off as loss 4.999.284 5.653.959 5.215.455 6.081.261

Amount of Credits Assigned to Other Financial Institutions -- -- -- 1,251,357

Book value -- -- -- 1,131,506

Earnings on sales before taxes -- -- -- 119,851

06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Credits contracted to release 109,147,070 91,326,087 85,254,240 102,361,555 86,083,616 82,827,590

Guarantees given (1) 8,275,060 8,071,232 7,584,142 12,923,380 12,500,620 12,122,866

Confirmed export credits 782,852 742,827 625,047 785,594 755,362 655,511

Credit opened for import 318,356 463,154 722,032 369,261 463,424 737,700

Resources linked (2) 685,416 716,859 708,044 1,082,111 1,179,658 1,150,086

Credit operations linked (2) 763,330 805,419 856,112 824,625 890,628 866,228

(1) For these operations, the Bank maintains an allowance recorded in Other liabilities - Sundry, (Note 20.e) totaling R$ 102,768 thousand (R$ 82,230 thousand, on 12.31.2010, R$ 75,600 thousand, at 06.30.2010) in Banco do Brasil and R$ 118,569 thousand (R$ 85,510 thousand, on 12.31.2010, R$ 78,927 thousand, at 06.30.2010), calculated in accordance with Resolution CMN No. 2.682/1999.

(2) On 06.30.2011, there are no operations in default and not judicial questioning on active operations or linked to the funds raised to implement these operations.

11 – Other Receivables

a) Specific credits

Refer to National Treasury credits – extension of the terms of rural financing - in the amount of R$ 1,086,093 thousand (R$ 1,029,638 thousand on 12.31.2010 and R$ 978,009 thousand on 06.30.2010), as established in Law 9,138/1995.


91

b) Sundry

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Deferred tax assets - Tax credits (Note 25.e) 19,862,339 19,751,902 20,364,000 22,351,236 21,969,538 22,431,474

Sundry debtors from escrow deposits – lawsuit (Note 28.e) 12,908,158 12,485,258 12,082,682 12,908,158 12,485,258 12,082,682

Credit and debit card operations 12,851,626 14,121,902 10,396,243 12,851,626 14,121,902 10,396,243

Actuarial Assets - Previ (Note 27.d) 12,051,137 9,894,787 14,509,718 12,051,137 9,894,787 14,509,718

Sundry debtors from escrow deposits – contingencies (Note 28.d) 10,152,771 9,401,829 9,024,454 11,651,141 10,843,777 10,141,040

Fund allocation of surplus - Previ (note 27.e) 9,448,203 9,119,367 1,860,574 9,448,203 9,119,367 1,860,574

Income tax and social contribution on net income to offset 6,359,179 9,495,380 5,038,692 7,103,056 10,268,266 5,607,772

Receivables - non-financial companies -- -- -- 3,340,389 2,888,627 2,082,947

National Treasury - equalization of taxes 3,054,496 3,493,439 2,753,659 3,054,496 3,493,439 2,753,659

Sundry debtors – domestic 1,207,417 1,391,406 2,073,812 1,647,826 1,740,272 2,399,988

Notes and credits receivable – other 614,749 887,161 713,352 1,275,987 1,265,895 1,242,411

Accounts receivable - Federal Treasury 1,140,835 1,305,327 875,779 1,140,835 1,305,327 875,779

Advances to Credit Guarantee or Fund (FGC) 589,683 711,686 833,689 589,683 711,686 833,689

Sundry debtors – foreign 41,955 14,138 34,265 294,859 15,370 34,982

Salary and other advances 172,514 247,735 175,188 190,055 256,385 188,583

Purchase of assets receivable 149,952 177,806 202,869 149,953 177,806 202,869

Acquisition of rights arising from exploration and production of oil, natural gas and mineral resources

72,966 85,282 106,315 72,966 85,282 106,315

Sundry debtors from escrow deposits Others 19,563 56,899 53,589 44,463 58,494 155,815

Others 398,595 439,783 382,178 420,408 414,337 402,223

Total 91,096,138 93,081,087 81,481,058 100,586,477 101,115,815 88,308,763

Current assets 37,998,849 44,611,607 28,344,083 44,877,659 49,880,444 32,026,002

Non-current assets 53,097,289 48,469,480 53,136,975 55,708,818 51,235,371 56,282,761


92

12 – Foreign exchange portfolio

a) Breakdown

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Other receivables

Receivables from sales of foreign exchange 25,670,216 28,661,146 13,030,336 25,674,321 28,691,802 13,557,336

(Advances received in local/foreign currency) (23,597,438) (27,541,940) (11,572,262) (23,873,060) (27,834,542) (11,708,801)

Forward foreign exchange purchases pending settlement

11,444,243 10,241,560 9,596,006 12,310,450 10,852,280 10,181,756

Income receivable on advances granted and financed imports

82,609 84,139 138,814 90,681 90,611 148,914

Bills of exchange and time drafts in foreign currency 71,943 72,340 73,464 71,943 72,340 73,464

Foreign currency receivables 4,041 5,269 5,156 4,041 5,269 5,156

Total 13,675,614 11,522,514 11,271,514 14,278,376 11,877,760 12,257,825

Current assets 13,675,614 9,936,710 11,271,514 14,278,376 10,291,956 12,257,825

Non-current assets -- 1,585,804 -- -- 1,585,804 --

Other liabilities

Forward foreign exchange sales pending settlement 23,898,616 27,631,836 12,970,205 24,175,666 27,661,366 13,495,981

(Financed imports) (20,475) (17,510) (15,556) (20,475) (17,510) (15,556)

Foreign exchange purchase liabilities 11,867,531 10,574,863 9,626,919 12,481,513 11,200,934 10,221,084

(Advances on foreign exchange contracts) (9,270,926) (9,144,263) (7,253,490) (9,629,479) (9,406,691) (7,456,474)

Foreign currency payables 4,788 10,408 10,880 52,812 64,161 72,142

Unearned income on advances granted 3,208 3,727 3,859 3,208 3,727 3,859

Total 26,482,742 29,059,061 15,342,817 27,063,245 29,505,987 16,321,036

Current liabilities 12,037,858 11,458,085 15,342,817 12,618,361 11,905,011 16,321,036

Non-current liabilities 14,444,884 17,600,976 -- 14,444,884 17,600,976 --

Net Foreign exchange portfolio (12,807,128) (17,536,547) (4,071,303) (12,784,869) (17,628,227) (4,063,211)

Memorandum accounts

Credit opened for imports 775,956 935,474 1,317,268 837,361 949,106 1,338,391

Confirmed export credit 782,852 742,827 625,047 785,594 755,362 655,511

b) Foreign exchange results

R$ thousand



Foreign exchange income 3,487,656 3,031,502 4,050,818 3,529,650

Foreign exchange expenses (2,574,529) (3,033,681) (3,038,831) (3,476,408)

Foreign Exchange result 913,127 (2,179) 1,011,987 53,242


93

13 – Other assets

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Non-operating assets 267,053 269,978 288,725 408,968 349,428 360,868

Assets in special regime 163,991 162,028 159,002 164,077 162,114 159,088

Vehicles 564 648 516 108,518 77,445 70,131

Buildings 75,360 78,865 79,464 92,537 80,212 81,026

Property 19,049 19,185 18,787 19,049 19,185 18,787

Machinery and Equipment 5,589 6,725 28,416 6,513 7,656 29,186

Other 2,500 2,527 2,540 18,274 2,816 2,650

Supply materials 22,588 21,809 15,341 54,248 38,643 33,337

Subtotal Other Assets 289,641 291,787 304,066 463,216 388,071 394,205

(Provision for devaluations) (171,050) (169,506) (163,096) (187,412) (177,233) (171,142)

Prepaid expenses 3,634,981 3,424,120 2,096,061 4,463,860 3,672,842 2,277,638

Premiums for purchased credits payroll (1) 2,856,705 2,557,495 1,119,555 2,178,825 2,046,909 863,921

Insurance selling expenses -- -- -- 820,721 389,024 241,040

Contracts for providing banking services 614,031 702,278 801,298 614,031 702,278 801,298

Commissions for credit intermediation - financing of vehicles

18,348 27,668 39,755 302,052 101,720 149,152

Personnel expenses - Workers’ Meal Program 84,983 82,068 74,054 84,983 82,068 74,054

Other 60,914 54,611 61,399 463,248 350,843 148,173

Total Other Assets 3,753,572 3,546,401 2,237,031 4,739,664 3,883,680 2,500,701

Current assets 1,468,208 1,500,405 1,341,387 2,026,517 1,534,331 1,390,816

Non-current assets 2,285,364 2,045,996 895,644 2,713,147 2,349,349 1,109,885

(1) The amounts are amortized over the maturity of the installments of loans acquired from other financial institutions,


94

14 – Investments

a) Changes in subsidiaries and affiliates

R$ thousand

Banco do Brasil BB – Consolidated

Book value Changes in 1st half/2011 Book value Equity Income Book value Changes in 1st half/2011 Book value Equity Income

12.31.2010 Dividends Other Events

Equityincome

06.30.2011 06.30.2010 1st half/2010 12.31.2010 Dividends Other Events

Equityincome

06.30.2011 06.30.2010 1st half/2010

Domestic 16,598,375 (506,245) 417,509 1,474,608 17,984,247 12,044,153 1,391,374 7,115,534 (1,932) (455,207) (6,848) 6,651,547 5,909,879 83,539

Banco Votorantim S.A. 3,955,638 (64,150) (43,879) 174,478 4,022,087 3,912,197 181,206 -- -- -- -- -- -- 39,685

BB Leasing S.A. – Arrendamento Mercantil 3,315,768 (27,983) -- 117,822 3,405,607 35,861 10,019 -- -- -- -- -- -- --

BB Aliança Participações S.A.(1) 1,358,987 -- (1,374,298) 15,311 -- 1,051,146 225,138 -- -- -- -- -- -- --

BB Seguros Participações S.A. 1,190,044 -- 1,990,625 354,959 3,535,628 603,735 184,670 -- -- -- -- -- -- --

BB Banco de Investimento S.A. 1,113,206 (104,685) 21,511 440,559 1,470,591 732,911 469,592 -- -- -- -- -- -- --

BB Gestão de Recursos - Distribuidora de Títulos e Valores Mobiliários S.A.

133,647 (255,257) 280 255,223 133,893 129,829 217,955 -- -- -- -- -- -- --

Mapfre Nossa Caixa Vida e Previdência S.A.(2) 102,351 -- (102,351) -- -- 76,164 32,285 102,351 -- (89,032) (3,746) 9,573 76,164 32,285

BV Participações S.A. 67,140 (6,969) -- 15,571 75,742 53,759 15,965 -- -- -- -- -- -- --

Cobra Tecnologia S.A .(3) 63,114 -- 70,000 (19,651) 113,463 8,283 (36,461) -- -- -- -- -- -- --

Cadam S.A. 44,019 -- -- (1,889) 42,130 44,888 (1,443) 44,019 -- -- (1,889) 42,130 44,888 (1,443)

BB Corretora de Seguros e Administradora de Bens S.A. 33,540 -- 19 66,476 100,035 91,197 57,649 -- -- -- -- -- -- --

BB Administradora de Consórcios S.A. 24,443 (46,920) -- 49,389 26,912 16,920 26,835 -- -- -- -- -- -- --

BB Administradora de Cartões de Crédito S.A. 21,205 -- 33 5,713 26,951 25,848 4,610 -- -- -- -- -- -- --

BESC Distribuidora de Títulos e Valores Mobiliários S.A. - Bescval 11,848 (140) 170 343 12,221 9,921 181 -- -- -- -- -- -- --

BB Elo Cartões Participações S.A. (4) 10,771 -- -- 293 11,064 10,615 251 -- -- -- -- -- -- --

Tecnologia Bancária S.A.– Tecban (3) 7,636 -- -- (320) 7,316 7,614 448 -- -- -- -- -- -- --

Nossa Caixa Capitalização S.A. (2) 5,394 -- (5,413) 19 -- 5,574 98 -- -- -- -- -- -- --

Companhia Brasileira de Securitização – Cibrasec (3) 2,216 (141) -- 247 2,322 2,158 (19) -- -- -- -- -- -- --

Cia. Hidromineral Piratuba 2,211 -- -- 65 2,276 2,159 72 2,211 -- -- 65 2,276 2,159 72

Cia. Catarinense de Assessoria e Serviços - CCA (5) 228 -- -- -- 228 228 -- 228 -- -- -- 228 228 --

BB Banco Popular do Brasil S.A. (6) -- -- -- -- -- -- 1,768 -- -- -- -- -- -- --

BESC Financeira S.A.- Bescredi (6) -- -- -- -- -- -- 414 -- -- -- -- -- -- --

BESC S.A. Arrendamento Mercantil - BESC Leasing (6) -- -- -- -- -- -- 141 -- -- -- -- -- -- --

Itapebi -- -- -- -- -- -- -- 63,307 (1,932) (8,976) 4,298 56,697 58,284 12,415

Estruturadora Brasileira de Projetos - EBP -- -- -- -- -- -- -- 1,553 -- -- (1,168) 385 1,850 (687)

Pronor (7) -- -- -- -- -- -- -- 18,606 -- (19,096) 490 -- 20,786 (2,076)

Other equity (8) -- -- -- -- -- -- -- -- -- 117,077 (4,898) 112,179 -- 3,288

Goodwill/Bargain purchase on acquisition of investments 5,134,969 -- (139,188) -- 4,995,781 5,223,146 -- 6,883,259 -- (455,180) -- 6,428,079 5,705,520 --


95

R$ thousand

Banco do Brasil BB – Consolidated

Book value Changes in 1st half/2011 Book value Equity Income Book value Changes in 1st half/2011 Book value Equity Income

12.31.2010 Dividends Other Events

Equityincome

06.30.2011 06.30.2010 1st half/2010 12.31.2010 Dividends Other Events

Equity income

06.30.2011 06.30.2010 1st half/2010

Abroad 1,008,171 (47,188) 691,952 68,612 1,721,547 1,005,156 33,348 -- -- 314,512 -- 314,512 -- --

Brasilian American Merchant Bank 707,151 -- (41,077) 33,412 699,486 706,151 47,065 -- -- -- -- -- -- --

Banco do Brasil AG. Viena 200,628 -- (7,802) 958 193,784 199,224 (21,489) -- -- -- -- -- -- --

BB Leasing Company Ltd. 72,878 -- (4,598) 535 68,815 78,080 3,299 -- -- -- -- -- -- --

BB Securities LLC 27,514 -- (1,738) 5,238 31,014 21,701 4,473 -- -- -- -- -- -- --

Banco Patagonia(10) -- (47,188) 432,655 28,469 413,936 -- -- -- -- -- -- -- -- --

Goodwill on acquisition of investments (9) -- -- 314,512 -- 314,512 -- -- -- -- 314,512 -- 314,512 -- --

Profit / (loss) in the agencies -- -- -- (96,478) -- -- (2,599) -- -- -- (96,478) -- -- (2,599)

Profit / (loss) of subsidiaries -- -- -- (56,047) -- -- -- -- -- -- (56,047) -- -- (2,203)

Increase / decrease in equity resulting from handling -- -- -- 239 -- -- (28) -- -- -- -- -- -- (28)

Total Investments in Subsidiaries and Affiliates 17,606,546 (553,433) 1,109,461 1,390,934 19,705,794 13,049,309 1,422,095 7,115,534 (1,932) (140,695) (159,373) 6,966,059 5,909,879 78,709

(1) Investment transferred to holding BB-Mapfre SH1 Participações S.A. (Note 2.b).

(2) Investment transferred to subsidiary BB-Aliança Participações S.A. in 1st half of 2011.

(3) The information refers to period from November 2010 to May 2011.

(4) New denomination to Nossa Caixa S.A. – Administradora de Cartão de Crédito.

(5) Company in liquidation process, not valued by the equity method.

(6) Companies incorporated by the Banco do Brasil in 1st half of 2010.

(7) Investment divested in 1st half of 2011.

(8) Refers to investments on non-financial associated companies.

(9) According to Note 14.d

(10) According to Note 2.a


96

R$ thousand

Realized capital stock

Adjusted Shareholders'

Equity

Net income (loss) for the

period

Quantity of Shares(in thousands)

Ownership interest in

the total capital %Common Preferred

Domestic

Banco Votorantim S.A. 4,026,875 8,833,994 540,585 33,356,791 7,412,620 50.00

BB Leasing S.A. - Arrendamento Mercantil 3,261,860 3,433,589 117,822 3,000 -- 100.00

BB Aliança Participações S.A. (1) 1,054,113 1,602,122 163,278 102,513 -- 74.99

BB Seguros Participações S.A. 2,942,623 3,535,628 354,959 235,922 -- 100.00

BB Banco de Investimento S.A. 743,806 1,575,276 440,559 3,249 -- 100.00

BB Gestão de Recursos - Distribuidora de Títulos e Valores Mobiliários S.A.

109,698 389,150 255,223 100,000 -- 100.00

BV Participações S.A. 60,422 151,483 31,142 15,105 15,106 50.00

Cobra Tecnologia S.A . 119,527 113,518 (8,756) 248,459 248,586 99.97

Cadam S.A. 183,904 194,688 (4,971) -- 4,762 21.64

BB Corretora de Seguros e Administradora de Bens S.A. 26,917 100,035 66,476 1,000 -- 100.00

BB Administradora de Consórcios S.A. 14,100 73,832 49,389 14 -- 100.00

BB Administradora de Cartões de Crédito S.A. 9,300 26,951 5,713 398,158 -- 100.00

BESC Distribuidora de Títulos e Valores Mobiliários S.A. – Bescval

6,312 12,407 147 10,168,624 -- 99.62

BB-Elo Cartões Participações S.A. 10,000 11,064 293 10,000 -- 100.00

Tecnologia Bancária S.A.- Tecban (2) 158,377 162,214 (5,139) 169,395 -- 13.53

Nossa Caixa Capitalização S.A. 5,486 5,633 147 5,400 -- 100.00

Companhia Brasileira de Securitização – Cibrasec (3) 68,475 76,623 4,289 8 -- 12.12

Cia. Hidromineral Piratuba 4,057 14,059 404 63,931 -- 16.19

Cia. Catarinense de Assessoria e Serviços - CCA 780 474 -- 260 520 48.13

Itapebi 105,000 298,405 27,283 19,950 -- 19.00

Estruturadora Brasileira de Projetos - EBP 34,732 3,466 (10,509) 3,859 -- 11.11

Abroad

Brasilian American Merchant Bank 376,068 699,486 33,412 241,023 -- 100.00

Banco do Brasil AG. Viena (Áustria) 42,625 193,784 958 188 -- 100.00

BB Leasing Company Ltd. -- 68,814 535 1,000 -- 100.00

BB Securities LLC 7,801 31,015 5,238 5,000 -- 100.00

Banco Patagonia 272,960 811,639 55,821 366,825,016 -- 51.00

(1) Investment transferred to BB Mapfre SH1 Participações S.A. (Note 2.b).

(2) Banco do Brasil’s direct interest of 4.51%.

(3) Banco do Brasil’s direct interest of 3.03%.

b) Other investments

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Tax incentive investments 10,487 18,810 18,810 81,955 82,988 68,007

Equity securities 58 58 58 146 146 146

Stocks and shares 52,522 52,482 52,434 56,255 56,186 55,948

Other investments (1) 3,252 3,265 3,281 964,785 944,993 885,769

Other investments abroad 10,387 11,520 12,650 10,386 12,322 13,451

Total 76,706 86,135 87,233 1,113,527 1,096,635 1,023,321

Allowance for losses (45,199) (51,355) (51,317) (77,924) (84,415) (67,679)

(1) Includes in BB-Consolidated, the amount of R$ 889,553 thousand (R$ 866,917 thousand on 12.31.2010 and R$ 816,201 thousand on 6.30.2010), relating to the investments of Neoenergia, a jointly-owned subsidiary.


97

c) Goodwill on acquisition of investments

R$ thousand

Changes of Goodwill Banco do Brasil BB-Consolidated

1st half/2011 1st half/2010 1st half/2011 1st half/2010

Opening Balance 5,134,970 5,114,807 6,887,334 5,601,574

Acquisitions (1) 318,648 206,879 394,289 206,879

Amortizations (2) (143,325) (90,413) (292,086) (90,413)

Others (3) -- -- (245,385) --

Closing balance 5,310,293 5,231,273 6,744,152 5,718,040

(1) According to Note 2.a.

(2) Recorded in Other Operating Expenses.

(3) Includes reductions for participation in goodwill on investments in Brasilveículos Companhia de Seguros and Companhia de Seguros Aliança do Brasil, amounting to R$ 123,645 thousand and R$ 121,740 thousand, respectively.

There was no impairment provision for goodwill on the acquisition of investments in the 1st half of 2011.

d) Expected Goodwill Amortization

R$ thousand

2st half/2011 2012 2013 2014 2015 2016 2017 2018 2019 Total

Banco do Brasil

Banco Nossa Caixa 116,244 473,923 617,846 709,394 807,756 900,156 1,007,459 -- -- 4,632,778

Banco Votorantim 22,941 49,191 54,570 56,722 57,981 60,466 61,133 -- -- 363,004

Banco Patagonia 8,273 20,585 25,276 30,357 35,210 40,226 45,567 51,430 57,587 314,511

Total 147,458 543,699 697,692 796,473 900,947 1,000,848 1,114,159 51,430 57,587 5,310,293

Tax effects (1) (58,983) (217,480) (279,077) (318,589) (360,379) (400,339) (445,664) (20,572) (23,034) (2,124,117)

Net total 88,475 326,219 418,615 477,884 540,568 600,509 668,495 30,858 34,553 3,186,176

Other participations

BB-BI 47,459 109,997 127,614 147,360 168,092 191,781 211,293 43,280 -- 1,046,876

Cielo 41,801 96,911 111,552 127,883 146,681 168,243 192,975 38,571 -- 924,617

VisaVale 5,658 13,086 16,062 19,477 21,411 23,538 18,318 4,709 -- 122,259

BB Aliança Participações S.A. 69,082 116,984 90,676 -- -- -- -- -- -- 276,742

Aliança do Brasil 69,082 116,984 90,676 -- -- -- -- -- -- 276,742

BB-Aliança Rev Participações S.A 5,854 22,653 26,049 30,096 25,589 -- -- -- -- 110,241

Brasilveículos 5,854 22,653 26,049 30,096 25,589 -- -- -- -- 110,241

Total 122,395 249,634 244,339 177,456 193,681 191,781 211,293 43,280 -- 1,433,859

Tax effects (1) (44,462) (91,475) (90,732) (69,177) (75,937) (76,712) (84,517) (17,313) -- (550,325)

Net total 77,933 158,159 153,607 108,279 117,744 115,069 126,776 25,967 -- 883,534

BB-Consolidated

Total 269,853 793,333 942,031 973,929 1,094,628 1,192,629 1,325,452 94,710 57,587 6,744,152

Tax effects (1) (103,445) (308,955) (369,809) (387,766) (436,316) (477,051) (530,181) (37,885) (23,034) (2,674,442)

Net total 166,408 484,378 572,222 586,163 658,312 715,578 795,271 56,825 34,553 4,069,710

(1) 25% of income tax and social contribution of 15% for financial companies and 25% of income tax and social contribution of 9% for non-financial company.

The expected amortization of goodwill generated by acquisitions of equity backs on projections of results that supported the business, prepared by specialized firms contemplating the timing of the estimates and discount rates used in calculating the net present value of expected cash flows.


98

15 – Property and Equipment and Leased Assets

R$ thousand

Banco do Brasil

12.31.2010 1st half 2011 06.30.2011 06.30.2010

Book Balance

Changes Depreciation Cost Accumulated Depreciation

Accumulated Impairment

Book Balance

Book Balance

Property and equipment in use

Buildings 1,767,296 207,780 (111,995) 3,683,925 (1,817,566) (3,278) 1,863,081 1,559,555

Data processing systems 1,552,105 114,720 (250,446) 3,994,963 (2,577,179) (1,405) 1,416,379 1,356,479

Furniture and equipment in use 533,840 61,620 (49,855) 1,257,604 (711,999) -- 545,605 484,162

Land 212,604 (373) -- 212,231 -- -- 212,231 212,782

Facilities 176,920 15,292 (18,008) 933,133 (758,929) -- 174,204 181,955

Constructions in progress 128,509 18,688 -- 147,197 -- -- 147,197 48,787

Communication systems 129,210 7,509 (17,147) 308,612 (189,040) -- 119,572 96,133

Security systems 94,307 8,974 (11,101) 270,520 (178,340) -- 92,180 83,369

Furniture and equipment in stock 15,889 (11,251) -- 4,638 -- -- 4,638 16,953

Transport systems 49 1 (35) 554 (539) -- 15 85

Total 4,610,729 422,960 (458,587) 10,813,377 (6,233,592) (4,683) 4,575,102 4,040,260

R$ thousand

BB-Consolidated

12.31.2010 1st half 2011 06.30.2011 06.30.2010

Book Balance

Changes Depreciation Provision

for Impairment

Cost Accumulated Depreciation


Book Balance

Book Balance

Property and equipment in use 4,903,927 605,306 (478,704) (64) 11,737,112 (6,700,748) (5,899) 5,030,465 4,259,386

Buildings 1,775,777 279,717 (112,683) -- 3,782,244 (1,836,155) (3,278) 1,942,811 1,568,338

Data processing systems 1,652,762 162,412 (255,179) -- 4,225,370 (2,663,970) (1,405) 1,559,995 1,442,035

Furniture and equipment in use 651,357 84,068 (61,760) (64) 1,698,069 (1,023,252) (1,216) 673,601 575,159

Land 218,994 11,738 -- -- 230,732 -- -- 230,732 215,995

Facilities 200,495 33,171 (19,554) -- 995,031 (780,919) -- 214,112 192,498

Constructions in progress 156,401 21,829 -- -- 178,230 -- -- 178,230 60,317

Communication systems 133,618 9,053 (17,513) -- 320,631 (195,473) -- 125,158 100,622

Security systems 95,215 9,736 (11,219) -- 274,237 (180,505) -- 93,732 84,253

Transport systems 3,419 4,833 (796) -- 27,930 (20,474) -- 7,456 3,216

Furniture and equipment in stock 15,889 (11,251) -- -- 4,638 -- -- 4,638 16,953

Leased assets 818 (108) -- -- 1,412 (702) -- 710 895

Total 4,904,745 605,198 (478,704) (64) 11,738,524 (6,701,450) (5,899) 5,031,175 4,260,281

16 – Intangible Assets

a) Changes and Breakdown

R$ thousand

Banco do Brasil

12.31.2010 1st half 2011 06.30.2011 06.30.2010

Book Balance

Acquisitions Write-offs Amortization Provision for

Impairment (1) Cost

Accumulated Amortization


Book Balance

Book Balance

Rights due to payroll acquisition

5.803.461 359.743 (171.026) (1.004.263) 3.443 9.510.607 (4.466.096) (53.153) 4.991.358 6.573.733

Acquisition/ development of software

524.148 172.022 (7) (75.018) -- 835.125 (213.980) -- 621.145 392.097

Total 6.327.609 531.765 (171.033) (1.079.281) 3.443 10.345.732 (4.680.076) (53.153) 5.612.503 6.965.830


99

R$ thousand

BB-Consolidated

12.31.2010 1st half 2011 06.30.2011 06.30.2010

Book Balance

Acquisitions Write-offs Amortization Provision for

Impairment (1) Cost

Accumulated Amortization


Book Balance

Book Balance

Rights due to payroll acquisition

5.803.461 359.743 (171.026) (1.004.263) 3.443 9.510.607 (4.466.096) (53.153) 4.991.358 6.573.733

Acquisition/ development of software

642.261 204.670 (7) (76.195) (102) 1.116.013 (345.284) (102) 770.627 473.915

Other intangible assets (2) 5.810 4.186 -- (188) (302) 10.204 (396) (302) 9.506 3.952

Total 6.451.532 568.599 (171.033) (1.080.646) 3.039 10.636.824 (4.811.776) (53.557) 5.771.491 7.051.600

(1) Recorded in Other Operating Expenses. Recorded parcial reversion of provision for impairment in the 1st half 2011.

(2) Refer to commercial cooperation agreements from Banco Votorantim.

b) Estimate for amortization

R$ thousand

Banco do Brasil

Year 2011 2012 2013 2014 2015 2016 Total

Amounts to be amortized 1.951.414 1.566.385 1.223.484 606.399 202.668 62.153 5.612.503

R$ thousand

BB-Consolidated

Year 2011 2012 2013 2014 2015 2016 Total

Amounts to be amortized 1.967.947 1.597.866 1.254.964 637.879 234.148 78.687 5.771.491


100

17 – Deposits and Money Market Borrowing

a) Deposits

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Demand deposits 59,881,055 63,295,580 58,796,157 61,138,134 63,502,759 59,025,332

Individuals 24,963,649 27,256,630 23,701,296 25,013,926 27,304,103 23,733,899

Companies 20,834,770 24,730,542 20,974,474 22,135,859 24,925,483 21,183,500

Restricted 8,387,648 5,232,546 7,281,814 8,412,086 5,219,078 7,281,814

Government 3,094,217 3,311,606 3,258,674 3,094,217 3,311,606 3,258,674

Special from Federal Treasury 758,446 805,562 696,831 758,446 805,562 696,831

Foreign currency 575,358 521,739 1,932,088 575,305 521,644 1,932,088

Institutions of the financial system 563,402 364,871 346,285 541,220 342,328 332,969

Related companies 514,609 468,532 466,025 412,571 469,831 466,985

Domiciled abroad 15,963 20,552 15,047 21,511 20,124 14,949

Other 172,993 583,000 123,623 172,993 583,000 123,623

Savings deposits 89,216,638 89,287,840 81,540,814 89,216,638 89,287,840 81,540,812

Individuals 83,071,478 83,636,945 76,219,779 83,071,478 83,636,945 76,219,778

Companies 5,846,945 5,391,191 5,044,999 5,846,945 5,391,191 5,044,998

Related companies 291,364 251,709 265,941 291,364 251,709 265,941

Institutions of the financial system 6,851 7,995 10,095 6,851 7,995 10,095


Time deposits 220,394,367 193,670,882 181,222,783 234,243,117 204,652,146 192,715,468

Individuals and corporate entities 136.377.504 118.181.699 108.918.828 150.162.283 129.162.719 120.411.270

Judicial 74,449,382 64,687,761 60,253,643 74,513,353 64,688,005 60,253,886

Funds and programs – FAT (Note 17.e) 8,946,973 10,234,642 11,383,299 8,946,973 10,234,642 11,383,299

Funproger (Note 17.f) 122,739 111,968 145,102 122,739 111,968 145,102

Others 497,769 454,812 521,911 497,769 454,812 521,911

Deposits for investments -- 409,746 241,535 54 409,821 242,951

Total 385,612,791 368,686,768 335,905,372 396,151,143 376,850,668 343,960,826


Non-current liabilities 97,667,111 84,368,330 81,042,233 99,663,608 86,154,411 82,475,508

b) Segregation of deposits by deadline chargeability

R$ thousand

Banco do Brasil

Without maturity

Up to 3 months

3 to 12 months

1 to 3 years

3 to 5 years

More than5 years

06.30.2011 12.31.2010 06.30.2010

Time deposits (1) 86,445,859 10,249,100 28,466,551 42,965,272 52,266,613 972 220,394,367 193,670,882 181,222,783

Savings deposits 89,216,638 -- -- -- -- -- 89,216,638 89,287,840 81,540,814

Demand deposits 59,881,055 -- -- -- -- -- 59,881,055 63,295,580 58,796,157

Interbank deposits 78,237 9,131,767 4,476,473 2,054,003 361,513 18,738 16,120,731 22,022,720 14,104,083

Deposits for investments -- -- -- -- -- -- -- 409,746 241,535

Total 235,621,789 19,380,867 32,943,024 45,019,275 52,628,126 19,710 385,612,791 368,686,768 335,905,372


101

R$ thousand

BB-Consolidated

Without maturity

Up to 3 months

3 to 12 months

1 to 3 years

3 to 5 years

More than 5 years

Total 06.30.2011

12.31.2010 06.30.2010

Time deposits (1) 86,446,104 15,923,195 34,387,678 45,193,388 52,285,332 7,420 234,243,117 204,652,146 192,715,468

Savings deposits 89,216,638 -- -- -- -- -- 89,216,638 89,287,840 81,540,812

Demand deposits 61,138,134 -- -- -- -- -- 61,138,134 63,502,759 59,025,332

Interbank deposits 78,237 4,960,476 4,337,019 1,767,106 391,331 19,031 11,553,200 18,998,102 10,436,263

Deposits for investments 54 -- -- -- -- -- 54 409,821 242,951

Total 236,879,167 20,883,671 38,724,697 46,960,494 52,676,663 26,451 396,151,143 376,850,668 343,960,826

(1) Includes the amounts of R$ 83,514,822, on 6.30.2011, (R$ 72,371,360 thousand on 12.31.2010 and R$ 71,153,586 thousand on 6.30.2010) at Banco do Brasil and R$ 87,925,648 on 6.30.2011, (R$ 82,387,902 thousand, on 12.31.2010 and R$ 77,178,576 thousand on 6.30.2010) in BB-Consolidated, relating to term deposits with early repurchase clause (liquidity commitment), considering the original maturity dates established in the fundings.

c) Money market borrowing

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Own Portfolio 55,720,827 45,559,644 52,464,652 68,405,790 56,795,153 63,630,252


Corporate bonds 3,501,617 -- -- 13,167,459 8,834,614 8,345,014


Treasury notes 684,368 -- 649,602 2,085,577 2,677,992 1,492,771

Securities abroad 851,374 729,051 1,381,562 1,238,705 736,193 1,590,571

Others -- -- -- 434,102 442,295 566,350

Third-party portfolio 120,388,377 80,699,183 99,894,264 123,570,021 84,080,296 102,922,773



Treasury notes 3,499,998 5,881,601 3,932,631 3,517,840 6,381,943 4,441,819

Securities abroad 2,694,410 2,335,240 2,746,429 2,694,410 2,335,240 2,746,429

Subject to repurchase agreements with free movement

-- -- -- 899,619 1,299,506 49,544

Total 176,109,204 126,258,827 152,358,916 192,875,430 142,174,955 166,602,569


Non-current liability 7,779,173 5,869,643 6,864,228 9,938,818 7,922,326 9,209,469

d) Expenses with Money Market

R$ thousand



Expenses borrowings with deposits (13,572,987) (9,909,772) (14,674,939) (10,809,132)

Time deposits (6,814,658) (4,783,764) (7,589,701) (5,339,813)

Savings deposits (3,295,768) (2,709,778) (3,295,768) (2,709,778)

Judicial deposits (2,424,317) (1,851,293) (2,424,121) (1,851,293)

Interbank deposits (432,609) (244,264) (361,467) (249,618)

Others (605,635) (320,673) (1,003,882) (658,630)

Expenses with money market repurchase commitments

(8,709,339) (6,119,796) (9,638,827) (6,739,047)

Third-party portfolio (6,430,931) (4,783,382) (6,670,546) (4,986,462)

Own portfolio (2,278,324) (1,333,787) (2,926,055) (1,733,489)

Subject to repurchase agreements with free movement (84) (2,627) (42,226) (19,096)

Total (22,282,326) (16,029,568) (24,313,766) (17,548,179)


102

e) Fund for Workers’ Assistance (FAT)

R$ thousand

Program Resolution/

TADE

Return of FAT funds 06.30.2011 12.31.2010 06.30.2010

Type(1) Initial date

Final date

Available TMS (2)

TJLP Applied(3) Total

Available TMS (2)


Available TMS (2)


Proger Rural and Pronaf 280,138 3,486,648 3,766,786 269,114 4,223,643 4,492,757 100,996 4,993,547 5,094,543

Pronaf Custeio 04/2005 RA 11/2005 -- 8,007 45,133 53,140 36,963 73,351 110,314 20,586 136,570 157,156

Pronaf Investimento 05/2005 RA 11/2005 -- 193,397 2,233,668 2,427,065 84,368 2,581,667 2,666,035 -- 2,923,451 2,923,451

Giro Rural – Aquisição de Títulos 03/2005 SD 01/2008 01/2014 -- 746,189 746,189 -- 1,019,428 1,019,428 -- 1,196,665 1,196,665

Giro Rural Fornecedores 14/2006 RA 08/2006 -- 47,825 263,168 310,993 114,269 310,209 424,478 33,401 433,515 466,916

Rural Custeio 02/2006 RA 11/2005 -- 1,360 8,051 9,411 1,982 10,742 12,724 7,661 19,169 26,830

Rural Investimento 13/2005 RA 11/2005 -- 29,549 190,439 219,988 31,532 228,246 259,778 39,348 284,177 323,525

Proger Urbano 223,317 4,657,825 4,881,142 214,352 5,193,775 5,408,127 169,103 5,633,480 5,802,583

Urbano Investimento 18/2005 RA 11/2005 -- 167,475 4,255,319 4,422,794 169,514 4,686,928 4,856,442 160,000 5,020,812 5,180,812

Urbano Capital de Giro 15/2005 RA 11/2005 -- 51,913 393,182 445,095 38,804 485,761 524,565 -- 575,101 575,101

Empreendedor Popular 01/2006 RA 11/2005 -- 3,929 9,324 13,253 6,034 21,086 27,120 9,103 37,567 46,670

Other 63,230 235,815 299,045 62,916 270,842 333,758 191,193 294,980 486,173

Exportação 27/2005 RA 11/2005 -- -- 1,957 1,957 -- 2,145 2,145 479 1,876 2,355

Integrar Área Rural 26/2005 RA 11/2005 -- -- -- -- -- 18 18 9 32 41

Integrar Área Urbana 25/2005 RA 11/2005 -- 75 466 541 8,129 408 8,537 81 9,329 9,410

Inclusão Digital 09/2005 RA 11/2005 -- -- -- -- -- 10 10 -- 11 11

FAT Giro Setorial Micro e Pequenas Empresas

08/2006 RA 09/2007 -- 22,985 46,009 68,994 17,183 31,748 48,931 797 650 1,447

FAT Giro Setorial Médias e Grandes Empresas

09/2006 RA 09/2007 -- -- -- -- -- -- -- -- -- --

FAT Giro Setorial Veículos MGE 09/2006 RA 02/2009 -- 1,040 518 1,558 1,666 4,367 6,033 1,605 8,610 10,215

FAT Giro Setorial Veículos MPE 08/2006 RA 02/2009 -- 11,311 16,680 27,991 19,033 50,005 69,038 18,725 89,523 108,248

FAT Giro Cooperativo Agropecuário 10/2006 RA 07/2006 -- -- -- -- -- -- -- -- -- --

FAT Fomentar Micro e Pequenas Empresas

11/2006 RA 08/2006 -- 1,255 10,130 11,385 1,394 12,391 13,785 1,521 14,569 16,090

FAT Fomentar Médias e Grandes Empresas

12/2006 RA 07/2006 -- 9,621 74,552 84,173 3,377 90,747 94,124 -- 103,218 103,218

FAT Taxista 02/2009 RA 09/2009 -- 10,003 45,921 55,924 5,382 31,731 37,113 164,832 14,891 179,723

FAT Charges to capitalize -- -- -- -- 6,940 39,582 46,522 6,752 47,272 54,024 3,144 52,271 55,415

Total 566,685 8,380,288 8,946,973 546,382 9,688,260 10,234,642 461,292 10,922,007 11,383,299

(1) RA - Auto Return (monthly, 2% on the balance) and SD - Available Balance.

(2) Funds remunerated by the Average Selic Rate (TMS).

(3) Funds remunerated by the Long Term Interest Rate(TJLP).


103

FAT is a special accounting and financial fund, established by Law 7998/1990, attached to the Ministry of Labor and Employment and managed by the Executive Council of the Workers’ Assistance Fund (Codefat). Codefat is a collective, tripartite, equal level organization, composed of representatives of workers, employers and government, which acts as the manager of FAT.

The main actions to promote employment using FAT funds are structured around the Programs for the Generating Employment and Earnings (Proger), whose resources are allocated through special deposits, established by Law 8352/1991, in official federal financial institutions (including, among others, Proger in the urban program- Investment and Working Capital - and rural program, the National Program for Strengthening Family Farming - Pronaf, the program that allocates resources for the purchase of construction materials - FAT Housing, in addition to the special lines such as FAT Rural and Urban Integration, FAT Giro Setorial - Micro and Small-Sized Companies, FAT Giro Setorial - Medium and Large-Sized Companies, FAT Fomentar - Micro and Small-Sized Companies, FAT Fomentar - Medium and Large-Sized Companies, FAT Giro Agropecuário, FAT Digital Inclusion and FAT Taxi).

The FAT special deposits, allocated with Banco do Brasil, while available, incur interest on a daily pro rata basis using the Average Selic Rate. As they are applied on loans, the interest rate is changed to the Long-term Interest Rate during the effective period of the loans. The earnings on the Bank’s funds are paid to FAT on a monthly basis, as established in CODEFAT Resolutions 439/2005 and 489/2006.

f) Guarantee Fund for Generation of Employment and Earnings (FUNPROGER)

The Guarantee Fund for Generation of Employment and Earnings (Funproger) is a special accounting fund established on November 23, 1999 by Law 9872/1999, amended by Law 10360/2001 and by Law 11110/2005 and regulated by Codefat Resolution 409/2004. It is managed by Banco do Brasil under the supervision of Codefat/MTE and the balance is R$ 122,739 thousand at 06.30.2011 (R$ 111,968 thousand at 12.31.2010 and R$145,102 thousand at 06.30.2010).

The objective of Funproger is provide guarantees to entrepreneurs who do not have the necessary guarantees of their own to contract Proger Urbano and Programa Nacional de Microcrédito Produtivo Orientado financing, through the payment of a commission. The net assets of Funproger are accumulated through funds arising from the difference between the Average Selic Rate and the Long-Term Interest Rate in respect of the remuneration of the special deposit balances available in FAT. Other sources of funds are the earnings from its operations and the income on its cash resources paid to Banco do Brasil, the fund manager.

18 – Borrowings and onlendings

a) Borrowings

R$ thousand

Banco do Brasil

up to 90 days

from 91 to 360 days

from 1 to 3 years

from 3 to 5 years

from 5 to 15 years

Total 06.30.2011

12.31.2010 06.30.2010

Abroad

Borrowings from BB Group companies overseas

85,611 256,832 8,451,233 -- -- 8,793,676 8,846,200 7,851,716

Borrowings from bankers abroad 1,222,611 4,120,010 484,992 29,046 -- 5,856,659 5,291,481 8,279,272

Public sector onlendings (1) -- 198,557 375,205 187,603 -- 761,365 914,401 1,098,338

Imports 93,343 35,811 91,065 50,392 2,277 272,888 318,861 379,313

Exports -- 10,419 -- -- -- 10,419 18,471 39,044

Total 1,401,565 4,621,629 9,402,495 267,041 2,277 15,695,007 15,389,414 17,647,683

Current liabilities 6,023,194 13,103,563 13,816,700

Non-current liabilities 9,671,813 2,285,851 3,830,983


104

R$ thousand

BB-Consolidated

up to 90 days

from 91 to 360 days

from 1 to 3 years

from 3 to 5 years

from 5 to 15 years

Total 06.30.2011

12.31.2010 06.30.2010

Domestic

Borrowing from non financial companies 29,682 -- 23,400 -- -- 53,082 82,771 119,696

Others 5,038 -- -- -- -- 5,038 10,679 17,367

Abroad

Borrowings from bankers abroad 2,216,204 4,844,036 1,348,221 29,108 -- 8,437,569 7,179,761 10,349,483

Public sector onlendings (1) -- 198,557 375,205 187,603 -- 761,365 914,401 1,098,338

Imports 76,403 19,033 50,995 30,936 891 178,258 231,970 259,561

Exports 96,251 167,034 -- -- -- 263,285 178,092 171,366

Total 2,423,578 5,228,660 1,797,821 247,647 891 9,698,597 8,597,674 12,015,811



(1) Maturity date as of April 2015 and rate of 6.92% p.a.

b) Onlendings

Domestic – Official institutions R$ thousand

Programs Financial chargesBanco do Brasil BB-Consolidated

06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

National Treasury - Rural credit 1,568,930 1,512,821 2,073,619 1,603,143 1,549,490 2,073,619

Pronaf TMS (if available) or

0.5% p.a. to 4.5% p.a. 1,320,228 1,274,161 1,835,010 1,320,228 1,274,161 1,835,010

Recoop 5.75% p.a. to 7.25% p.a. 104,618 117,353 128,149 104,618 117,353 128,149

Cocoa TJLP + 0.6% p.a. or 6.35% p.a. 78,162 47,678 68,053 78,162 47,678 68,053

Farming/livestock breeding TR or TR + 9% p.a. 41,567 41,274 41,052 41,567 41,274 41,052

Others -- 24,355 32,355 1,355 58,568 69,024 1,355

BNDES 24,482,999 24,937,764 20,624,630 26,406,092 26,978,427 22,249,516

Banco do Brasil S.A. 0.6305% p.a. to 14.1% p.a. or

TJLP/ exch. var. + 0.5% p.a. to 4.5% p.a.24,482,999 24,937,764 20,624,630 24,482,999 24,937,764 20,624,630

Banco Votorantim TJLP/ exch. var. + 1.3% p.a. to 10.5% p.a. -- -- -- 1,923,093 2,040,663 1,624,886

Caixa Econômica Federal -- 196,840 147,079 141,635 196,840 147,079 141,635

Finame 13,791,468 12,612,578 10,433,626 15,414,020 14,046,259 11,372,559

Banco do Brasil S,A,1% p.a. to 11% p.a. or

TJLP/ exch. var. + 0.5% p.a. to 5.5% p.a.13,791,468 12,612,578 10,433,626 13,802,200 12,625,745 10,449,626

Banco Votorantim TJLP / Pre – 0.3% p.a. to 11.5% p.a. -- -- -- 1,611,820 1,420,514 922,933

Other Official Institutions -- 7,732,614 8,042,770 675,079 7,732,614 8,042,770 675,079

Special supply - Rural savings TR 7,440,027 7,399,212 204,007 7,440,027 7,399,212 204,007

Funcafé TMS (if available) or 6.75% p.a. 292,448 643,419 470,934 292,448 643,419 470,934

Others -- 139 139 138 139 139 138

Total 47,772,851 47,253,012 33,948,589 51,352,709 50,764,025 36,512,408




105

Foreign R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Funds obtained under the terms of Resolution CNN 3.844/2010 300,112 525,663 753,836 86,362 96,658 103,064

Special fund for support to small and medium manufacturing companies - FAD 3

477 477 477 477 477 477

Total 300,589 526,140 754,313 86,839 97,135 103,541

Current liabilities 11,030 112,178 317,009 10,592 11,238 12,787

Non-current liabilities 289,559 413,962 437,304 76,247 85,897 90,754

c) Expense of borrowings and onlendings

R$ thousand



Cost of Borrowings (57,851) (380,471) (65,337) (269,198)

Expenses Onlendings (1,215,314) (1,123,824) (1,316,110) (1,210,364)

BNDES (785,708) (652,864) (847,477) (717,353)

Finame (298,316) (277,558) (336,732) (302,394)

National Treasury (70,674) (65,709) (71,285) (65,709)

Caixa Econômica Federal (3,705) (2,478) (3,705) (2,478)

Foreign -- (99,355) -- (96,570)

Others (56,911) (25,860) (56,911) (25,860)

Expenses for Financial and development liabilities (227,647) (282,242) (227,647) (282,242)

Expenditure obligations with foreign banks -- (125,370) (2,087) (138,289)

Total (1,500,812) (1,911,907) (1,611,181) (1,900,093)


106

19 – Resources from Securities Issues

R$ thousand

Borrowings CurrencyIssued

valueRemuneration

Date of funding

Maturity 06.30.2011 12.31.2010 06.30.2010

Banco do Brasil

Program “Global Medium – Term Notes” 4,518,949 2,964,545 3,173,547

R$ 350,000 9.75% p.a. 07/2007 07/2017 332,111 332,768 332,008

US$ 100,000 Libor 6m+2.55% p.a. 07/2009 07/2014 155,483 159,776 167,844

US$ 950,000 4.5% p.a. 01/2010 01/2015 1,513,764 1,617,034 1,749,665

US$ 500,000 6% p.a. 01/2010 01/2020 795,890 854,967 924,030

EUR 750,000 4.5% p.a. 01/2011 01/2016 1,721,701 -- --

Certificates of deposits - Long Term 2,270,948 2,286,150 2,138,881

US$ 30,000 1.82% p.a. 05/2010 05/2011 -- -- 54,021

US$ 199,889 3.88% p.a. 06/2009 06/2012(1) -- -- 359,940

US$ 98,105 3.08% p.a. 07/2009 07/2012(1) -- -- 176,658

US$ 4,908 2.92% p.a. 07/2009 06/2012(1) -- -- 8,838

US$ 98,101 3% p.a. 08/2009 08/2012(1) -- -- 176,650

US$ 9,920 3.46% p.a. 08/2009 08/2016(1) -- -- 17,863

US$ 98,127 2.85% p.a. 09/2009 08/2012(1) -- -- 176,697

US$ 99,941 3.36% p.a. 10/2009 10/2012(1) -- -- 179,965

US$ 195,854 2.12% p.a. 03/2010 03/2013(1) -- -- 352,674

US$ 146,961 2.53% p.a. 10/2009 10/2012(1) -- -- 264,631

US$ 99,000 3.03% p.a. 01/2010 01/2013(1) -- 164,875 178,269

US$ 100,000 2.88% p.a. 01/2010 01/2013(1) -- 166,540 180,070

US$ 4,000 3.8% p.a. 11/2009 12/2012 6,241 6,662 7,203

US$ 1,000 3.67% p.a. 12/2009 12/2012 1,560 1,665 1,801

US$ 2,000 3.19% p.a. 05/2010 05/2013 3,120 3,331 3,601

US$ 200,000 3.34% p.a. 08/2010 06/2012(1) -- 332,990 --

US$ 100,000 2.67% p.a. 08/2010 07/2012(1) -- 164,918 --

US$ 5,000 2.69% p.a. 08/2010 06/2012(1) -- 8,251 --

US$ 10,000 3.4% p.a. 08/2010 08/2016(1) -- 16,548 --

US$ 200,000 2.12% p.a. 08/2010 03/2013(1) -- 328,041 --

US$ 100,000 2.5% p.a. 08/2010 08/2012 154,618 164,830 --

US$ 4,806 2.02% p.a. 09/2010 09/2012 7,498 8,003 --

US$ 30,000 2.48% p.a. 09/2010 09/2013 46,809 49,962 --

US$ 100,000 2.34% p.a. 09/2010 08/2012 154,637 164,807 --

US$ 150,000 2.07% p.a. 10/2010 10/2012 231,785 246,800 --

US$ 25,000 2.2% p.a. 11/2010 11/2012 39,008 41,635 --

US$ 100,000 2.92% p.a. 11/2010 10/2012 155,986 166,482 --

US$ 150,000 2.63% p.a. 12/2010 12/2013 234,045 249,810 --

US$ 100,000 2.78% p.a. 01/2011 01/2013 156,030 -- --

US$ 10,000 2.63% p.a. 02/2011 08/2016 15,544 -- --

US$ 99,000 2.87% p.a. 02/2011 01/2013 154,470 -- --

US$ 100,000 2.72% p.a. 03/2011 03/2013 156,870 -- --

US$ 100,000 2.02% p.a. 03/2011 03/2013 308,977 -- --

US$ 247,500 2.27% p.a. 05/2011 02/2014 386,174 -- --

US$ 2,000 1.5% p.a. 06/2011 04/2014 3,121 -- --

US$ 5,000 1.43% p.a. 06/2011 04/2013 7,802 -- --

US$ 29,900 1.97% p.a. 06/2011 02/2013 46,653 -- --

Certificates of deposits - Short Term(2) US$ 2,495,440 1,289,609 1,665,235

Certificate of Credit EUR -- 7,816 --

Resources Letters of Credit Agribusiness

(3) 3,310,287 275,445 30,222

Short Term R$ 525,451 85.2 a 94.2% do DI 538,025 -- --

Long Term(3) R$ 2,705,040 80.6 a 94% do DI 2,772,262 275,455 30,222

Letters of Credit 827,063 207,994 --

Total Banco do Brasil 13,422,687 7,031,559 7,007,885

Banco Patagonia 41,535 -- --

Bonds G PAT Series I ARS 50,000 14.3% p.a. 03/2010 03/2012 16,833 -- --

Bonds G PAT Series II ARS 94,310 14.12% p.a. 05/2010 05/2012 24,702 -- --

Special purpose entities abroad(4)

Securitization of future flow of payment orders from abroad

US$ 250,000 6.55% p.a. 12/2003 12/2013 160,502 202,361 251,299

US$ 250,000 Libor 3m+0.55% p.a. 03/2008 03/2014 390,213 416,517 448,780

US$ 200,000 Libor 3m+1.2% p.a. 09/2008 09/2015 264,293 315,303 360,418

US$ 150,000 5.25% p.a. 04/2008 06/2018 234,590 250,429 270,735

Total Special purpose entities abroad 1,049,598 1,184,610 1,331,232


107

R$ thousand

Borrowings CurrencyIssued

valueRemuneration

Date of funding

Maturity 06.30.2011 12.31.2010 06.30.2010

Banco Votorantim

Debentures 1,504,108 1,506,785 1,535,787

With exchange variation R$ PTAX+12.0436% p.a. 12/2006 12/2011 739,489 783,564 849,778

Post-fixed R$ DI + 0.35% p.a. 06/2006 07/2012 764,619 723,221 686,009

Real Estate Receivables Certificates 90% do DI 02/2009 01/2012 1,447 2,316 13,185

Letters of Credit - Agribusiness 90% do DI 07/2007 03/2020 791,321 894,759 883,799

Letters of Credit 2,852,525 1,303,480 --

Pre-fixed 12.4% a 14% p.a. 07/2010 02/2014 23,295 6,822 --

Post-fixed 106% a 112% DI 07/2010 07/2016 2,765,188 1,296,658 --

Post-fixed 108% Selic 02/2011 02/2013 420 -- --

Post-fixed 100% IPCA 01/2011 06/2014 63,622 -- --

Liabilities for securities abroad – Global Medium Term Notes 2,688,189 1,441,671 1,327,213

Short-Term(5) 178,417 478,224 297,581

Long-Term 2,509,772 963,447 1,029,632

US$ 50,000 Libor 3m+2% p.a. 08/2005 08/2010 -- -- 76,527

US$ 100,000 6.88 % p.a. 10/2005 10/2015(1) -- -- 112,716

R$ 55,500 16.2% p.a. 11/2005 11/2010 -- -- 40,502

R$ 100,000 9.25% p.a. 12/2005 12/2012 91,896 81,296 84,090

US$ 100,000 6.75 % p.a. 09/2006 09/2016 75,453 80,532 86,687

R$ 100,000 10.62% p.a. 04/2007 04/2014 103,699 103,606 103,534

US$ 250,000 4.25 % p.a. 02/2010 02/2013 391,729 423,680 457,766

US$ 37,500 4.25 % p.a. 04/2010 02/2013 59,523 57,637 67,810

CHF 125,000 2.75 % p.a. 12/2010 12/2013 225,236 216,696 --

US$ 625,000 5.25 % p.a. 02/2011 02/2016 980,854 -- --

US$ 37,500 3 % p.a. 03/2011 03/2014 58,552 -- --

R$ 10,000 14.19 % p.a. 05/2011 01/2015 16,233 -- --

R$ 309,253 6.25 % p.a. 05/2011 05/2016 506,597 -- --

Total Banco Votorantim 7,837,590 5,149,010 3,759,984

Non-Financial Corporations

Cibrasec

Real Estate Receivables Certificates (6) 7,734 7,233 6,734

Kepler Weber S,A

Debentures R$ TJLP +3.08 % p.a. 09/2007 09/2020 16,067 17,977 131,193

Ativos S,A, Securitizadora de Créditos Financeiros

Debentures R$ DI + 1.5% p.a. 03/2010 03/2014 83,174 98,294 --

Total Non-Financial Corporations 106,975 123,504 137,927

Eliminated amount on consolidation (7)

(38,287) (2,577) (4,865)

Total BB-Consolidated 22,420,098 13,486,107 12,232,163



(1) Operations settled in advance during the year 2010 and the first half of 2011.

(2) Securities maturing in less than 360 days and interest rates of the certificate issued in U,S, dollars between 0,18% p.a. and 2,87% p.a.

(3) Operations period between 361 and 720 days.

(4) The Special Purpose Entity (SPE) - "Dollar Diversified Payment Rights Finance Company" was organized under the laws of the Cayman Islands for the following purposes: (a) the issuance and sale of securities in the international market, (b) use of resources obtained by issuing securities to pay for the purchase, with the BB, the rights to payment orders issued by banking correspondents located in the U,S, and by the agency of BB New York in U,S, dollars, for an agency for Brasil ( "Rights on Consignment") and (c) making payments of principal and interest on securities and other payments payable on the issuance of these securities, The SPE declares that it has no relevant asset or liability other than the rights and duties originating from the contracts for issue of securities, Bank does not hold the control, is not a shareholder, the owner, or is a beneficiary of any of the results of operations of the SPE, The liabilities arising from the issued securities are paid by the SPE using the funds accumulated in its account,

(5) Securities with a maturity of less than 360 days, foreign currency and national, and interest rates between 2,28% p.a. and 11,1% p.a.

(6) Reference Rate - TR, General Market Price Index - IGP-M, IPCA and average maturity of 135 months,

(7) Refers to securities issued by Banco do Brasil, in possession of subsidiary abroad.


108

20 – Other Liabilities

a) Financial and Development Funds

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

PIS/Pasep 2,058,927 2,027,901 2,107,678 2,058,927 2,027,901 2,107,678

Merchant Navy 866,775 901,393 855,733 866,775 901,393 855,733

Funds from the State Government of São Paulo 538,806 516,424 485,826 538,806 516,424 485,826

Consolidation of Family Farming – CAF 35,481 36,181 47,417 35,481 36,181 47,417

Special Lending Program for Agrarian Reform – Procera 29,381 36,634 177,717 29,381 36,634 177,717

Combating Rural Poverty – Our First Land – CPR/NPT 6,477 2,957 6,617 6,477 2,957 6,617

Land and Agrarian Reform – BB Banco da Terra 2,822 2,237 2,316 2,822 2,237 2,316

Others 39,358 44,660 45,512 39,358 44,660 45,512

Total 3,578,027 3,568,387 3,728,816 3,578,027 3,568,387 3,728,816



b) Taxes and Social Security

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Legal liabilities (Note 28.e) 12,478,583 12,241,776 12,017,767 13,211,062 12,942,257 12,632,587

Deferred tax liabilities (Note 25.d) 5,455,616 4,733,093 5,357,346 6,434,803 5,907,382 6,443,413

Provision for taxes and contributions on net income 2,270,941 83,766 2,054,256 3,277,913 750,904 2,828,331

Provision for tax litigation (Note 28.b) 203,133 195,377 198,895 1,292,012 1,260,923 1,221,967

Taxes payable 712,373 771,502 501,758 1,016,078 1,181,390 738,940

Taxes and contributions on net income payable 8,516 4,748,986 5,942 210,320 5,257,069 153,232

Others 316,399 316,399 296,215 304,570 313,194 289,609

Total 21,445,561 23,090,899 20,432,179 25,746,758 27,613,119 24,308,079




109

c) Subordinated Debt

R$ thousand

Funding Issued ValueRemuneration

p.a.Date of

FundingMaturity 06.30.2011 12.31.2010 06.30.2010

Banco do Brasil

FCO – Resources from Fundo Constitucional do Centro-Oeste

13,882,051 13,455,864 13,239,454

Funds applied(1) 12,901,385 11,751,006 11,360,015

Resources available (2) 948,622 1,492,488 1,630,023

Charges to capitalize 32,044 212,370 249,416

Subordinated CDB Issued in the Country 4,043,283 3,807,875 3,596,792

900,000 113.8% do CDI 03/2009 09/2014 1,151,066 1,082,844 1,021,732

1,335,000 115% do CDI 03/2009 03/2015 1,709,549 1,607,190 1,515,558

1,000,000 105% do CDI 11/2009 11/2015 1,182,668 1,117,841 1,059,502

Subordinated Debt Abroad 3,845,513 1,614,119 551,208

US$ thousand 300,000 8.5% 09/2004 09/2014 470,087 500,519 551,208

US$ thousand 660,000 5.375% 10/2010 01/2021 1,055,014 1,113,600 --

US$ thousand 1,500,000 5.875% 05/2011 01/2022 2,320,412 -- --

Subordinated Letters of Credit 2,546,512 1,082,764 1,024,424

1,000,000 108.5% do CDI 03/2010 03/2016 1,147,711 1,082,764 1,024,424

1,006,500 111% do CDI 03/2011 03/2017 1,040,359 -- --

335,100 111% do CDI 04/2011 04/2017 344,699 -- --

13,500 111% do CDI 05/2011 05/2017 13,743 -- --

Total Subordinated Debt from Banco do Brasil 24,317,359 19,960,622 18,411,878

Banco Votorantim

Subordinated CDB Issued in the Country 1,451,345 1,631,268 1,539,508

312,500 CDI+0.491417% 11/2007 11/2012 459,310 434,228 411,584

8,500 CDI+0.491417% 12/2007 12/2012 12,471 11,791 11,175(3) 200,000 CDI+0.540556% 12/2007 12/2012 11,653 277,838 263,285

32,500 IGPM+7.219701% 12/2007 12/2012 52,773 49,360 45,212

57,500 IPCA+7.934241% 03/2008 03/2013 89,078 82,321 77,392

7,500 IPCA+7.855736% 08/2009 08/2014 9,648 8,921 8,389

5,250 IPCA+7.924428% 08/2009 08/2014 6,761 6,250 5,876

19,500 IPCA+8.002932% 08/2009 08/2014 25,151 23,239 21,838

2,500 IPCA+7.953867% 08/2009 08/2014 3,221 2,976 2,798

260,000 CDI+1.670229% 08/2009 08/2014 321,297 301,977 284,529

250,000 CDI+1.635268% 12/2009 12/2014 298,680 280,768 264,593

135,000 CDI+1.674668% 12/2009 12/2014 161,302 151,599 142,837

Subordinated Note US$ thousand 575,000 7.38% 01/2010 01/2020 854,240 942,842 700,558

Subordinated Letters of Credit 534,528 152,483 --

1,000 IPCA+6.88494% 11/2010 11/2016 1,098 1,020 --

5,000 IPCA+7.25% 11/2010 11/2020 5,487 5,085 --

5,000 IPCA+7.2% 11/2010 11/2016 5,480 5,076 --

15,000 IPCA+7.1% 11/2010 11/2016 16,471 15,294 --

94,950 CDI+1.3% 11/2010 11/2016 96,005 95,982 --

30,000 CDI+1.6% 12/2010 12/2016 30,045 30,026 --

324,900 CDI+1.94% 05/2011 05/2017 330,212 -- --

35,550 IGPM+7.420494% 05/2011 05/2017 35,994 -- --

1,400 IPCA+7.626766% 05/2011 05/2017 1,420 -- --

4,650 IPCA+7.713512% 05/2011 05/2017 4,717 -- --

7,500 IPCA+7.95% 05/2011 05/2017 7,599 -- --

Debentures 693,575 CDI+0.5% 04/2006 04/2016 -- 725,538 687,685

Total Subordinated Debt from Banco Votorantim 2,840,113 3,452,131 2,927,751

Subordinated debt issued by the Banco do Brasil, in the possession of subsidiary abroad, eliminated in the BB-Consolidated

(2,628) (637) --

Total Subordinated Debt from BB-Consolidated (4)

27,154,844 23,412,116 21,339,629

(1) Contracted charges are paid by borrowers, with less the del credere financial institution, according to article 9 of Law n.º 7,827/1989.

(2) Remunerated based on extra-rate announced by the Central Bank of Brazil (Bacen), according to article 9 of Law n.º 7,827/1989.

(3) The amount of R$ 192,071 thousand from the issued value was settled in 1st half 2011.

(4) The amount of R$ 22,111,297 thousand (R$ 18,738,173 thousand on 12.31.2010 and R$ 17,767,405 thousand on 06.30.2010) compose the level II of the Referential Equity (PR), in conformity with CMN Resolution n.º 3,444/2007. As determined by Bacen, subordinated debts issued by Banco Votorantim do not compose the Bank’s PR (Note 29.f).


110

d) Capital and Debt Hybrid Instruments

R$ thousand

Funding

Banco do Brasil and BB-Consolidated

Issued Value (US$ thousand)

Remuneration p.a.

Date of Funding 06.30.2011 12.31.2010 06.30.2010

Perpetual Bonuses

500,000 7.95% 01/2006 -- 911,750 985,628

1,500,000 8.5% 10/2009 2,366,620 2,459,533 2,657,765

Total Banco do Brasil 2,000,000 2,366,620 3,371,283 3,643,393

Values eliminated in the BB-Consolidated (321) (9,890) (344)

Total BB-Consolidated 2,366,299 3,361,393 3,643,049

Current liabilities 39,788 55,746 --


The amount of R$ 2,262,435 thousand of Perpetual Bonuses compose the level I of the Referential Equity (R$ 2,414,830 thousand and R$ 816,046 thousand in 12.31.2010, and R$ 2,611,015 thousand and R$ 882,343 thousand in 06.30.2010, respectively, the level I and the level II of Referential Equity), in conformity with CMN Resolution n.º 3,444/2007 (Note 29.f).

The Bank settled, in January 2011, the US$ 500,000 thousand bonus, issued in January 2006, through the exercise of the redemption option provided in the operation.

The bonus of US$ 1,500,000 thousand, issued in October 2009, has the option of redemption at the initiative of the Bank from 2020 or on each twice yearly payment of interest thereafter, provided by prior authorization of Bacen. If the Bank does not exercise the option to redeem in October 2020, the interest on the bonds will be fixed on this date for 7.782% over the trading price of 10 years North American Treasury bonds. Thereafter, every 10 years, the interest on the bonds will be corrected by taking into account the trading price of 10 years North American Treasury bonds. The terms of Perpetual Bonuses determine that the Bank suspend the twice yearly payments of interest and/or accessories on those securities issued (which shall not be paid or accrued) if:

(i) the Bank is not framed or the payment of such charges do not allow the Bank is in accordance with the levels of capital adequacy, operational limits or its financial indicators are below the minimum level required by the rules applicable to Brazilian banks;

(ii) Bacen or the regulatory authorities determine the suspension of payments of such charges; (iii) any event of insolvency bankruptcy occurs; (iv) any default occurs; or (v) the Bank has not distributed dividend payments or interest on equity to common shareholders for

the period corresponding to the period of calculation of such interest and/or accessories.


111

e) Sundry

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Credit/debit card operations 9,364,765 10,420,831 7,770,628 9,364,765 10,420,831 7,770,628

Actuarial liabilities (Note 27.d) 7,031,875 6,906,736 6,758,094 7,031,875 6,906,736 6,758,094

Provisions for payments 3,156,728 3,102,822 3,001,009 4,224,982 3,707,256 3,482,382

Provisions for civil claims (Note 28.b) 3,531,358 3,464,569 3,204,045 3,669,939 3,594,694 3,353,840

Sundry creditors – domestic 1,191,574 1,893,896 2,036,985 3,283,126 3,698,337 3,437,127

Provision for labor claims (Note 28.b) 2,245,651 2,462,390 2,736,323 2,392,876 2,538,036 2,804,314

Funds bounded to credit operations 685,416 716,859 708,044 1,082,111 1,179,658 1,150,086

Obligations for premiums granted by the customer loyalty 779,619 1,088,368 2,231,921 779,619 1,088,368 2,231,921

Liabilities for payment services 867,391 389,253 757,342 867,391 389,253 757,342

Liabilities for official agreements 780,877 756,351 696,483 780,877 756,351 696,483

Liabilities for purchase of properties and rights 285,788 465,922 243,056 293,458 467,917 244,986

Sundry creditors – overseas 28,935 142,065 58,327 244,477 150,779 64,257

Provision for losses with Compensation Fund of Salaries Variations – FCVS

241,675 289,274 279,357 241,675 289,274 279,357

Provisions for guarantees provided 102,768 82,230 75,600 118,569 85,510 78,927

Contracts of assumption of liabilities – securitization (Note 20.f) -- 35,869 76,455 -- 35,869 76,455

Obligations for the acquisition of Banco Nossa Caixa -- -- 957,302 -- -- 957,302

Others 387,342 287,784 195,726 420,141 355,347 230,080

Total 30,681,762 32,505,219 31,786,697 34,795,881 35,664,216 34,373,581



f) Securitization

R$ thousand

Funding

Banco do Brasil and BB-Consolidated

Issued Value (US$ thousand)

Remuneration p.a.

Date of Funding

Maturity 06.30.2011 12.31.2010 06.30.2010

Future flow of credit/debit card invoice receivables

178,474 5.911% 07/2003 06/2011 -- 28,822 61,394

44,618 4.777% 07/2003 06/2011 -- 7,047 15,061

Total 223,092 -- 35,869 76,455

The Special Purpose Entity (SPE) "Brazilian Merchant Voucher Receivables" was created under the laws of the Cayman Islands with the following purposes:

(a) issue and sell securities in the international market; (b) use of funds raised with the issue of securities to pay for the purchase of current and future rights

of Cielo S.A. against Visa International Service Association over the receivables arising from: (i) credit or debit purchases made in Brazilian territory, in any currency processed by Cielo, with

Visa cards, issued by financial institutions located outside of Brazil; or (ii) credit or debit purchases processed by Cielo in foreign currency and made with Visa cards

issued by financial institutions located in Brazil; and (c) payments of principal and interest with regard to securities and other payments provided in the

agreements covering the issue of such securities.

The Bank is the beneficiary of 44.618488% of the funds, calculated based on the equity interest held in Cielo, on the issuing date, and the remaining funds made available to the other Brazilian financial institution which holds interest in Cielo. The SPE declares that it has no relevant asset or liability other than the rights and duties originating from the contracts for issue of securities. The Bank is not a shareholder, the owner, or is a beneficiary of any of the results of operations of the SPE. The liabilities arising from the issued securities are paid by the SPE using the funds accumulated in its account.


112

21 – Operations of insurance, pension and capitalization

a) Operation credits

R$ thousand

BB-Consolidated 06.30.2011 12.31.2010 06.30.2010

Direct insurance premiums receivable 1,211,275 977,155 658,122

Credit insurance business with insurers 37,362 7,097 7,426

Credit insurance transactions with reinsurers 322,543 122,771 150,170

Credits reinsurance pension 2,434 1,547 --

Total 1,573,614 1,108,570 815,718

Current assets 1,556,112 1,086,548 794,598

Non-current assets 17,502 22,022 21,120


113

b) Technical provisions

R$ thousand

BB-Consolidated 06.30.2011 12.31.2010 06.30.2010

Insurance Pension plan Capitalization Total Insurance Pension plan Capitalization Total Insurance Pension plan Capitalization Total

Mathematical provision for future benefits 3,434 31,123,893 -- 31,127,327 4,173 25,858,592 -- 25,862,765 4,932 21,228,842 -- 21,233,774

Mathematical provision for vested benefits -- 739,068 -- 739,068 -- 643,665 -- 643,665 232 578,057 -- 578,289

Mathematical provision for redemptions -- 58,425 2,120,098 2,178,523 -- 42,183 2,028,909 2,071,092 -- 36,762 1,865,673 1,902,435

Mathematical provision for unearned premiums 1,989,701 -- -- 1,989,701 1,465,400 -- -- 1,465,400 957,443 -- -- 957,443

Provision for unsettled claims 1,179,231 -- -- 1,179,231 888,751 -- -- 888,751 852,464 -- -- 852,464

Provision for financial surplus -- 414,292 -- 414,292 -- 395,635 -- 395,635 -- 391,842 -- 391,842

Provision for insufficiency of contributions -- 335,844 -- 335,844 -- 301,435 -- 301,435 -- 248,815 -- 248,815

Provision for financial fluctuation -- 255,102 -- 255,102 -- 254,698 -- 254,698 -- 241,609 -- 241,609

Provision for IBNR(1) 313,855 6,717 -- 320,572 181,251 6,065 -- 187,316 187,274 5,770 -- 193,044

Provision for insufficiency of premiums 126,728 33,224 -- 159,952 139,403 31,371 -- 170,774 115,149 50,068 -- 165,217

Provision for prize draws and redemptions -- -- 71,804 71,804 -- -- 35,256 35,256 -- -- 60,559 60,559

Other provisions 127,840 40,604 32,238 200,682 33,704 33,463 25,461 92,628 41,734 36,600 16,973 95,307

Total 3,740,789 33,007,169 2,224,140 38,972,098 2,712,682 27,567,107 2,089,626 32,369,415 2,159,228 22,818,365 1,943,205 26,920,798

Current liabilities 3,234,520 1,831,595 2,224,140 7,290,255 2,344,851 718,087 2,089,626 5,152,564 1,828,134 607,835 1,943,205 4,379,174

Non-current liabilities 506,269 31,175,574 -- 31,681,843 367,831 26,849,020 -- 27,216,851 331,094 22,210,530 -- 22,541,624

(1) Incurred but not reported.


114

c) Technical provisions by product

R$ thousand

BB-Consolidated 06.30.2011 12.31.2010 06.30.2010


Auto(1) 570,068 -- -- 570,068 1,067,363 -- -- 1,067,363 707,921 -- -- 707,921

Life 1,674,654 -- -- 1,674,654 857,975 -- -- 857,975 795,641 -- -- 795,641

Property/casualty 1,306,916 -- -- 1,306,916 676,712 -- -- 676,712 541,374 -- -- 541,374

Dpvat 189,151 -- -- 189,151 110,632 -- -- 110,632 93,963 -- -- 93,963

Health -- -- -- -- -- -- -- -- 20,329 -- -- 20,329

Capitalization -- -- 2,224,140 2,224,140 -- -- 2,089,626 2,089,626 -- -- 1,943,205 1,943,205

Free benefit generating plan - PGBL -- 11,267,570 -- 11,267,570 -- 9,858,613 -- 9,858,613 -- 8,771,577 -- 8,771,577

Living benefits life insurance - VGBL -- 16,784,764 -- 16,784,764 -- 13,083,869 -- 13,083,869 -- 9,698,318 -- 9,698,318

Traditional plans -- 4,954,835 -- 4,954,835 -- 4,624,625 -- 4,624,625 -- 4,348,470 -- 4,348,470

Total 3,740,789 33,007,169 2,224,140 38,972,098 2,712,682 27,567,107 2,089,626 32,369,415 2,159,228 22,818,365 1,943,205 26,920,798

(1) There was a equity share change in Brasilveículos, from 100% in 12.31.2010 to 50% in 06.30.2011 (Note 2.b).

d) Guarantee of technical provisions

R$ thousand

BB-Consolidated 06.30.2011 12.31.2010 06.30.2010


Shares in Investment Funds (VGBL and PGBL)

-- 27,770,236 -- 27,770,236 -- 22,693,391 -- 22,693,391 -- 18,206,105 -- 18,206,105

Shares in Investment Funds (except VGBL and PGBL)

2,513,456 3,693,991 1,374,279 7,581,726 1,464,706 3,387,192 1,386,313 6,238,211 852,105 3,144,448 1,253,336 5,249,889

Federal Government securities 993,522 1,851,711 292,776 3,138,009 814,204 1,788,979 283,944 2,887,127 726,743 1,710,783 326,151 2,763,677

Corporate bonds 344,226 24,651 635,145 1,004,022 239,104 27,523 498,339 764,966 196,459 41,081 462,845 700,385

Credit rights 740,392 -- 31,983 772,375 578,124 -- 25,326 603,450 420,144 -- -- 420,144

Property 39,495 -- -- 39,495 1,709 -- -- 1,709 1,266 -- -- 1,266

Deposits held at IRB and deposits in court 9,143 -- -- 9,143 96 -- -- 96 432 -- -- 432

Total 4,640,234 33,340,589 2,334,183 40,315,006 3,097,943 27,897,085 2,193,922 33,188,950 2,197,149 23,102,417 2,042,332 27,341,898


115

e) Results from Insurance, Pension Plan and Capitalization Operations

R$ thousand

BB-Consolidated 1st half 2011 1st half 2010

Insurance Pension plan Capitalization Total Insurance Pension plan Capitalization Total

Financial Income 185,082 693,977 127,821 1,006,880 113,279 615,176 106,327 834,782

Financial revenues 211,959 1,203,835 129,209 1,545,003 133,076 854,516 106,741 1,094,333

Financial expenses (26,877) (509,858) (1,388) (538,123) (19,797) (239,340) (414) (259,551)

Restatement and interest of technical reserves (16,179) (552,725) (73,491) (642,395) (33,593) (498,961) (57,327) (589,881)

Operating results 1,091,013 21,462 67,064 1,179,539 873,838 (10,175) 45,202 908,865

Retained premiums and contribution (Note 21.f) 2,284,355 4,586,898 780,528 7,651,781 1,677,113 2,987,263 655,627 5,320,003

Change in technical provisions (156,788) (4,515,001) (16,164) (4,687,953) (58,075) (2,954,081) (10,301) (3,022,457)

Retained claims (982,226) -- -- (982,226) (700,492) -- -- (700,492)

Selling expenses (54,328) (36,017) (31,132) (121,477) (44,708) (24,804) (41,773) (111,285)

Expenses with prize draws and redemptions of financial bonds

-- -- (666,168) (666,168) -- -- (558,351) (558,351)

Expenses with benefits and redemptions of pension plans

-- (14,418) -- (14,418) -- (18,553) -- (18,553)

Total 1,259,916 162,714 121,394 1,544,024 953,524 106,040 94,202 1,153,766

f) Retained insurance premiums, pension plan contributions and capitalization certificates

R$ thousand

BB-Consolidated 1st half 2011 1st half 2010

Insurance Pension plan Capitalization Total Insurance Pension plan Capitalization Total

Premiums issued (VGBL retirement) 2,405,540 3,820,377 -- 6,225,917 1,766,295 2,305,727 -- 4,072,022

Supplementary pension contributions (includes VGBL risk portion)

-- 783,737 -- 783,737 -- 698,249 -- 698,249

Revenues from capitalization certificates -- -- 780,528 780,528 -- -- 655,627 655,627

Coinsurance premiums ceded (16,744) -- -- (16,744) (8,018) -- -- (8,018)

Reimbursed premiums (return of VGBL contribution) (8,383) (17,216) -- (25,599) (4,754) (16,713) -- (21,467)

Premiums issued net (premium issued - premium reimbursed) and supplementary pension contributions

2,380,413 4,586,898 780,528 7,747,839 1,753,523 2,987,263 655,627 5,396,413

Reinsurance premiums ceded, consortiums and funds (96,058) -- -- (96,058) (76,410) -- -- (76,410)

Retained insurance premiums, pension plans and capitalization

2,284,355 4,586,898 780,528 7,651,781 1,677,113 2,987,263 655,627 5,320,003


116

22 – Other Operating Income/Expenses

a) Service fee income

R$ thousand



Fund Management 790,257 673,198 1,523,923 1,276,834

Income from cards 691,552 595,556 1,461,511 1,186,323

Billing 599,662 588,761 606,441 590,805

Account fees 434,351 411,123 435,163 412,058

Collection 347,283 283,806 347,283 283,806

Interbank 303,512 266,692 303,512 266,692

Insurance, pension and capitalization 261,651 211,004 261,651 211,004

Brokerage and custody 10,688 11,030 177,874 206,158

Loans and guarantees provided 131,512 139,406 165,500 180,086

By non-financial associated companies -- -- 162,592 338,909

National Treasury and management of official funds 99,688 112,138 99,688 112,138

Consortium administration fees -- -- 90,427 50,046

Provided to the related 214,774 189,890 79,822 83,655

Other services 158,196 201,001 242,676 229,539

Total 4,043,126 3,683,605 5,958,063 5,428,053

b) Bank fee income

R$ thousand



Service package 1,247,940 1,211,354 1,248,753 1,247,872

Loans and registration file 485,579 404,441 675,928 539,712

Income from cards 378,403 312,810 383,343 312,810

Deposit account 123,584 131,768 123,720 131,935

Transfer of funds 76,872 68,446 79,076 68,639

Others 6,311 -- 26,264 --

Total 2,318,689 2,128,819 2,537,084 2,300,968

c) Personnel expenses

R$ thousand



Salaries (2,981,688) (2,662,356) (3,325,926) (2,893,146)

social charges (1,016,166) (933,648) (1,135,705) (1,019,968)

Personnel provisions (950,773) (854,881) (950,773) (854,881)

Benefits (834,588) (802,959) (903,356) (858,747)

Provisions for labor claims (293,585) (337,912) (293,585) (337,912)

Supplementary pension (135,411) (97,546) (139,683) (100,583)

Directors’ fees (10,515) (10,057) (27,460) (28,199)

Training (21,711) (28,265) (25,960) (32,037)

Total (6,244,437) (5,727,624) (6,802,448) (6,125,473)


117

d) Other administrative expenses

R$ thousand



Amortization (1,143,472) (1,131,080) (1,164,677) (1,144,404)

Communications (594,095) (598,527) (641,490) (642,942)

Expenses with Outsourced Services (569,004) (515,399) (617,940) (589,257)

Depreciation (458,587) (427,800) (478,704) (441,327)

Transport (362,211) (321,058) (381,726) (338,668)

Security services (359,642) (325,961) (365,348) (327,947)

Rent (275,635) (260,174) (339,152) (309,990)

Data processing (421,887) (534,730) (329,928) (565,466)

Financial system services (241,293) (266,887) (319,885) (304,847)

Specialized technical services (96,128) (88,879) (306,355) (267,271)

Litigation (260,673) (325,396) (260,673) (325,396)

Maintenance and upkeep (208,068) (171,624) (226,917) (182,179)

Advertising and publicity (144,460) (132,176) (182,874) (188,310)

Water, electricity and gas (172,493) (168,063) (178,402) (172,009)

Advertising and public relations (89,799) (79,138) (105,954) (95,536)

Domestic travel (72,651) (62,378) (87,556) (75,310)

Materials (61,714) (56,763) (67,735) (60,133)

Others (154,697) (178,734) (278,668) (284,084)

Total (5,686,509) (5,644,767) (6,333,984) (6,315,076)

e) Other operating income

R$ thousand



Previ – Restatement of Acturial Assets (Note 27.c) 1,920,105 1,826,515 1,920,105 1,826,515

Equalization of rates – Law 8,427/1992 1,115,515 1,153,880 1,115,515 1,153,880

Readjustment negative exchange / reclassification of balances

567,937 -- 797,508 83,384

Restatement of guarantee deposits 723,347 547,358 723,347 547,358

Update on allocation of surplus funds - Previ (Note 27.e)

564,792 109,954 564,792 109,954

Recovery of charges and expenses 415,592 604,568 416,129 879,644

Reversal of provisions - Labor, civil and tax claims 216,671 568,609 216,671 568,609

Credit card transactions 111,787 109,275 111,787 109,275

Administrative expenses - Reversal of provisions 59,250 83,008 59,250 83,008

Dividends received 15,431 31,407 15,431 31,407

Personnel expenses - Reversal of provisions 4,598 5,728 4,598 5,728

Others 620,955 247,887 1,044,843 590,649

Total 6,335,980 5,288,189 6,989,976 5,989,411


118

f) Other operating expenses

R$ thousand



Readjustment negative exchange / reclassification of balances

(798,957) (12,604) (950,218) (31,932)

From non-financial associated companies -- -- (739,300) (570,670)

Premiums paid to clients (671,987) (267,430) (671,987) (267,430)

Premiums Paid based on payroll guaranteed loans acquired

(567,236) (172,574) (567,236) (172,574)

Credit/debit card transactions (559,802) (441,119) (559,802) (441,119)

Actuarial liabilities (494,603) (658,056) (494,603) (658,056)

Failures/frauds and other losses (349,761) (115,093) (349,761) (115,093)

Business partners (1) (6,637) (16,120) (301,766) (561,689)

Amortization of goodwill (143,325) (90,413) (292,086) (90,413)

Restatement of guarantee deposits (209,087) (257,304) (209,087) (257,304)

Amortization / early settlement of contracts (139,629) (27,024) (139,629) (27,024)

Discounts granted on renegotiations (102,289) (84,659) (139,366) (143,416)

Restatement of hybrid capital and debt instruments (103,343) (157,481) (103,343) (157,481)

Premium life insurance - consumer credit (86,024) (93,100) (86,024) (93,100)

ATM Network (67,807) (62,612) (67,807) (62,612)

Restatement of funds to be returned to the Federal Treasury - Law n.º 9,138/1995

(26,643) (19,575) (26,643) (19,575)

INSS (17,737) (12,667) (17,737) (12,667)

Restatement of interest own capital/Dividends (15,702) (25,361) (15,702) (25,361)

Previ – Acturial Adjustment (12,973) (16,225) (12,973) (16,225)

Fees for the use of Sisbacen – Central Bank of Brazil System

(8,327) (7,783) (8,327) (7,783)

Expenses Proagro (6,062) (45,713) (6,062) (45,713)

Updating the acquisition of investments -- (66,676) -- (66,676)

Others (229,575) (249,839) (438,019) (298,124)

Total (4,617,506) (2,899,428) (6,197,478) (4,142,037)

(1) Refers mainly to commission for loans originated by partners and commercial agreements with tenants.

23 – Non-operating income

R$ thousand



Non-operating income 169,218 214,943 293,906 426,300

Profit on sale of investments 91,914 116,350 171,664 213,716

Capital gains 10,250 7,469 30,610 106,323

Profit on sale of assets 12,039 34,390 18,843 36,473

Reversal for devaluation of other assets 18,438 25,537 18,506 25,665

Disposal of property 10,291 16,936 10,291 16,936

Rental income 6,163 6,010 6,545 6,135

Other non-operating income 20,123 8,251 37,447 21,052

Non-operating expenses (60,273) (42,334) (101,600) (80,276)

Loss on sale of assets (8,539) (2,220) (33,838) (33,390)

Capital losses (28,047) (11,037) (28,912) (11,764)

Loss in value of other assets (22,113) (27,206) (26,305) (27,383)

Other non-operating expenses (1,574) (1,871) (12,545) (7,739)

Total 108,945 172,609 192,306 346,024


119

24 - Shareholders' Equity

a) Book value and market value per common share

06.30.2011 12.31.2010 06.30.2010

Shareholders' equity - Banco do Brasil (R$ thousand) 54,276,101 50,495,741 39,386,911

Book value per share (R$) 18.97 17.65 15.33

Market value per common share (R$) 28.00 31.42 24.65

Shareholders' equity - BB-Consolidated(1) (R$ thousand) 54,618,972 50,440,683 39,331,882

(1) Reconciled with the equity of Banco do Brasil (Note 24.g)

Book value per share is calculated based on the equity of Banco do Brasil.

b) Capital

The capital of R$ 33,122,569 thousand (R$ 33,077,996 thousand on 12.31.2010 and R$ 26,028,096 thousand on 06.30.2010) of Banco do Brasil is divided into 2,860,729,247 book-entry common shares without par value. The Federal Government is the largest shareholder, holding the control.

The capital increased R$ 44,573 thousand in the 1st half of 2011, due to the exercise of subscription of 1,496,831 bonuses “C” (Note 24.K).

The Bank may, even without amend bylaws, if approved by a General Meeting, and in the conditions established therein, increase its capital up to the limit of R$ 50 billion, by issuing common shares, granting shareholders preference for subscribing the capital increase proportionally to the number of held shares, while maintaining the rights of subscription bonus holders issued by the Bank.

c) Revaluation reserves

The revaluation reserves, totaling R$ 5,960 thousand (R$ 6,241 thousand on 12.31.2010 and R$ 6,372 thousand on 06.30.2010), refer to revaluations of assets made by the associated/subsidiary companies. The realizations of the reserves in the 1st half of 2011 totaling R$ 281 thousand (R$ 374 thousand in the first half of 2010), were transferred to "Retained earnings (accumulated losses)". The remaining balance will be held until to the date of its effective realization, in conformity with CMN Resolution n.° 3 ,565/2008.

d) Profit reserves

R$ thousand

06.30.2011 12.31.2010 06.30.2010

Reserve for Retained Earnings(1)

20,705,329 16,944,324 12,972,258

Legal Reserve 3,197,314 2,884,196 2,552,851

Statutory Reserves (1)

17,508,015 14,060,128 10,419,407

Operating margin 13,842,884 10,725,406 7,512,570

Equalization of dividends 3,665,131 3,334,722 2,906,837

(1) In the BB-Consolidated, figures of profit reserve and statutories reserves are R$ 20,650,421 thousand and R$ 17,453,107 thousand, respectively, due to the elimination of R$ 54,908 thousand of subsidiary company unrealized profit.

The Statutory reserve for Operating Margin aims to guarantee an operating margin compatible with the development of the company's transactions. It is formed by up to 100% of the balance of net income after legal distributions, including dividends, up to the limit of 80% of the capital.

The Statutory Reserve for Dividend Equalization assures resources for the payment of dividends and is formed by up to 50% of the balance of net income after legal distributions, including dividends, up to the limit of 20% of the capital.


120

e) Earnings per share


Net profit attributable to shareholders (R$ thousand) 6,262,367 5,131,184

Weighted average number of shares

Basic 2,860,725,975 2,570,298,221

Diluted 2,874,233,334 2,588,525,717

Earnings per share

Basic earnings per share (R$) 2.19 2.00

Diluted earnings per share (R$) 2.18 1.98

f) Interest on own capital / Dividends

Amount(R$ thousand)

Amount pershare (R$)

Base date of payment

Payment date

1st quarter/2011

Dividends paid 449,024 0.157 05.19.2011 05.27.2011

Interest on own capital paid 723,921 0.253 03.22.2011 05.27.2011

2nd quarter/2011

Dividends payable 595,322 0.208 08.18.2011 08.26.2011

Interest on own capital payable 736,680 0.258 06.21.2011 08.26.2011

Total destined to shareholders in 1st half 2011 2,504,947 0.876

Dividends 1,044,346 0.365

Interest on own capital(1) 1,460,601 0.511

Net income for the period 6,262,367

Amount(R$ thousand)

Amount per share (R$)

Base date of payment

Payment date

1st quarter/2010

Dividends paid 444,161 0.173 05.21.2010 05.31.2010


2nd quarter/2010

Dividends paid 564,785 0.220 08.18.2010 08.26.2010


Total destined to shareholders in 1st half 2010 2,052,473 0.800

Dividends 1,008,946 0.393

Interest on own capital(1) 1,043,527 0.407

Net income for the period 5,131,184

(1) Amounts subject to the rate of 15% Income Tax Withholding

In accordance with Laws n.° 9,249/1995 and n.° 9,43 0/1996 and the Bank's bylaws, Management decided on the payment of Interest on Own Capital to its shareholders, imputed to the value of the dividends, plus additional dividends, equivalent to 40% of the net income.

The interest on own capital is calculated based on adjusted net equity accounts and is limited on a pro rata basis to the variation of long-term interest rate, as long as there is profit computed before its deduction or Reserve for Retained Earnings and profit reserves at least twice its amount.

To comply with the Income Tax legislation, the amount of interest on own capital was recorded as corresponding entries against "Financial expenses" and, for purposes of disclosure of these financial statements, reclassified to "Retained earnings". The total interest on own capital during the first half of 2011, provided a reduction in spending on tax charges totaling R$ 584,240 thousand (R$ 417.411 thousand in the first half of 2010).


121

g) Reconciliation of Net Income and Shareholders' Equity

R$ thousand

Net Income Shareholders' equity

1 st half 2011 1 st half 2010 06.30.2011 12.31.2010 06.30.2010

Banco do Brasil 6,262,367 5,131,184 54,276,101 50,495,741 39,386,911

Unrealized Gains -- (54,908) (54,908) (54,908) (54,908)

Reciprocal participation in subsidiaries -- -- -- (197) (164)

Minority participation 27,348 (20) 397,779 47 43

BB-Consolidated 6,289,715 5,076,256 54,618,972 50,440,683 39,331,882

h) Minority participation

R$ thousand

Net Income Shareholders' equity

1 st half 2011 1 st half 2010 06.30.2011 12.31.2010 06.30.2010

Banco Patagonia S.A. 27,352 -- 397,703 -- --

Besc Distribuidora de Títulos e Valores Mobiliários S.A.

1 1 47 45 5

Cobra Tecnologia S.A. (5) (21) 29 2 38

Minority participation 27,348 (20) 397,779 47 43

i) Stockholdings (Number of shares)

Evolution of shares held by the Bank's shareholder, directly or indirectly, of more than 5% and by the directors and members of the Fiscal Council and Audit Committee:

Shareholders 06.30.2011 12.31.2010 06.30.2010

Shares % Total Shares % Total Shares % Total

Federal Government 1,693,134,063 59.3 1,693,134,063 59.3 1,677,309,063 65.3

Ministério da Fazenda 1,483,734,063 51.9 1,483,734,063 51.9 1,483,734,063 57.7

Fundo de Garantia à Exportação 139,400,000 4.9 139,400,000 4.9 139,400,000 5.4

Fundo Fiscal de Investimento e Estabilização 62,500,000 2.2 62,500,000 2.2 -- --

Fundo Garantidor para Investimentos 7,500,000 0.3 7,500,000 0.3 7,500,000 0.3

Fundo Garantidor de Habitação Popular – FGHab

-- -- -- -- 1,675,000 0.1

Fundo Garantidor para Construção Naval -- -- -- -- 45,000,000 1.8

Caixa de Previdência dos Funcionários do Banco do Brasil – Previ (1) 296,831,111 10.3 296,564,911 10.3 266,546,187 10.4

BNDES Participações S.A. – BNDESPar (1) 235,119 -- 235,119 -- 62,409,779 2.4

Treasury Stock 32 -- 9,753 -- 1,159,815 --

Other shareholders 870,528,922 30.4 870,785,401 30.4 562,444,707 21.9

Total 2,860,729,247 100.0 2,860,729,247 100.0 2,569,869,551 100.0

(1) Connected to the Controller.

Common shares (ON) (1)

06.30.2011 12.31.2010 06.30.2010

Board of Directors (Except the BB's President that is included in the Steering Committee of Banco do Brasil)

11 12 15

Board of Directors 27,440 33,331 18,061

Audit Committee 823 823 823

(1) The shareholding interest of the Board of Directors, Executive Committee, Fiscal Council and Audit Committee represents approximately 0.001% of the Bank's capital stock.


122

j) Number of Shares being Traded on the Market / Free Float

06.30.2011 12.31.2010 06.30.2010

Number % Number % Number %

Free Float (1) 870,501,462 30.4 870,752,058 30.4 562,426,631 21.9

Total issued 2,860,729,247 100.0 2,860,729,247 100.0 2,569,869,551 100.0

(1) According to the Law n.º 6,404/1976 and the regulation of BM&FBovespa's New Market. The shares held by the Board of Directors and Executive committee are not included.

k) “C” subscription bonuses

According to the market release of 03.30.2011, the Bank announced to the bonuses of subscription “C” holders (BBAS13), which were issued and gratuitously distributed to the shareholders on 06.17.1996, the conditions for exercising the right to subscribe new shares arising from such bonuses in the period from 03.31.2011 to 06.30.2011 (until 06.28.2011 to holders of bonuses in custody of stock exchange). Each bonus guarantees the right to subscribe 3.131799 shares by the price of R$ 8.50 per bonus, corrected by the General Price Index - Internal Availability (IGP-DI), of Fundação Getúlio Vargas, from 06.17.1996 up to the date the application to exercise the subscription right is filed. The holders of 1,196,831 bonuses exercised their right generating 4,687,773 receipts which, after Bacen approval, will be converted in 4,687,773 common shares. The non subscribed bonuses, in total of 2,831,873, lost their validity from the closing date for subscription on 06.30.2011.

25 – Taxes

a) Breakdown of income tax and social contribution expenses

R$ thousand



Present values (2,228,032) (2,071,689) (3,308,527) (2,899,248)

Domestic income tax and social contribution (2,215,719) (2,053,571) (3,263,560) (2,877,576)

Foreign income tax (12,313) (18,118) (44,967) (21,672)

Deferred values (250,063) 1,742 105,900 184,469

Deferred tax liabilities (790,956) (844,946) (553,124) (1,053,528)

Leasing operations – Portfolio adjustment and accelerated Depreciation

(426) (807) 194,603 (82,549)

Mark to Market (MTM) 160,822 13,970 203,624 (131,644)

Actuarial gains (732,328) (696,633) (732,327) (696,633)

Restatement of judicial deposits (161,294) (134,781) (161,294) (134,781)

Income abroad (21,916) (26,706) (21,916) (26,706)

Transactions Carried out on the Futures Market 3,903 11 3,903 11

Sale of Term Investments -- -- -- 18,774

Arising from losses MP n.º 517/2010 (1) (39,717) -- (39,717) --

Deferred tax assets 540,893 846,688 659,024 1,237,997

Temporary differences 705,922 878,769 814,627 1,208,576

Income tax and social contribution losses 5.250 41.364 14.880 103.656

Mark to Market (MTM) (173,378) (44,378) (173,582) (45,168)

Transactions Carried out on the Futures Market 3,099 (29,067) 3,099 (29,067)

Total Income Tax and Social Contribution (2,478,095) (2,069,947) (3,202,627) (2,714,779)

(1) The MP n.° 517/2010, converted into Law n.° 12, 431/2011, allowed values recovered from losses on loans are recognized at the time of actual receipt of credit in cases of rural finance and operating loans to individual value up R$ 30 thousand


123

b) Reconciliation of income tax and social contribution expense

R$ thousand



Profit before taxation and profit sharing 9,539,565 7,856,709 10,420,155 8,558,189

Total charges of IR (25%) and CSLL (15%) (3,815,826) (3,142,684) (4,168,062) (3,423,276)

Charges upon Interest on Own Capital 584,240 417,411 584,240 417,411

Equity in subsidiaries and associated 556,374 568,838 (63,749) 31,484

Profit sharing 319,642 262,231 371,125 306,862

Other amounts (122,525) (175,743) 73,819 (47,260)

Income Tax and Social Contribution Expense (2,478,095) (2,069,947) (3,202,627) (2,714,779)

c) Tax Expenses

R$ thousand



Cofins (1,122,928) (975,479) (1,435,981) (1,240,642)

ISSQN (268,011) (233,304) (341,029) (301,026)

PIS/PASEP (182,476) (158,515) (238,321) (206,032)

Others (39,079) (36,243) (87,843) (60,032)

Total (1,612,494) (1,403,541) (2,103,174) (1,807,732)

d) Deferred tax liabilities

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Arising from unrecognized actuarial gains (1) 4,870,978 4,049,365 4,904,664 4,870,978 4,049,365 4,904,664

Arising from leasing portfolio adjustment 3,400 2,973 808 826,812 930,884 826,196

Arising from restatement of judicial deposits 336,077 316,412 295,574 336,077 316,412 295,574

Arising from mark-to-market adjustment 173,941 354,776 126,034 226,994 413,899 144,394

Arising from foreign profits 21,916 -- 26,706 21,916 -- 26,706

Entities abroad 7,537 3,141 3,530 7,628 3,175 4,243

Arising from futures market transactions 18 4,394 30 18 4,395 30

Arising from losses MP n.º 517/2010 39,717 -- -- 39,717 -- --

Other 2,032 2,032 -- 104,663 189,252 241,606

Total deferred tax liabilities 5,455,616 4,733,093 5,357,346 6,434,803 5,907,382 6,443,413

Income tax 2,906,999 2,518,448 2,872,197 3,862,585 3,666,538 3,534,005

Social contribution 1,753,227 1,508,079 1,729,917 1,771,061 1,527,853 2,127,001

PIS/PASEP 111,184 98,767 105,570 111,990 99,665 109,369

Cofins 684,206 607,799 649,662 689,167 613,326 673,038

(1) The realization of deferred tax liabilities on actuarial gains is related to the achievement of the values of actuarial asset (Note 27).


124

e) Deferred tax assets (Tax Credit)

Recorded R$ thousand

Banco do Brasil

12.31.2010 1st half 2011 06.30.2011 06.30.2010

Balance Constitution Write-off Balance Balance

Temporary differences 16,821,714 3,358,087 2,968,565 17,211,236 16,873,038

Allowance for loan losses 6,879,043 2,045,238 2,099,196 6,825,085 7,085,497

Passive reserves 6,371,687 696,100 454,757 6,613,030 6,623,337

Mark to market 282,870 142,337 300,448 124,759 83,009

Other provisions 3,288,114 474,412 114,164 3,648,362 3,081,195

CSLL written to 18% (MP n.º 2,158/2001) 2,809,264 -- 256,800 2,552,464 2,967,044

Fiscal losses/ negative bases 120,924 11,869 34,154 98,639 523,918

Total tax credits recorded 19,751,902 3,369,956 3,259,519 19,862,339 20,364,000

Income tax 10,573,273 2,104,560 1,866,029 10,811,804 10,988,263

Social contribution 9,147,903 1,249,986 1,360,838 9,037,051 9,366,876

PIS/PASEP 4,295 2,154 4,564 1,885 1,239

Cofins 26,431 13,256 28,088 11,599 7,622

R$ thousand

BB-Consolidated

12.31.2010 1st half 2011 06.30.2011 06.30.2010

Balance Constitution Write-off Balance Balance

Temporary differences 18,147,741 3,809,938 3,011,967 18,945,712 18,076,106

Allowance for loan losses 7,492,836 2,075,720 2,122,372 7,446,184 7,640,358

Passive reserves 6,536,650 762,821 459,180 6,840,291 6,783,799

Mark to market 299,337 173,567 302,243 170,661 116,218

Other provisions 3,818,918 797,830 128,172 4,488,576 3,535,731

CSLL written to 18% (MP n.º 2,158/2001) 2,809,263 -- 256,799 2,552,464 2,967,044

Fiscal losses/ negative bases 618,325 23,991 431,088 211,229 989,650

Excess depreciation 394,209 257,255 9,633 641,831 398,674

Total tax credits recorded 21,969,538 4,091,184 3,709,487 22,351,236 22,431,474

Income tax 12,189,100 2,529,808 2,166,152 12,552,756 12,452,184

Social contribution 9,745,084 1,548,615 1,510,559 9,783,140 9,966,800

PIS/PASEP 4,643 2,083 4,581 2,145 1,746

Cofins 30,711 10,678 28,195 13,195 10,744

Not Recorded R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Tax credit abroad 182,203 198,728 216,598 182,203 198,728 216,598

Temporary differences -- -- -- 13,363 14,249 48,629

Total tax credits not recorded 182,203 198,728 216,598 195,566 212,977 265,227

Income tax 113,877 124,205 135,374 126,390 138,449 165,767

Social contribution 68,326 74,523 81,224 69,176 74,528 99,460

Estimates for the realization

The expectation of implementation of deferred assets (tax credits) is based on technical study was prepared in 06.30.2011, and the present value determined based on the average rate of funding of Banco do Brasil.


125

R$ thousand


Par value Present value Par value Present value

In 2011 2,010,272 1,934,460 2,254,073 2,160,646

In 2012 3,736,095 3,493,018 4,165,894 3,857,144

In 2013 3,832,159 3,457,804 4,047,708 3,629,437

In 2014 2,829,265 2,472,205 3,036,987 2,620,804

In 2015 2,751,839 2,331,261 2,931,765 2,447,991

From 2016 4,702,709 3,877,195 5,914,809 4,102,203

Total tax credits 19,862,339 17,565,943 22,351,236 18,818,225

In the first half of 2011, it was possible to observe the realization of deferred tax assets (tax credits) at Banco do Brasil in the amount of R$ 3,258,777 thousand corresponding to 92.28% of the respective projection of use for the period of 2011, contained in the technical study prepared on 12.31.2010.

The realization of the nominal value of tax credit assets, considering the recovery of those issued during the processing of the lawsuit -70% (Note 28.e.), based on a technical study conducted by the Banco do Brasil on 06.30.2011, is designed for 6 years in following proportions:


Tax losses carryforwards/CSLL

recoverable (1)

Intertemporary

differences (2)

Tax losses carryforwards

/CSLL recoverable(1)

Intertemporary

differences (2)

In 2011 22% 8% 20% 8%

In 2012 36% 16% 33% 16%

In 2013 39% 16% 37% 16%

In 2014 3% 16% 4% 17%

In 2015 -- 16% 1% 17%

From 2016 -- 28% 5% 26%

(1) Projected consumption linked to the capacity to generate IRPJ and CSLL taxable amounts in subssequent periods.

(2) The consumption capacity results from the movements of provisions (expectation of reversals, write-offs and uses).

26 – Related-party Transactions

The costs of salaries and other benefits granted to key management personnel of the Banco do Brasil Group (Board of Directors, Executive Board, Audit Committee and Fiscal Council):

R$ thousand


Short-term benefits 14,667 13,783

Fees 9,139 8,473

Executive Board 8,150 7,542

Audit Committee 747 700

Board of Directors 130 126

Fiscal Council 112 105

Profit sharing 3,912 3,718

Other 1,616 1,592

Benefits for termination of employment 777 --

Total 15,444 13,783

The Bank has no variable remuneration based on shares and other long-term benefits and does not offer post-employment benefits to its key management personnel, except for those who are part of the staff of the Bank, participating in the Pension Plan for Employees of the Banco do Brasil (Previ). Since January 2007, due to the accumulated surplus in the Plan of those officials, the Bank does not provide this benefit expenses (Note 27).

The Bank does not grant loans to key management personnel, pursuant to the prohibition to all financial institutions established by the Central Bank of Brazil.


126

The balances referring to transactions between the consolidated companies of the Bank are eliminated in the Consolidated Financial Statements. With respect to majority shareholder, the transactions with National Treasury and with agencies of the direct administration of the Federal Government that maintain banking operations with the Bank, are included.

The Bank has banking transactions with these related parties, such as interest bearing and non-interest bearing deposits, loans, and sale and repurchases transactions, except for key management personnel. There are also service provision and guarantee agreements.

These transactions are conducted under normal market conditions, mainly under the terms and conditions for comparable transactions with unrelated parties, including interest rates and collateral. These transactions do not involve payment risks.

The funds invested in government securities and federal funds for transfers and programs from the Official Institutions are listed as notes 8 and 18, respectively.

The Bank sponsors the Banco do Brasil Foundation (FBB) whose goals are the promotion, support, encouragement and sponsorship educational, cultural, social, philanthropic, recreational/sports projects and provide resources to scientific and technological activities. The Foundation also assists urban-rural communities areas. In 1st half of 2011, the Bank made contributions to the FBB in the amount of R$ 22,050 thousand (R$ 15,840 thousand in 1st half of 2010).

The information related to onlending and other transactions with other sponsored entities are disclosed in Note 27.

In 1st half of 2011, Banco do Brasil acquired loan portfolios from Banco Votorantim, sold with recourse, the amount of R$ 4,583,571 thousand (R$ 3,045,401 thousand in 1st half of 2010). The unrealized results arising from such transactions amounted to R$ 451,857 thousand (R$ 194,470 thousand in 1st half of 2010), net of tax effects.

Summary of transactions with related parties R$ thousand

06.30.2011

Controller (1)

Subsidiaries(2) Jointly

controlled (3) Affiliates

(4)Key

Management personnel

(5)

Other related

parties(6)

Total

Assets

Interbank deposits -- 16,155,839 2,133,776 -- -- 78,547 18,368,162

Securities -- 5,120 81,467 -- -- -- 86,587

Loan operations 789,314 27,969 81,973 -- -- 505,248 1,404,504

Receivables from related companies -- 72,892 -- -- -- -- 72,892

Other assets -- 80,228 -- 1,915 -- -- 82,143

Liabilities

Demand deposits 766,916 82,715 28,442 126,419 831 1,932,200 2,937,523

Saving deposits -- -- -- -- 876 -- 876

Remunerated time deposits -- 5,311,990 347,955 655,665 5,870 5,529,894 11,851,374

Deposits received under security repurchase agreements

-- 1,210,418 1,899,996 -- -- 606,498 3,716,912

Borrowings and onlendings 1,568,930 9,140,140 -- -- -- 38,471,307 49,180,377

Other llabilities -- 1,104,464 741,989 -- -- 115,787 1,962,240

Guarantees and Other Recourses (7) -- 539,471 6,973,078 -- -- -- 7,512,549

1st half 2011

Income from interest and services 34,706 794,464 33,713 55,417 -- 214,805 1,133,105

Expenses from raising funds (70,674) (294,439) (48,501) (29,415) (366) (1,313,786) (1,757,181)


127

R$ thousand

06.30.2010

Controller (1)

Subsidiaries(2) Jointly

controlled (3) Affiliates

(4)Key

Management personnel

(5)

Other related

parties(6)

Total

Assets

Interbank deposits -- 16,953,980 152,717 -- -- 78,917 17,185,614

Securities -- 5,599 72,328 41,166 -- -- 119,093

Loan operations 1,138,644 52,982 66,717 -- -- 363,435 1,621,778

Receivables -- 23,027 -- -- -- -- 23,027

Other assets -- 575,236 84,303 16,964 -- -- 676,503

Liabilities

Demand deposits 722,460 21,044 2,402 25,614 772 767,939 1,540,231

Saving deposits -- -- -- -- 1,049 -- 1,049

Remunerated time deposits -- 4,183,748 721,491 112,829 5,193 3,891,826 8,915,087

Deposits received under security repurchase agreements

-- 885,027 1,291,999 51,288 -- 236,665 2,464,979

Borrowings and onlendings 2,073,619 8,679,242 -- -- -- 31,199,891 41,952,752

Other liabilities -- 1,346,459 46,553 -- -- 18,039 1,411,051

Guarantees and Other Recourses(7) -- 347,105 5,076,861 -- -- -- 5,423,966

1st half 2010

Income from interest and services 49,629 798,582 488,953 95,716 -- 86,227 1,519,107

Expenses from raising funds (65,709) (275,383) (147,342) (4,310) (271) (1,060,373) (1,553,388)

(1) National Treasury and agencies of the direct administration of the Federal Government.

(2) Includes related companies Note 3 as identified in item (1).



(5) Board of Directors, Executive Board, Audit Committee and Fiscal Council.

(6) Includes private and public companies controlled by the Federal Government, entities linked to employees.

(7) Includes Opening Contract Interbank Revolving Credit Line to release with Banco Votorantim, equivalent to the value of net assets of that institution.

27 – Benefits for employees

Banco do Brasil sponsors the following private pension and complementary health plan entities that provide for complementation of retirement and healthcare benefits for its employees:

Plans Benefits Classification

Previ - Caixa de Previdência dos Funcionários do Banco do Brasil

Previ Futuro Retirement and Pension Defined contribution

Plano de Benefícios 1 Retirement and Pension Defined benefit

Plano Informal Retirement and Pension Defined benefit

Cassi - Caixa de Assistência dos Funcionários do Banco do Brasil

Plano de Associados Health Care Defined benefit

Economus – Instituto de Seguridade Social

Prevmais Retirement and Pension Defined contribution

Regulamento Geral Retirement and Pension Defined benefit

Regulamento Complementar 1 Retirement and Pension Defined benefit

Grupo B’ Retirement and Pension Defined benefit

Plano Unificado de Saúde – PLUS Health Care Defined benefit

Plano Unificado de Saúde – PLUS II Health Care Defined benefit

Plano de Assistência Médica Complementar - PAMC

Health Care Defined benefit

Fusesc - Fundação Codesc de Seguridade Social Multifuturo I Retirement and Pension Defined contribution

Plano de Benefícios 1 Retirement and Pension Defined benefit

SIM - Caixa de Assistência dos Empregados dos Sistemas Besc e Codesc, do Badesc e da Fusesc

Plano de Saúde Health Care Defined contribution

Prevbep – Caixa de Previdência Social Plano BEP Retirement and Pension Defined benefit


128

Number of participants covered by benefit plans sponsored by the Bank

06.30.2011 12.31.2010 06.30.2010

N.° of participants N.° of participants N.° of participants

Actives Assisted Total Actives Assisted Total Actives Assisted Total

Retirement and Pension Plans 114,144 105,718 219,862 110,526 107,760 218,286 101,667 103,382 205,049

Plano de Benefícios 1 – Previ 31,594 83,237 114,831 32,449 82,727 115,176 33,182 82,281 115,463

Plano Previ Futuro 65,159 402 65,561 60,113 370 60,483 55,563 325 55,888

Plano Informal -- 7,780 7,780 -- 7,920 7,920 -- 8,071 8,071

Other plans 17,391 14,299 31,690 17,964 16,743 34,707 12,922 12,705 25,627

Medical Assistance Plans 117,096 87,124 204,220 112,630 91,152 203,782 103,782 81,731 185,513

Cassi 102,206 82,707 184,913 98,221 82,153 180,374 94,867 81,731 176,598

Other plans 14,890 4,417 19,307 14,409 8,999 23,408 8,915 -- 8,915

Bank’s contributions to benefit plans R$ thousand


Retirement and Pension Plans 540,519 284,967

Plano de Benefícios 1 – Previ (1) 235,956 27,746

Plano Previ Futuro 103,523 78,144

Plano Informal 141,333 141,741

Other plans 59,707 37,336

Medical Assistance Plans 429,562 375,414

Cassi 386,221 278,976

Other plans 43,341 96,438

Total 970,081 660,381

(1) Refers to the contributions made by the participants comprised by Agreement 97 and Plan 1, considering that these contributions occurred respectively by the realization of the Parity Fund (Note 27.e.1) and the Contribution Fund (Note 27.e.3). The 1997 Agreement aims to regulating the way of funding required to achieve a portion equivalent to 53.7% of guarantee amount concerning the payment of supplement retirement due to the participants who joined the Bank up to 04.14.1967 and who have retired or will retire after the aforementioned date, except for those participants who are part of the Plano Informal.

Values recognized in earnings R$ thousand


Retirement and Pension Plans 1,597,868 1,357,206

Plano de Benefícios 1 – Previ 1,920,105 1,826,515

PlanoPrevi Futuro (103,523) (78,144)

Plano Informal (122,522) (350,763)

Other plans (96,192) (40,402)

Medical Assistance Plans (505,445) (552,617)

Cassi (451,346) (439,809)

Other plans (54,099) (112,808)

Total 1,092,423 804,589

a) Supplementary retirement and pension plans

Previ Futuro (Previ)

Participants in this plan are the Bank's employees hired as from 12.24.1997. The active participants contribute to Previ an amount between 7% and 17% of their contribution salary, which varies based on time of service and the amount of the contribution salary. There is no contribution for retired participants. The sponsor contributes an amount equal to the contributions of the participants, limited to 14% of the total contribution payroll of these participants.

Plano de Benefícios 1 (Previ)

The participants of this plan are the Bank’s employees who were enrolled up to December 23, 1997. Due to the establishment of parity between Bank's and participants' contributions, in December 2000, a parity fund was set up, and its resources are being used for the purpose of offsetting contributions to the plan.


129

Due to the accumulated surplus, the contributions of participants, beneficiaries (retirees and pensioners) and of the sponsor (Banco do Brasil) were suspended, since January 2007. According to the Memorandum of Understanding signed between the Bank, Previ entities representing the beneficiaries, was proposed to amend the Rules of the Plan 1, which includes the suspension of contributions for the years 2011, 2012 and 2013, being linked to its continued existence of the Reserve Special plan.

Plano Informal (Previ)

The sole responsibility of the Banco do Brasil whose contractual obligations include (a) retirement pensions to founder participants and pension payments to survivors of participants deceased up to 04.14.1967; (b) payment of retirement supplements to the other participants employed by Banco do Brasil who retired up to 04.14.1967 or who, on that date, would have the right through length of service to retire and who had at least 20 years of effective service with the Bank; and (c) increase in the amount of retirement benefits and of pensions in addition to that provided for in the benefit plan of Previ, resulting from judicial decisions and from administrative decisions on account of restructuring of the job and salary plan and of incentives created by the Bank.

Prevmais (Economus)

The participants of this plan are the employees from Banco Nossa Caixa (merged into Banco do Brasil on 11.30.2009) enrolled after 08.01.2006, and the participants previously linked to the General regulation benefit plan who opted for the distribution of their vested account balances. The funding for income benefits is equally provided by employees and employer, not exceeding 8% of the participants' salary. The plan also provides risk benefits, such as complementation of sickness aid, workers' compensation, disability benefits and death pension.

Regulamento Geral (Economus)

The participants of this plan are the employees from Banco Nossa Caixa enrolled up to 07.31.2006. The plan is closed to new applicants. Employees and the sponsor contribute equally, in average, with 12.11% of participation salary.

Regulamento Complementar 1 (Economus)

For officials coming from Banco Nossa Caixa. Offers the benefits of supplemental sickness benefit and annuity for death and disability. The cost of the plan is the responsibility of the sponsor, participants and assisted. The sponsor's contribution focuses on real salary to participate in equal numbers with participants.

Grupo B' (Economus)

Participate in this plan the employees from Banco Nossa Caixa admitted between 01.22.1974 to 05.13.1974 and their beneficiaries. Plan closed to new members. The level of benefit to be granted when the implementation of all the conditions laid down in regulation, is known a priori.

Multifuturo I (Fusesc)

The participants of this plan are the employees from Banco do Estado de Santa Catarina - Besc (merged into Banco do Brasil on 09.09.2008) enrolled after 01.12.2003 and the employees previously linked to Fusesc's Benefit Plan 1 who opted for this plan. Employees and sponsor equally contribute from 2.33% to 7% of participation salary to that plan, as determined by each participant.

Plano de Benefícios 1 (Fusesc)

The participants of this plan are the employees from Besc enrolled until 01.11.2003. The plan is closed to new applicants. Employees and the sponsor contribute equally, in average, with 9.89% of participation salary.

Plano BEP (Prevbep)

Participants of this plan are the employees from Banco do Estado do Piauí – BEP (merged in to Banco do Brasil on 11.30.2008). Employees and the sponsor contribute equally, in average, with 3.58% of participation salary.


130

b) Medical Assistance Plans

Plano de Associados (Cassi)

The Bank is the sponsor of a Health Plan managed by Cassi that the main objective is to provide coverage for expenses related to the promotion, protection, recovery and rehabilitation of a member's health and of his/her enrolled beneficiaries. Each month, the Bank contributed a sum equivalent to 4.5% of the total payroll or of the total retirement or pension plan benefit. Monthly contributions from members and pension beneficiaries amount to 3% of the total payroll or the total retirement or pension plan benefits.

Plano Unificado de Saúde - PLUS (Economus)

The participants of this plan are the employees from Banco Nossa Caixa. Participation in this plan takes place by means of a 1.5% contribution of gross salary, without limitation, covering the owner and his/her preferred dependants, deducted from the owner's payroll and 10% as a co-participation in the price of each medical visit and low-cost exams, made by the owner and his/her dependants (preferred and non-preferred).

Plano Unificado de Saúde - PLUS II (Economus)

For employees from Banco Nossa Caixa. Participation in this plan takes place by means of a 1.5% contribution of gross salary, without limitation, covering the owner and his/her preferred dependants, deducted from the owner's payroll and 10% as a co-participation in the price of each medical visit and low-cost exams, made by the owner and his/her preferred dependants and children of age. The plan does not provide for non-preferred dependants.

Plano de Assistência Médica Complementar - PAMC (Economus)

For employees from Banco Nossa Caixa stationed in the State of São Paulo. Plan owners are those employees retired due to disability in Groups "B" and "C", and their dependants, who participate in costs inasmuch as they use it, and according to the salary range progressive table.

Plano de Saúde (SIM)

The participants of this plan are the employees from Besc. Monthly contributions from members amount to 3% of the total payroll.


131

c) Actuarial valuations

The actuarial valuations are prepared every six months and the information contained in the tables below refers to those carried out on the base dates of 06.30.2010, 12.31.2010 and 06.30.2011.

Changes in present value of defined benefit actuarial obligations R$ thousand

Plano 1 – Previ Plano Informal – Previ Plano de Associados – Cassi Other plans

1st half 2011

Year 2010 1st half 2010

1st half 2011


1st half 2011


1st half 2011 Year 2010 1st half 2010

Initial Balance (90,805,477) (80,270,786) (80,270,786) (1,994,759) (1,743,385) (1,743,385) (5,297,172) (4,943,220) (4,943,220) (5,189,411) (4,432,673) (4,432,673)

Interest cost (4,783,578) (8,434,756) (4,123,612) (104,266) (202,866) (103,027) (279,738) (542,750) (275,676) (274,486) (514,367) (244,215)

Current service cost (273,055) (447,544) (222,587) -- -- -- (41,543) (70,937) (33,269) (32,230) (41,506) (20,090)

Benefits paid net contributions retirees 3,063,279 7,532,656 3,159,981 141,173 295,797 141,556 254,031 376,039 167,780 189,408 314,364 148,176

Liabilities transferred from other plans -- -- -- -- -- -- -- -- -- (6,576) -- --

Actuarial gain / (loss) on actuarial obligation (1,912,425) (9,185,047) (1,548,440) 38,868 (344,304) (270,981) (273,906) (116,304) 34,900 271,470 (515,228) (117,721)

Closing Balance (94,711,256) (90,805,477) (83,005,444) (1,918,984) (1,994,759) (1,975,837) (5,638,328) (5,297,172) (5,049,485) (5,041,825) (5,189,411) (4,666,523)

Present value of actuarial liabilities with cover (94,711,256) (90,805,477) (83,005,444) -- -- -- -- -- -- (4,449,957) (4,339,122) (4,165,462)

Present value of actuarial liabilities without cover -- -- -- (1,918,984) (1,994,759) (1,975,837) (5,638,328) (5,297,172) (5,049,485) (591,868) (850,289) (501,061)

Changes in fair value of plan assets R$ thousand


1st half 2011

Year 20101st half

20101st half

2011Year 2010

1st half 2010

1st half 2011

Year 20101st half


Initial Balance 141,566,323 137,814,150 137,814,150 -- -- -- -- -- -- 4,339,122 3,943,103 3,943,103

Estimated yield on plan assets 7,553,413 13,963,696 7,220,769 -- -- -- -- -- -- 236,726 532,843 259,440

Contributions received 236,245 459,300 27,857 141,173 295,797 141,556 254,031 376,039 339,015 39,784 56,326 30,997

Benefits paid net contributions retirees (3,063,279) (7,532,656) (3,159,981) (141,173) (295,797) (141,556) (254,031) (376,039) (339,015) (156,416) (245,810) (126,279)

Equity transfer -- -- -- -- -- -- -- -- -- 6,576 -- --

Allocation Fund to Sponsor and Participant (1) -- (15,068,115) -- -- -- -- -- -- -- -- -- --

Gain / (loss) on actuarial plan assets (8,068,037) 11,929,947 (11,739,294) -- -- -- -- -- -- (15,836) 52,660 58,201

Closing Balance 138,224,665 141,566,323 130,163,501 -- -- -- -- -- -- 4,449,957 4,339,122 4,165,462

(1) Refers to the values used for setting up the fund allocation of the surplus, and to the Bank the amount of R$ 7,519,058 thousand (Note 27.e.2).


132

Amounts recognized in the balance sheet R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

1) Fair value of the plan’s assets 138,224,665 141,566,323 130,163,501 -- -- -- -- -- -- 4,449,957 4,339,122 4,165,462

2) Present value of actuarial liabilities (94,711,256) (90,805,477) (83,005,444) (1,918,984) (1,994,759) (1,975,837) (5,638,328) (5,297,172) (5,049,485) (5,041,825) (5,189,411) (4,666,523)

3) Surplus/(deficit) (1+2) 43,513,409 50,760,845 47,158,057 (1,918,984) (1,994,759) (1,975,837) (5,638,328) (5,297,172) (5,049,485) (591,868) (850,289) (501,061)

4) Surplus/(deficit) - plot sponsor 21,756,704 25,380,423 23,579,029 (1,918,984) (1,994,759) (1,975,837) (5,638,328) (5,297,172) (5,049,485) (577,997) (684,994) (484,424)

5) Unrecognized actuarial gains or (losses) 9,705,567 15,485,636 9,069,311 (142,352) (199,476) (197,583) (947,703) (689,849) (545,909) (13,379) (180,864) (8,160)

6) Unrecognized past service cost -- -- -- -- -- -- -- -- -- -- -- --

7) Net actuarial (liability)/asset (4-5-6) 12,051,137 9,894,787 14,509,718 (1,776,632) (1,795,283) (1,778,254) (4,690,625) (4,607,323) (4,503,576) (564,618) (504,130) (476,264)

The actuarial assets recorded in other receivables (Note 11.b) will be realized before the end of the plan. The end of the plan is understood as the date in which the last commitment will be paid.

Amounts recognized in income relating to defined benefit plans R$ thousand


1st half 2011 1st half 2010 1st half 2011 1st half 2010 1st half 2011 1st half 2010 1st half 2011 1st half 2010

1) Cost of current service (136,527) (111,293) -- -- (41,543) (33,269) (16,155) (9,793)

2) Contributions from participants -- -- -- -- -- -- -- 15,462

3) Interest cost (2,391,789) (2,061,806) (104,266) (103,027) (279,738) (275,676) (150,706) (117,872)

4) Expected earnings on the plan's assets 3,776,706 3,610,384 -- -- -- -- 118,176 108,226

5) Amortization of net actuarial gains or (losses) 671,715 389,230 (18,257) (247,736) (11,097) -- (16,324) (58,439)

6) Unrecognized past service cost -- -- -- -- (4,956) (4,956) -- (863)

7) Expense with active employees -- -- -- -- (114,012) (97,286) -- --

8) Expenses with extraordinary contribution -- -- -- -- -- (28,622) -- --

9) Effect of passive/asset not recognized -- -- -- -- -- -- (29) (15,460)

10) (Expense)/income recognized in Statement of Income 1,920,105 1,826,515 (122,522) (350,763) (451,346) (439,809) (65,038) (78,739)


133

Composition of the plans' assets, shown as a percentage of the total

Plano 1 - Previ Plano Informal - Previ Plano de Associados - Cassi Other plans

06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Fixed Revenue 29.9% 29.1% 32.8% -- -- -- -- -- -- 86.5% 88.7% 91.6%

Floating Revenue 63.4% 64.7% 61.2% -- -- -- -- -- -- 7.5% 7.8% 4.6%

Real estate investments 3.6% 3.2% 3.2% -- -- -- -- -- -- 1.9% 1.7% 1.2%

Loans and financing 3.1% 2.9% 2.8% -- -- -- -- -- -- 1.5% 1.4% 1.3%

Others -- -- -- -- -- -- -- -- -- 2.7% 0.4% 1.3%

Amounts listed in fair value of plan assets

In their own financial instruments of the entity 6.3% 6.7% 5.4% -- -- -- -- -- -- -- -- --

In properties or other assets used by the entity 0.1% 0.1% 0.1% -- -- -- -- -- -- 0.1% -- 0.1%

Comparative table showing expected and actual return from plan assets


1st half 2011


1st half 2011


1st half 2011


1st half 2011


Real expected yield on plan assets 5.34% p.h. 10.13% p.a. 5.24% p.h. -- -- -- -- -- -- 5.34% p.h. 13.51% p.a. 7.06% p.h.

Real expected yield on assets for the period (R$ thousand) (1) 7,553,413 13,963,696 7,220,769 -- -- -- -- -- -- 236,726 532,843 278,305

Effective yield (R$ thousand) (2) (514,624) 10,825,529 (4,518,525) -- -- -- -- -- -- 227,467 585,503 315,321

(1) Value calculated based on the actuarial goal (INPC+5% p.a.).

(2) Considers the effects of floating revenue investments.

Principal actuarial assumptions adopted in each period

Plano 1 – Previ Plano Informal – Previ Plano de Associados – Cassi Other plans (1)

06.30.2011 06.30.2010 06.30.2011 06.30.2010 06.30.2011 06.30.2010 06.30.2011 06.30.2010

Inflation rate (p.a.) 4.38% 4.20% 4.38% 4.20% 4.38% 4.20% 4.38% 5.15%

Real discount rate (p.a.) 6.30% 6.30% 6.30% 6.30% 6.30% 6.30% 6.30% 8.66%

Nominal return rate of investments (p.a) 10.96% 10.76% -- -- -- -- 10.96% 14.26%

Real rate of future salary growth (p.a.) 0.41% 1.26% -- -- 0.41% 1.26% 0.57% 3.29%

Average remaining work period (years) 2.58 4.04 -- -- 13.78 14.14 6.95 4.51

Table actuarial survival AT-83 AT-83 AT-83 AT-83

Capitalization regime Projected credit unit Projected credit unit Projected credit unit Projected credit unit

(1) Grouped actuarial assumptions are expressed as weigthed averages.


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The Bank, to define the values for the defined benefit plans, uses methods and assumptions different from those submitted by entities sponsored. The most significant differences are concentrated on the definition of the figures relating to Plano 1 – Previ.

Differences in assumptions of the Plano 1 - Previ

Bank Previ

Real discount rate (p.a.) 6.3% 5%

Table acturial survival AT-83 AT-2000

Evaluation of Assets - Funds exclusive Market value or discounted cash flow - base scenario

Discounted cash flow - conservative scenario

Capitalization Regime Projected credit unit Aggregate Method

Reconciliation of Plan 1 amounts calculated - Previ/Bank R$ thousand

Plan assets Actuarial liabilities Effect in surplus

06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Value determined - Previ

117,796,676 116,790,760 113,382,177 (94,743,551) (90,629,774) (75,916,187) 23,053,125 26,160,986 37,465,990

Incorporation of values from contract 97

13,278,803 13,147,607 12,666,487 (13,278,803) (13,147,607) (12,666,487) -- -- --

Adjust the value of plan assets (1) 7,149,186 11,627,956 4,114,837 -- -- -- 7,149,186 11,627,956 4,114,837

Adjust the liabilities - the rate of discount / capitalization regime

-- -- -- 13,311,098 12,971,904 5,577,230 13,311,098 12,971,904 5,577,230

Value determined - Bank

138,224,665 141,566,323 130,163,501 (94,711,256) (90,805,477) (83,005,444) 43,513,409 50,760,846 47,158,057

(1) Refers mainly to adjustments made by the Bank in determining the fair value of plan assets, using the market value for shares of Vale and discounted cash flow – baseline scenario for assets Neonergia, 521 Holdings and Invepar, while at Previ is used in the method of discounted cash flow - the conservative scenario.

Actuarial amounts for the current period and for the last four years R$ thousand

06.30.2011 12.31.2010 12.31.2009 12.31.2008 12.31.2007

Plano 1 (Previ) – Surplus/(deficit) 43,513,409 50,760,845 57,543,364 28,669,191 64,229,505

Defined benefit obligation (94,711,256) (90,805,477) (80,270,786) (76,109,637) (70,572,791)

Plan assets 138,224,665 141,566,323 137,814,150 104,778,828 134,802,296

Adjustment of experience on the plan liabilities (p.a.) (2.0%) (8.4%) (3.6%) (7.1%) (3.2%)

Adjustment experience on plan assets (p.a.) (5.8%) 16.7% 20.8% (28.7%) (18.7%)

Plano Informal (Previ) – Surplus/(deficit) (1,918,984) (1,994,759) (1,743,386) (1,739,592) (1,666,065)


Adjustment of experience on the plan liabilities (p.a.) 2.0% (3.7%) (6.1%) (11.4%) (9.6%)

Plano de Associados (Cassi) – Surplus/(deficit) (5,638,328) (5,297,172) (4,943,220) (4,677,766) (4,547,868)


Adjustment of experience on the plan liabilities (p.a.) (4.9%) (2.9%) (0.3%) 0.1% 8.8%

Other Plans – Surplus/(deficit) (591,868) (850,289) (489,570) 171,899 --

Defined benefit obligation (5,041,825) (5,189,411) (4,432,673) (446,280) --

Plan assets 4,449,957 4,339,122 3,943,103 618,179 --

Adjustment of experience on the plan liabilities (p.a.) 6.0% (6.9%) (17.6%) (4.9%) --

Adjustment experience on plan assets (p.a.) (0.3%) (0.5%) (3.2%) 0.4% --


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d) Overview of asset/liability actuarial recorded in the Bank

R$ thousand

Actuarial assets Actuarial liabilities

06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Plano 1 (Previ) 12,051,137 9,894,787 14,509,718 -- -- --

Plano Informal (Previ) -- -- -- (1,776,632) (1,795,283) (1,778,254)

Plano de Associados (Cassi) -- -- -- (4,690,625) (4,607,323) (4,503,576)

Regulamento Geral (Economus) -- -- -- (162,801) (113,592) (100,114)

Regulamento Complementar 1 (Economus) -- -- -- (237) (237) --

Plus I e II (Economus) -- -- -- (286,594) (275,836) (257,573)

Grupo B’ (Economus) -- -- -- (114,986) (114,465) (118,577)

Total 12,051,137 9,894,787 14,509,718 (7,031,875) (6,906,736) (6,758,094)

e) Allocations of the Surplus – Plano 1

R$ thousand


Fundo Paridade

Initial Balance 1,524,374 1,778,366 1,778,366

Restatement 92,467 205,059 109,954

Contributions to the Plano 1 – Contract 97 (62,985) (459,051) (27,746)

Closing Balance 1,553,856 1,524,374 1,860,574

Fundo de Destinação

Initial Balance 7,594,993 7,519,058 --

Restatement • 302,850 75,935 --

Tranfers to Fundo de Contribuição and Fundo de Utilização • (3,618,691) -- --

Closing Balance • 4,279,152 7,594,993 --

Contribution Fund

Initial Balance -- -- --

Constitution (1)• 1,398,467 -- --

Restatement • 53,851 -- --

Contributions to the Plano 1 • (172,971)

Closing Balance • 1,279,347 -- --

Utilization Fund

Initial Balance -- -- --

Constitution (1)• 2,220,224 -- --

Restatement • 115,624 -- --

Closing Balance • 2,335,848 -- --

(1) Funds recorded in the first half 2011.

e.1) Fundo Paridade

The plan was funded, up to 12.15.2000, through a contribution of 2/3 (two thirds) from the Bank and another of 1/3 (one third) from participants. As from 12.16.2000, in order to adjust to the provisions of Constitutional Amendment N.° 20, both the Bank and the participants started to make a contribution of 1/2 (one half), and an agreement was signed by the parties involved and duly approved by the Supplementary Pension Plan Secretariat.

The cost for the implementation of the equal contributions was defrayed by using the Plan's surplus at the time. As a result of this Agreement, the Bank, yet, was entitled to recognize the amount of R$ 2,227,254 thousand, which was recorded in Other Receivables – Accounts receivable - Previ. This Asset is monthly adjusted based on the actuarial goal (INPC + 5% per year) and, since January 2007, has been used to offset any financial imbalance in the ratio between the Unamortized Reserve and Advanced Amortization arising from the agreement entered into with Previ in 1997, which granted supplementary benefits to the participants of Plano 1 who joined the Plan up to 04.14.1967 and had not retired up to that date.


136

e.2) Fundo de Destinação

On 11.24.2010, Banco do Brasil signed a Memorandum of Understanding with the entities that represent current and retired employees, the aim of which was to allocate and use a share of the Plan's surplus, as determined by Supplementary Law N.° 109/2001 and CG PC Resolution N.° 26/2008.

In view of the approval of the measures provided for in the Memorandum of Understanding by Previ's Decision-Making Council, the Bank recorded, as of November 30, 2010, under "Other receivables - Securities and credits receivable - Previ", the amount of R$ 7,519,058 thousand against the write-off of the amount from "Other receivables - Actuarial assets", adjusted by the actuarial target (INPC + 5% p.a.).

e.3) Fundo de Contribuição

The fund is composed by resources transferred from the Fundo de Destinação to support the interruption of contribution payments for a period of three exercises, as established in the Memorandum of Understanding. The amount related to the Bank’s contributions is transferred to Previ, in a monthly basis. The Fundo de Contribuição is updated by an actuarial goal (INPC + 5% p.a.).

e.4) Fundo de Utilização

The Utilization Fund is composed by resources transferred from the Fundo de Destinação and it can be used by the Bank after fulfilling the requirements established by applicable law. The Fundo de Utilização is updated by an actuarial goal (INPC + 5% p.a.).

28 – Contingent Assets and Liabilities and Legal Obligations – Taxes and Pension Plan

a) Contingent Tax Assets

The Banco do Brasil is an active participant in judicial proceedings to restore indebts tax and prevent the launch of tax credits by tax authorities, recognized in the financial statements only on the assumption favorable to the Bank (not counted), according Resolution CMN nº. 3823/2009. The actions of most relevance:

a.1) Unconstitutionality of Income Tax on Net Income paid in 1989 and in the 1st half of 1992, in the amount of R$ 13,706 thousand (R$13,274 thousand on 06.30.2010);

a.2) IOF – Law nº. 8033/1990 (Indexation), in the amount of R$ 212,672 thousand (R$ 206,101 thousand on 06.30.2010).

b) Contingent liabilities – Probable

Labor Lawsuits

The Bank is a party to labor lawsuits mainly filed by ex-employees or trade unions of the banking industry. Allowance for probable losses represent various claimed requests, such as: compensation, overtime, distortion of the working day, additional function and representation, and others.

Fiscal Lawsuits

The Bank is subject to challenges by the tax authorities in relation to taxes, which can give rise to notice assessments with the subject matter of jurisdiction or the sum of taxable income or deductible expense. Most of the lawsuits originating from tax assessment notices refer mainly to ISSQN, CPMF, CSLL, IRPJ and IOF, and as a guarantee of some of them, there are attachments in cash or in properties.

Civil Lawsuits

The most significant civil lawsuits classified as probable losses are those aimed at the collection of the difference between the actual rates of inflation suffered and the rate used for inflation correction of financial investments during the period of the various economic plans (Collor Plan, Bresser Plan and Summer Plan).

With the proximity of the prescriptive periods for bringing actions seeking the recovery of values based on inflation rates away by these economic plans, there was an increase in the volume of lawsuits filed. Actions whose success by adverse parties are considered probable are properly provisioned. The refered


137

rates are provided by law that regulated the time the Federal Government's economic policy by that time. With the prescription that occurred, there is potential liability to be considered representative.

In this regard, there is action pending trial in the Supremo Tribunal Federal (STF) - ADPF/165: Complaint of breach of fundamental precept - authored by the National Confederation of Financial System (Consif), with the aim of declaring the constitutionality of legislation that established the economic plans.

Changes in the provision for civil, tax and labor claims classified as probableR$ thousand



Labor claims

Opening Balance 2,462,390 3,242,208 2,538,036 3,300,748

Constitution 28,794 412,657 49,669 424,404

Reversal of the provision (250) (739,824) (2,999) (742,089)

Monetary restatement (291,410) (273,314) (291,490) (273,317)

Written off due payment 46,127 94,208 46,195 94,568

Amounts merged/added (1) -- 388 53,465 --

Closing Balance 2,245,651 2,736,323 2,392,876 2,804,314

Tax Claims

Opening Balance 195,377 174,696 1,260,923 1,138,706

Constitution 8,396 27,935 89,409 71,868


Monetary restatement (1,552) (444) (1,552) (1,899)

Written off due payment 916 5,784 7,221 22,863

Change in equity interest held in associated companies(2) -- -- (237,556) --

Amounts merged/added (1) -- -- 182,178 --

Closing Balance 203,133 198,895 1,292,012 1,221,967

Civil claims

Opening Balance 3,464,569 3,036,381 3,594,694 3,131,472

Constitution 397,493 571,088 412,364 660,600


Monetary restatement (356,149) (139,840) (357,535) (151,681)

Written off due payment 25,580 121,973 26,003 124,333

Amounts merged/added (1) -- 1,799 14,880 --

Closing Balance 3,531,358 3,204,045 3,669,939 3,353,840

Total Labor Demand, Taxation and Civil 5,980,142 6,139,263 7,354,827 7,380,121

(1) In the first half of 2011, it is related to the balance from Banco Patagonia and from companies that make up the BB-Mapfre partnership in insurance business.

(2) Related to changes in equity interest held in non-financial associated companies.

c) Contingent Liabilities – Possible

The lawsuits, tax and civil risks classified "possible" are exempted from any provisions on the Resolution CMN nº. 3823/2009.

Labor Lawsuits

Representing various applications demanded as compensation for overtime, distortion of the working day, additional function and representation, and others.

Fiscal Lawsuits

Represents a number of claims made such as: ISSQN, collection and other tax obligations originating from Secretaria da Receita Federal and Instituto Nacional do Seguro Social (INSS). The main contingencies originate from:


138

� Notices of labor infraction drawn by the INSS, aiming at the payment of contributions applicable on year-end bonuses paid in the collective agreements in the period from 1995 to 2006, in the amount of R$ 1,058,118 thousand, public transport pay and use of private car by employees of Banco do Brasil, in the amount of R$ 160,093 thousand and employee profit sharing corresponding to the period from April 2001 to October 2003, in the amount of R$ 26,646 thousand.

� Notices of tax assessment drawn by the Treasuries of the Municipalities, aiming at the collection of ISSQN, which amounts R$ 187,717 thousand.

Civil Lawsuits

In civil lawsuits there are actions that seek to recover the difference between inflation and the index used to restate financial investments during the period of economic plans (Collor Plan, Bresser Plan and Summer Plan).

The balances of contingent liabilities classified as possible

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Labor claims 78,304 83,822 73,295 100,211 87,335 75,632

Tax Claims 2,577,565 2,180,924 2,022,057 3,331,357 2,976,256 2,631,124

Civil claims 3,334,961 2,761,507 2,452,110 3,422,272 2,812,261 2,504,772

Total 5,990,830 5,026,253 4,547,462 6,853,840 5,875,852 5,211,528

d) Deposits in Guarantee of Funds

The balances of deposits in guarantee recorded for contingencies

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Labor claims 2,632,491 2,420,578 2,406,001 2,657,068 2,440,689 2,423,641

Tax claims 4,284,557 4,149,248 4,081,010 5,601,528 5,419,232 5,135,663

Civil claims 3,235,723 2,832,003 2,537,443 3,392,545 2,983,856 2,581,736

Total 10,152,771 9,401,829 9,024,454 11,651,141 10,843,777 10,141,040

e) Legal Obligations

The Bank has a record in Other Liabilities - Fiscal and Social Security, of the amount of R$ 12,478,583 thousand (R$ 12,241,776 thousand on 12.31.2010 and R$ 12,017,767 thousand on 06.30.2010) at Banco do Brasil and R$ 13,211,062 thousand (R$ 12,942,257 thousand on 12.31.2010 and R$ 12,632,587 thousand on 06.30.2010) in BB-Consolidated, relating to the following actions:

Judicial Proceeding: Income and Social Contribution Taxes

In February 1998, the Bank filed a request for full offsetting of accumulated income tax loss carry forwards and negative basis of social contribution against taxable income. Since then, the Bank has been fully offsetting tax loss carry forwards and negative basis of social contribution against income tax and social contribution and has made judicial deposits in the full amount due (70% of the amount offset). These deposits prompted the 16th Vara da Justiça Federal do Distrito Federal to issue an order recognizing the suspension of chargeability of these taxes until final judgment of the Bank's request, based on article 151, item II, of the Códito Tributário Nacional (CTN). Since 10.1.2002, the proceedings have been awaiting hearing of an extraordinary appeal by the STF.

The offsetting of tax loss carry forward and recoverable CSLL has resulted in the write-off of deferred tax credits, observing the limitation of 30%.

Deferred taxes including corporate income tax (IRPJ) and social contribution on net income (CSLL) on the restatement of judicial deposits are being offset with the tax credits resulting from the provision related


139

to that judicial deposit, in conformity with paragraph 2, item II, article 1 of CMN Resolution nº. 3059/2002, with no impact on income.

Based on the hypothesis of a successful outcome to its lawsuit, observed as of September 2005 and January 2009, the Bank would have consumed the entire stock of tax loss carry forward and recoverable social contribution, respectively. Therefore, since the accrual period of October 2005 and February 2009, the amount of IRPJ and CSLL are being paid in full. Moreover, there would be a transfer of resources from the account used to record judicial deposits to that of cash and cash equivalents. Tax credits for the escrow deposits (principal) would be written off against the allowance of IRPJ and CSLL and would be reversed against income, the provision for tax risks related to the restatement of the deposits, amounting to R$ 4,106,984 thousand.

If the Bank were unsuccessful in its lawsuit (situation in which the amounts deposited judicially would be converted into income in favor of the National Treasury), the portions of IRPJ tax credits on tax losses and CSLL to offset would be reclassified to the representative asset account "IRPJ recoverable" and "CSLL recoverable", respectively, that could be used since the accrual period of October 2005 and February 2009, observing the limitation of 30%. These taxes recoverable, which would result from the adjustments of Statements of Economic-Fiscal Information of Businesses, corresponds to R$ 4,094,085 thousand on 06.30.2011 and its restatement by the Selic Rate corresponds to R$ 784,809 thousand. This sum adjusts the provision for tax risks with respect to the updating of court deposits so that it will be sufficient to fully cancel the risk of a likely loss.

The amounts related to this matter

R$ thousand

06.30.2011 12.31.2010 06.30.2010

Legal Liability - Provision for lawsuit 11,906,706 11,697,619 11,502,534

Judicial Deposits 12,908,158 12,485,258 12,082,682

Amount realized 7,817,011 7,817,011 7,817,011

Restatement 5,091,147 4,668,247 4,265,671

The amount of tax credits corresponding to the 70% portion 6,585,045 6,585,045 6,585,045

Tax losses of IRPJ 3,002,033 3,002,033 3,002,033

CSLL losses to offset/ CSLL recoverable 3,583,012 3,583,012 3,583,012

Judicial Proceeding: PIS/Pasep and Cofins

Provision for lawsuit relating to the writ of mandamus intended to achieve recognition of the right of Banco do Brasil, BB Corretora and Banco Votorantim to pay PIS/Pasep and Cofins according to the calculation bases set out in Complementary Laws nº. 7/1970 and nº. 70/1991, in the amount of R$ 571,877 thousand (R$ 544,157 thousand on 12.31.2010 and R$ 515,233 thousand on 06.30.2010) in Banco do Brasil and R$ 1,304,356 thousand (R$ 1,244,638 thousand on 12.31.2010 and R$ 1,130,053 thousand on 06.30.2010) in BB-Consolidated, considering R$ 732,146 thousand from Banco Votorantim. Since the injunctions were suspended on 08.18.2010, Banco do Brasil and BB Corretora returned to collect the PIS/Pasep and Cofins from the event of July 2010 as provided for in Law nº. 9718/1998. The legal actions of Banco Votorantim had favorable judgments which are subject to an appeal.

29 - Risk Management and Regulatory Capital

a) Risk Management Process

Banco do Brasil considers the management of risks and of capital the main vectors for the decision-making process.

In the Banco do Brasil, collegiate risk management is performed completely apart from the business units. Risk policies are specified by the Bank's Board of Directors and by the Global Risk Committee (CRG), which is a discussion group composed by the President and by Vice-Presidents. Actions for implementing and monitoring guidelines issued by the CRG are directed at specific sub-committees (Credit, Market and Liquidity and Operational), which are groups formed by Directors.


140

To find out more about the risk management process at Banco do Brasil, access the website bb.com.br/ri.

b) Credit Risk

Credit Risk is associated with the possibility of loss resulting from uncertainty regarding the receipt of amounts agreed on with borrowers, counterparts of contracts or issues of securities.

In order to compliance with the best practices of credit risk management and to increase efficiency in the economic capital management, Banco do Brasil uses risk and return metrics, present throughout its loan process, as a mechanism of risk management culture at the Institution.

c) Liquidity risk

This type of risk takes two forms: market liquidity risk and cash flow liquidity risk (funding). The first is the possibility of loss resulting from the incapacity to perform a transaction in a reasonable period of time and without significant loss of value. The second is associated with the possibility of a shortage of funds to honor commitments assumed on account of the mismatching between assets and liabilities.

d) Operational risk

Reflects the possibility of loss resulting from faults, deficiencies, or the inadequacy of internal processes, personnel and systems, or external events. This concept includes legal risks.


141

e) Market Risk

Market Risk reflects the possibility of loss that can be caused by changes in the behavior of interest and exchange rates and of prices of shares and commodities.

Financial Instruments – Fair Value

Financial instruments recorded in balance-sheet accounts, compared to fair value:

R$ thousand

BB-Consolidated

06.30.2011 12.31.2010 06.30.2010 Unrealized gain/loss, net of tax effects

Book value Fair value Book value Fair value Book value Fair valueOn Income On Shareholders´ Equity

06.30.2011

12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Assets

Short-term interbank deposits 147,565,392 147,567,484 107,578,790 107,564,261 132,542,665 132,686,485 2,092 (14,529) 143,820 2,092 (14,529) 143,820

Securities 153,376,179 153,215,415 142,243,143 142,083,409 131,032,385 130,902,147 212,916 285,221 195,621 (160,764) (159,734) (130,238)

Adjustment of securities available for sale (Note 8.a)

-- -- -- -- -- -- 373,680 444,955 325,859 -- -- --

Adjustment of securities held to maturity (Note 8.a)

-- -- -- -- -- -- (160,764) (159,734) (130,238) (160,764) (159,734) (130,238)

Derivative financial instruments 1,257,517 1,257,517 1,623,591 1,623,591 1,217,067 1,217,067 -- -- -- -- -- --

Loan operations 342,481,237 342,421,835 317,726,499 317,801,144 289,075,118 289,042,251 (59,402) 74,645 (32,867) (59,402) 74,645 (32,867)

Liabilities

Interbank deposits 11,553,200 11,708,524 18,998,102 19,007,052 10,436,263 10,520,311 (155,324) (8,950) (84,048) (155,324) (8,950) (84,048)

Time deposits 234,243,117 234,274,141 204,652,146 204,636,840 192,715,468 192,757,526 (31,024) 15,306 (42,058) (31,024) 15,306 (42,058)

Obligations related to Committed Operations 192,875,430 192,904,566 142,174,955 142,100,736 166,602,569 166,506,148 (29,136) 74,219 96,421 (29,136) 74,219 96,421

Borrowings and onlendings 61,138,145 61,116,556 59,458,834 59,416,542 48,631,760 48,674,016 21,589 42,292 (42,256) 21,589 42,292 (42,256)

Derivative financial instruments 4,290,449 4,290,449 5,296,640 5,296,640 3,237,903 3,237,903 -- -- -- -- -- --

Other liabilities 167,416,147 167,350,890 159,458,907 159,393,860 136,664,758 136,624,799 65,257 65,047 39,959 65,257 65,047 39,959

Unrealized gain/loss, net of tax effects 26,968 533,251 274,592 (346,712) 88,296 (51,267)


142

Determination of Fair Value of Financial Instruments

Short-term interbank investments: The fair value was obtained by future cash flows discount, adopting interest rates exercised by the market in similar operations in the balance sheet date.

Securities: Securities and derivative financial instruments are accounted for by market value, as provided for in Bacen Circular nº 3068/2001, except for securities held to maturity. The securities fair value, including those held to maturity, are obtained according to rates collected at the market.

Loan operations: Fixed rates’s operations have been estimated through the future cash flow discount method, considering the interest rates utilized by the Bank for contracting of similar operations in the balance sheet date. For these operations that are remunerated by floating rates, the fair value was equivalent to the book value itself.

Interbank deposits: The fair value has been calculated through discount of the difference between future cash flows and rates currently applicable in the fixed operations market. In case of floating operations which maturities did not exceed 30 days, the book value was deemed equivalent to the fair value.

Time deposits: The same criteria adopted for interbank deposits are utilized in the determination of the fair value.

Deposits received under repurchase agreements: For operations at fixed rates, the fair value was determined calculating the discount of the estimated cash flows adopting a discount rate equivalent to the rates applicable in contracting of similar operations in the last market day. For floating operations, book values have been deemed equivalent to market value.

Borrowing and onlendings: Such operations are exclusive to the Bank, without similarity in the market. In face of their specific characteristics, exclusive rates for each fund entered, inexistence of an active market and similar instrument, the fair values of such operations are equivalent to the book value.

Other liabilities: Fair values have been determined by means of the discounted cash flow method, which takes into account interest rates offered in the market for obligations which maturities, risks and terms are similar.

Other financial instruments: Included or not in the balance sheet, fair value is approximately equivalent to the correspondent book value.

Derivatives: According to Bacen Circular nº 3,082/2002, derivatives are recorded at market value. Derivatives' market value is estimated in accordance with an internal pricing model, with the use of the rates disclosed for transactions with similar terms and indices on the fiscal years' last business day.

Sensitivity analysis (CVM Instruction nº 475/2008)

The Banco do Brasil manages its risks in a dynamic process, identifying, assessing, monitoring, and controlling market risk exposure in its own position. In this context, the Bank takes into account the risk limits defined by the Strategic Committees and likely scenarios, to act in a timely manner in reversing any occasional adverse results.

In accordance with CMN Resolution nº 3,464/2007 and with Bacen Circular nº 3,354/2007, to manage more efficiently its transactions exposed to market risks, Banco do Brasil separates its transactions, including derivative financial instruments as follows:

1) Trading Book: consisting in own positions operations held for trading or as a hedge for its trading portfolio, for which there is an intention of trading prior to their contractual expiry, subject to normal market conditions and that do not have a non-trading clause.

2) Banking Book: consisting in transactions not classified in the Trading Book whose feature is helding to maturity.


143

The sensitivity analysis for all the operations with assets and liabilities of the balance sheet, in compliance with CVM Instruction 475/2008, related to scenario II and III above, does not adequately reflect the management of market risks adopted by the Institution.

In order to determine the sensitivity of the Bank's capital to the reflexes of market volatility (excepted Banco Votorantim capital), simulations were performed with three likely scenarios, two of which with an adverse effect for the Bank. The scenarios used are listed below:

Scenario I: Likely situation, which reflects the perception of Management of the Bank, the scenario most likely to occur for a 3-month horizon, considering macroeconomic factors and market information (BM & F Bovespa, Andima, etc.). Assumptions: exchange rate - Reais/Dollar of R$ 1.59 and raising the Selic rate to 12,75% per annum based on market conditions observed at 06.30.2011.

Scenario II: Situation possible. Assumptions employed: parallel shock of 25.0% in the risk variables, based on market conditions observed on 06.30.2011 and is considered the worst losses by risk factor and, therefore, neglecting the dynamics of macroeconomic factors;

Scenario III: Situation possible. Assumptions employed: parallel shock of 50.0% in the risk variables, based on market conditions observed on 06.30.2011 and is considered the worst losses by risk factor and thus ignoring the dynamics of macroeconomic factors.

The tables below summarize the results for the Trading Portfolio (Trading), excluding Banco Votorantim's positions, composed of public and private securities, derivative financial instruments and funds obtained through commitment operations.

R$ thousand

Scenario I

Risk Factor Concept

06.30.2011 12.31.2010 06.30.2010

Variation of rates

Income Variation

of ratesIncome

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Increase (1,547) Increase (13,129) Increase (4,946)

TMS and CDI coupons Risk of variation of interest rate coupons Increase (71) Increase 164 -- --

IPCA Risk of variation of price index coupons Increase (377) Increase (971) Increase (1,378)

Foreign currency coupons (US Dollars)

Risk of variation of foreign exchange coupon Decrease (57) Decrease -- Increase --

Exchange variation Risk of variation of exchange rates Increase 1,614 Increase 2,382 Decrease (59)

R$ thousand

Scenario II

Risk Factor Concept

06.30.2011 12.31.2010 06.30.2010

Variation of rates

IncomeVariation

of ratesIncome

Variation of rates

Income


TMS and CDI coupons Risk of variation of interest rate coupons Increase (34) Increase (41) -- --

IPCA Risk of variation of price index coupons Increase (1,317) Increase (1,451) Increase (1,790)


Risk of variation of foreign exchange coupon Decrease (374) Increase -- Decrease --

Exchange variation Risk of variation of exchange rates Decrease (21,794) Decrease (22,653) Decrease (17,603)

R$ thousand

Scenario III

Risk Factor Concept

06.30.2011 12.31.2010 06.30.2010

Variation of rates

IncomeVariation

of ratesIncome

Variation of rates

Income


TMS and CDI coupons Risk of variation of interest rate coupons Increase (68) Increase (82) -- --

IPCA Risk of variation of price index coupons Increase (2,576) Increase (2,837) Increase (3,482)


Risk of variation of foreign exchange coupon Decrease (876) Increase -- Decrease --



144

For transactions classified in the Banking Book, appreciations or depreciations resulting from changes in interest rates practiced in the market do not imply in a significant financial and accounting impact on the Bank's income. It’s a result of the portfolio quality that is composed on large scale of loan operations (consumer credit, agribusiness, working capital, etc.); retail funding (demand, time, and savings deposits), and securities, which are recorded in the books according to the agreed on rates when contracting these operations. In addition, it should be pointed out that these portfolios have as their key feature the intention of holding the respective positions to maturity, and hence they are not subject to the effects of fluctuating interest rates, or the fact that such transactions are naturally related to other instruments (natural hedge), hence minimizing the reflexes of a stress scenario.

In the tables below may be seen a summary of the Trading Portfolio (Trading) and Non Trading (Banking), except from Banco Votorantim:

R$ thousand

Scenario I

Risk Factor Concept

06.30.2011 12.31.2010 06.30.2010

Variation of rates

Income Variation

of ratesIncome

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Increase (666,901) Increase (1,928,246) Increase (2,392,340)

TR Risk of variation of interest rate coupons

Increase 885,604 Increase 1,449,619 Increase 1,655,303

TBF Decrease (107) Decrease (145)

TJLP Risk of variation of interest rate coupons

Increase 68,882 Increase 137,778 Increase

--

127,596

-- TMS and CDI coupons Increase 68,422 Increase (27,143)

IGP-M

Risk of variation of price index coupons

Increase (62,328) Increase (137,572)

Increase (405,550) IGP-DI Increase (106) Increase (207)

INPC Increase (125,199) Increase (70,605)

IPCA Increase (17,773) Increase (31,214)

Foreign Currency Coupom Risk of variation of foreign exchange coupon Decrease (542,286) Decrease (116,853) Increase (36,115)

Exchange variation Risk of variation of exchange rates Increase 19,356 Increase 21,083 Decrease (405)

R$ thousand

Scenario II

Risk Factor Concept

06.30.2011 12.31.2010 06.30.2010

Variation of rates

IncomeVariation

of ratesIncome

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Increase (4,277,466) Increase (5,300,903) Increase (5,294,655)


Decrease (6,318,277) Decrease (4,570,631) Decrease (3,948,404)



Decrease (219,063) Decrease (203,752) Decrease (272,593)

TMS and CDI coupons Decrease (57,521) Increase (35,049) -- --

IGP-M









145

R$ thousand

Scenario III

Risk Factor Concept

06.30.2011 12.31.2010 06.30.2010

Variation of rates

IncomeVariation

of ratesIncome

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Increase (8,208,400) Increase (10,163,642) Increase (10,150,330)


Decrease (13,194,126) Decrease (9,476,165) Decrease (8,168,385)



Decrease (446,492) Decrease (414,806) Decrease (311,629)

TMS and CDI coupons Decrease (115,093) Increase (70,073) -- --

IGP-M








The scenarios used for preparing the framework of sensitivity analysis must use situations of deterioration of at least 25% and 50% for variable risk, in a individuallized basis, as determined by CVM Instruction nº 475/2008. Thus, the combined analysis of the results is impaired. For example, simultaneous shocks of increase in the prefixed interest rate and reduction of TR Coupon are not consistent from the macroeconomic perspective.

The derivative transactions classified in the Banking Book, don’t represent a relevant market risk to Banco do Brasil, as these positions originated mainly to fulfill the following situations:

� Change of the indexation of funding and lending transactions performed to meet customer needs; � Market risk hedge with purpose and efficacy as described in Note 8.d. Also in this transaction, the

interest and exchange rate variations have no effects on the Bank's income.

The Banco do Brasil did not enter into any transaction likely to be classified as an exotic derivative, as described in CVM Instruction no. 475/2008 - Attachment II.

Interest in Banco Votorantim

Banco Votorantim, in the first half of 2011, revised the criteria for classification its operations, which resulted in the migration of part of its trading book positions for non-trading. Thus, the sensitivity analysis of the positions regarding the participation of Banco do Brasil's in Banco Votorantim consider the trading and non-trading book together and the trading book only.

Simulations were also made with three possible scenarios, two of which with consequent adverse result, as follows:

Scenario I: Situation likely, which reflects the perception of Management of Banco Votorantim in the scenario most likely to occur. Assumptions employed: exchange rates real/dollar from R$ 1.50 and the Selic rate of interest 12.75% per year, to the end of 2011.

Scenario II: Assumptions: parallel shock of 25% in the risk variables, based on market conditions observed on 06.30.2011 and is considered the worst losses by risk factor and, therefore, neglecting the dynamics of macroeconomic factors;

Scenario III: Assumptions: employed parallel shock of 50% in the risk variables, based on market conditions observed on 06.30.2011 and is considered the worst losses by risk factor and therefore ignoring the dynamics of macroeconomic factors.

In the tables below are the results for the positions of the Bank for its participation in Banco Votorantim:


146

R$ thousand

Scenario I

Risk Factor Concept

06.30.2011 12.31.2010 06.30.2010

Variation of rates

IncomeVariation

of ratesIncome

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Increase (20,589) Increase -- Increase (69,082)

Foreign currency coupons Risk of variation of foreign exchange coupon Increase (28,347) Increase 42,497 Increase --

Exchange variation Risk of variation of exchange rates Decrease (12,249) Increase (690,382) Decrease 6,752

Price Indexes Risk of variation of price index coupons Decrease 21,520 Increase (2,403) Decrease 17,286

Interest rates Risk of variation of interest rate coupons Increase -- Increase (425) Increase (530)

Other Risk of variation of other coupons Increase 23,719 Increase (12,221) Increase (33,067)

R$ thousand

Scenario II

Risk Factor Concept

06.30.2011 12.31.2010 06.30.2010

Variation of rates

IncomeVariation

of ratesIncome

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Decrease (292,192) Decrease (605,880) Increase (81,359)

Foreign currency coupons Risk of variation of foreign exchange coupon Increase (19,688) Decrease (111,898) Increase --

Exchange variation Risk of variation of exchange rates Decrease (191,201) Increase (732,519) Increase (122,315)

Price Indexes Risk of variation of price index coupons Increase (5,491) Increase (8,522) Increase (20,004)

Interest rates Risk of variation of interest rate coupons Increase -- Increase (2,973) Increase (659)

Other Risk of variation of other coupons Decrease (22,699) Decrease (21,201) Decrease --

R$ thousand

Scenario III

Risk Factor Concept

06.30.2011 12.31.2010 06.30.2010

Variation of rates

IncomeVariation

of ratesIncome

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Decrease (539,551) Decrease (1,237,639) Increase (94,275)

Foreign currency coupons Risk of variation of foreign exchange coupon Increase (10,107) Decrease (167,073) Increase --

Exchange variation Risk of variation of exchange rates Decrease (396,251) Increase (1,025,643) Increase (322,441)

Price Indexes Risk of variation of price index coupons Increase (30,454) Increase (14,498) Increase (23,808)

Interest rates Risk of variation of interest rate coupons Increase -- Increase (5,241) Increase (785)

Other Risk of variation of other coupons Decrease (90,500) Decrease (207,868) Decrease (48,073)

In the tables below are the results for the positions of the Bank for its participation in Banco Votorantim of the trading and non-trading book:

R$ thousand

Scenario I

Risk Factor Concept

06.30.2011

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Increase (36,012)

Foreign currency coupons Risk of variation of foreign exchange coupon Increase (2,852)

Exchange variation Risk of variation of exchange rates Decrease (16,680)

TJLP Risk of variation of TJLP coupons Decrease --

TR/TBF Risk of variation of TR/TBF coupons Increase --

Price Index Risk of variation of price index coupons Increase 799


147

R$ thousand

Scenario II

Risk Factor Concept

06.30.2011

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Decrease (486,574)



TJLP Risk of variation of TJLP coupons Increase (1,196)


Price Index Risk of variation of price index coupons Decrease (1,075)

R$ thousand

Scenario III

Risk Factor Concept

06.30.2011

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Decrease (880,787)



TJLP Risk of variation of TJLP coupons Increase (2,152)


Price Index Risk of variation of price index coupons Decrease (2,444)

f) Regulatory Capital

The Basel Ratio was determined using the criteria established by CMN Resolutions n.º 3,444/2007 and n.º 3,490/2007, which refer to the calculation of the Referential Equity (RE) and of the Required Referential Equity (RRE), respectively, without considering the information relating to Banco Votorantim as determined by Bacen.


148

R$ thousand

06.30.2011 12.31.2010 06.30.2010

Economic and Financial

FinancialEconomic and

FinancialFinancial

Economic and Financial

Financial

RE - Referential equity amount 73,341,938 74,807,517 66,927,567 68,257,551 55,153,643 56,438,421

Tier I 56,450,434 56,505,314 52,397,235 52,452,142 41,496,816 41,551,719

Shareholders' equity 54,618,972 54,673,851 50,440,683 50,495,590 39,331,882 39,386,785

Revaluation reserves (5,961) (5,960) (6,241) (6,241) (6,373) (6,373)

Deferred Assets (193,499) (193,499) (226,529) (226,529) (272,171) (272,171)

Mark-to-market (218,587) (218,587) (203,031) (203,031) (145,060) (145,060)

Tax credits excluded from Level I of RE (12,926) (12,926) (22,477) (22,477) (22,477) (22,477)

Hybrid Capital and Debt Instruments - Level I 2,262,435 2,262,435 2,414,830 2,414,830 2,611,015 2,611,015

Tier II 22,335,845 22,335,844 19,763,491 19,763,491 18,801,181 18,801,181

Mark-to-market 218,587 218,587 203,031 203,031 145,060 145,060

Subordinated Debt Qualifying as Capital 22,111,297 22,111,297 18,738,173 18,738,173 17,767,405 17,767,405

Funds obtained from the FCO 13,882,051 13,882,051 13,455,864 13,455,864 13,239,454 13,239,454

Funds obtained abroad 3,608,214 3,608,214 1,369,813 1,369,813 414,193 414,193

Funds obtained from the CDB 2,662,504 2,662,504 2,829,732 2,829,732 3,089,335 3,089,335

Funds raised in Financial Letters 1,958,528 1,958,528 1,082,764 1,082,764 1,024,423 1,024,423

Hybrid Capital and Debt Instruments – Level II -- -- 816,046 816,046 882,343 882,343

Revaluation reserves 5,961 5,960 6,241 6,241 6,373 6,373

Deduction from the RE (5,444,341) (4,033,641) (5,233,159) (3,958,082) (5,144,354) (3,914,479)

Financial instruments excluded from RE (5,444,341) (4,033,641) (5,233,159) (3,958,082) (5,144,354) (3,914,479)

RRE - Required Referential Equity Amount 56,112,197 54,508,657 52,297,217 50,993,696 47,219,758 46,452,190

Credit risk 52,705,599 51,352,811 48,900,525 47,805,205 44,238,446 43,470,878

Market Risk 64,590 64,590 31,422 31,422 45,114 45,114

Operational Risk 3,342,008 3,091,256 3,365,270 3,157,069 2,936,198 2,936,198

Sufficiency/(Insufficiency) of RE: (RE – RRE) 17,229,741 20,298,860 14,630,350 17,263,855 7,933,885 9,986,231

BIS Ratio: (RE x 100)/ (RRE / 0.11) 14.38 15.10 14.08 14.72 12.85 13.36

g) Fixed asset ratio

The Fixed Asset Ratio in relation to the Referential Equity (RE) is 21.32% (20.99% on 12.31.2010 and 20.26% on 6.30.2010) for the Consolidated Financial Report, and 16.06% (16.83% on 12.31.2010 and 16.28% on 6.30.2010) for the Consolidated Economic and Financial Report, in compliance with CMN Resolution n.º 2,669/1999. The difference between the Fixed Assets Ratio of Consolidated Financial and Economic-Financial is the result of the inclusion of non-financial subsidiaries / affiliates that have high liquidity and low level of restraint, wich consequently reduces the Fixed Assets Ratio of Consolidated Financial and Economic.


149

30 – Statement of Comprehensive Income

R$ thousand



Net income presented in the Statement of Income 6,262,367 5,131,184 6,289,715 5,076,256

Other comprehensive income / (loss)

Assets valuation adjustments (Note 8.f) (71,788) 184,004 (71,788) 184,004

Own (24,052) 94,491 (24,052) 94,491

Subsidiaries and affiliates (47,736) 89,513 (47,736) 89,513

Income and social contribution taxes related to unrealized gains / (losses) (Note 8.f)

46,597 (42,792) 46,597 (42,792)

Other comprehensive income / (loss), net of income and social contribution taxes

(25,191) 141,212 (25,191) 141,212

Comprehensive income 6,237,176 5,272,396 6,264,524 5,217,468

Comprehensive income attributable to the Parent 6,237,176 5,272,396 6,237,176 5,217,488

Comprehensive income of the Non-Controlling Investments -- -- 27,348 (20)

31 – Other Information

a) Novo Mercado

At 5.31.2006, Banco do Brasil signed a contract with the São Paulo Stock Exchange for adhesion to the Novo Mercado segment of BM&FBovespa, which assembles a group of companies with the best corporate governance practices in Brazil.

Moreover, Banco do Brasil, yours Shareholders, the Officers, and the members of the Audit Committee undertake to resolve all and any dispute or controversy related with the Novo Mercado Listing Regulation by means of the Arbitration Chamber of the BM&FBovespa, in compliance with a commitment clause contained in the By-laws of Banco do Brasil.

b) Distribution of Dividends and/or Interest on Own Capital

During a meeting held on 1.21.2011, the Board of Directors approved the setting, for the year 2011, of the payout rate equivalent to the minimum 40% of net income, fulfilling the policy for payment of dividends yield and/or interest on own capital on a quarterly basis, pursuant to art. 43 of the Bank's By-Laws.

c) Bescredi and Besc Leasing - Auction of Fractions

On 03.03.2011 there was an auction for the sale at BM&FBovespa of the remaining fractions of shares of Banco do Brasil S.A., resulting from the conversion of instruments of the merged companies Besc S.A. Arrendamento Mercantil and Besc Financeira S.A. - Credit, a total of R$ 5,247.98, equivalent to 178 shares.

d) Funds and Programs

The Bank administrator of the Programa de Formação do Patrimônio do Servidor Público - Pasep with assets of R$2,058,927 thousand on 03.31.2011(R$ 2,027,901 thousand on 12.31.2010 and R$ 2,107,678 thousand on 06.30.2010), guaranteeing a minimum return equivalent to Taxa de Juros de Longo Prazo - TJLP.


150

e) Banco Postal

On 05.31.2011, the Bank won the bidding process to 5 years exploration period, of correspondent banking services provided by the chain of Banco Postal da Empresa Brasileira de Correios e Telégrafos - ECT. The financial offer was R$ 2,800,000 thousand.

In accordance with the contract signed on 07.01.2011 by the companies, the Bank paid on cash R$ 2,300,000 thousand to ECT on 07.11.2011, related to total of “Basic Value to Access the Business”. The amount of R$ 500,000 thousand, refered to “Value for the Agency Chain” will be paid on 01.02.2012, updated pro rata temporis, as contract clause.

From 01.01.2012, the Bank will have access to the ECT’s agencies chain, with 6,915 service points located at 95% of brasilian cities. Through this investment, the Bank anticipates its strategic plan that intend to increase its service points to achieve all the brasilian cities.

f) Investment funds administration

Position of investment funds managed by BB Gestão de Recursos - Distribuidora de Títulos e Valores Mobiliários S.A.:

N.º Funds/Portfolios Balance (R$ thousand)

06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Managed funds 507 489 475 407,705,169 360,200,007 344,885,897

Investment Funds 488 471 456 395,601,968 348,659,790 331,654,483

Managed Portfolios 19 18 19 12,103,201 11,540,217 13,321,414

g) Details of branches, subsidiaries and associated abroad

R$ thousand


06.30.2011 12.31.2010 06.30.2010 06.30.2011 12.31.2010 06.30.2010

Assets

BB Group 17,673,333 16,773,425 19,188,451 14,366,723 14,931,097 15,768,597

Third parties 41,010,941 37,217,130 42,389,390 48,728,446 39,120,507 43,600,059

Total assets 58,684,274 53,990,555 61,577,841 63,095,169 54,051,604 59,368,656

Liabilities

BB Group 10,506,180 9,063,431 15,464,286 8,757,059 7,093,625 11,361,964

Third parties 45,654,490 42,378,018 43,497,754 50,040,782 43,428,217 44,407,437

Shareholders' equity 2,523,604 2,549,106 2,615,801 4,297,328 3,529,762 3,599,255

attributable to parent company 2,523,604 -- -- 3,899,625 -- --

participation of non-controlling -- -- -- 397,703 -- --

Total liabilities 58,684,274 53,990,555 61,577,841 63,095,169 54,051,604 59,368,656

1 st half 2011 Year 2010 1 St half 2010 1 st half 2011 Year 2010 1 St half 2010

Net income (loss) 19,593 24,653 (7,219) 110,320 106,429 23,859

attributable to parent company 19,593 24,653 (7,219) 82,967 106,429 23,859

participation of non-controlling -- -- -- 27,353 -- --


151

h) Consortium funds

R$ thousand

06.30.2011 12.31.2010 06.30.2010

Monthly forecast of funds receivable Purchase Pool Members 101,407 71,052 56,109

Obligations of the group due to contributions 6,480,113 4,524,352 3,352,521

Purchase Pool Members - assets to be contemplated 6,119,292 4,236,828 3,115,953

(In units)

Quantity of groups managed 333 532 239

Quantity of active purchase pool members 284,321 208,486 161,801

Quantity of bens deliverable to purchase pool members 15,043 15,934 16,722

Quantity of bens delivered in the period 13,996 41,286 22,123

i) Assignment of Employees to Outside Agencies

Federal government assignments are regulated by Law No. 10470/2002 and Decree No. 4050/2001.


Employees

Ceded (1)

Cost in the

Period (R$ thousand)

Employees

Ceded (1)

Cost in the

Period (R$ thousand)

With costs for the Bank

Federal Government 8 952 10 1,258

Labor unions 231 13,159 229 11,477

Other organizations/entities: 5 973 4 770

Subsidiary and associated companies 2 417 -- --

Without cost to the Bank

Federal, state and municipal governments 271 -- 310 --

External organizations (Cassi, FBB, Previ) 761 -- 756 --

Employee entities 87 -- 76 --

Subsidiary and associated companies 327 -- 311 --

Total 1,692 15,501 1,696 13,505

(1) Balance in the last day of the period.

j) Remuneration of Employees and Managers

Monthly wages paid to employees and Directors of the Banco do Brasil: R$ thousand

06.30.2011 12.31.2010 06.30.2010

Lowest salary 1,600.13 1,600.13 1,416.00

Highest salary 27,140.70 27,140.70 25,247.10

Average salary 4,422.12 4,444.70 4,121.45

Management

President 47,308.80 44,505.00 44,505.00

Vice-President 42,729.60 40,197.00 40,197.00

Director 36,546.00 34,380.00 34,380.00

Directors

Council Tax 3,834.10 3,606.85 3,606.85

Board of Directors 3,834.10 3,606.85 3,606.85

Audit Committee – Member 32,891.40 30,942.00 30,942.00

Audit Committee - Substitute 29,602.26 27,847.80 27,847.80


152

k) Insurance Policy of Assets

Despite the reduced level of risk to which its assets are subject, the Bank contracts insurance cover for its assets in amounts considered sufficient to cover any losses.

Insurance contracted by the Bank in force on 06.30.2011: R$ thousand

Covered Risks Amounts Covered Value of the Premium

Property insurance for the relevant assets 6,290,753 2,560

Life insurance and personal accident for the collective Board (1) 704 193

Other 47,547 2,089

Total 6,339,004 4,842

(1) Refers to individual coverage for members of the Executive Board.

KPMG Auditores Independentes

SBS - Qd. 02 - Bl. Q - Lote 03 - Salas 708 a 711 Edifício João Carlos Saad 70070-120 - Brasília, DF - Brasil Caixa Postal 8723 70312-970 - Brasília, DF - Brasil

Central Tel 55 (61) 2104-2400 Fax 55 (61) 2104-2406 Internet www.kpmg.com.br

KPMG Auditores Independentes, uma sociedade simples brasileira e firma-membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative (“KPMG International”), uma entidade suíça.

KPMG Auditores Independentes, a Brazilian entity and a member

firm of the KPMG network of independent member firms affiliated with

KPMG International Cooperative (“KPMG International”), a Swiss

entity.

ToThe Board of Directors, Shareholders and Management Banco do Brasil S.A. Brasília - DF

We have audited the accompanying, individual and consolidated, financial statements of Banco do Brasil S.A., acknowledged as Banco do Brasil and BB – Consolidated, which comprise the balance sheet as of June 30, 2011 and the related statements of income, of changes in stockholders' equity and of cash flows for the six-month-period then ended, as well as the summary of significant accounting policies and other notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting practices adopted in Brazil, applicable to institutions authorized to operate by the Brazilian Central Bank (BACEN), and for designing, implementing and maintaining internal control relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved Brazilian auditing standards and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the Bank's preparation and fair presentation of the financial statements 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 Bank´s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

3

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the individual and consolidated financial statements referred to above present fairly, in all material respects, the financial position of Banco do Brasil S.A. at June 30, 2011, the financial performance of its operations and its 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.

Other matters

Amounts corresponding to the first half of 2010 which were audited by the same current

independent auditor sharing responsibility with another independent auditor

The financial statements for the six-month-period ended June 30, 2010, presented for the purposes of comparison, were examined by us in accordance with auditing standards in force at the time of issuance of the audit report, on August 13, 2010, which did not include any modification. The auditing standards then in force permitted the sharing of responsibility with other independent auditors. Therefore, the financial statements of the indirect investments: Brasilcap Capitalização S.A., Brasilsaúde Companhia de Seguros, Brasilveículos Companhia de Seguros, Brasilprev Seguros e Previdência S.A., Cielo S.A., Neoenergia S.A. and Itapebi Geração de Energia S.A. (Notes 3 and 14) as of June 30, 2010, were examined by other independent auditors and, our opinion on the balances of the investments aforementioned and of the respective income arising from these investments, is based on the reports issued by those independent auditors. Additionally, the net assets used in the calculation of the Retirement and Pension Plan (Note 27), were examined by other independent auditors and our evaluation, with respect to these net assets, is based on the report issued by those independent auditors.

Statement of value added

We have also audited the statement of value added (DVA) for the six-month-period ended June 30, 2011, submission of which publicly-held companies are required to make. This statement was subjected to the same audit procedures described above and, in our opinion, is presented fairly in all material respects in relation to the financial statements taken as a whole.

Brasília, August 08, 2011.

KPMG Auditores Independentes CRC 2SP014428/O-6 F-DF

Original report in Portuguese signed by

Giuseppe Masi Carlos Massao Takauthi Accountant CRC 1SP176273/O-7 S-DF Accountant CRC 1SP206103/O-4 S-DF

155

SUMMARY OF THE AUDIT COMMITTEE REPORT

Introduction

The Audit Committee of the Banco do Brasil (BB) is the advising statutory body of the Board ofDirectors whose mains attributions are: evaluate the internal controls system and the internaland external audits effectiveness, and review prior to publication, all the statements. The BBAudit Committee bylaws are available at www.bb.com.br/ri.

The action universe of the Committee comprises BB Banco do Brasil and the followingsubsidiaries: BB DTVM Gestão de Recursos – Distribuidora de Títulos e Valores MobiliáriosS.A., BB Banco de Investimento S.A., BB Leasing S.A. – Arrendamento Mercantil, BBAdministradora de Cartões S.A. e BB Administradora de Consórcios S.A. e Besc Distribuidorade Títulos e Valores Mobiliários S.A. (Bescval), this last one from April 27

th, 2011.

BB management and its subsidiaries’ management are responsible for preparing and assuringthe integrity of the financial statements, for managing risks, for maintaining an effective andconsistent internal control system, and for ensuring compliance with applicable legal andregulatory standards.

The Internal Audit independently responds for periodic actions in order to evaluate riskmanagement work, as well as to evaluate adequacy and effectiveness of internal controls.

KPMG Auditors Independents is responsible for auditing the Bank’s financial statements and forissuing an opinion on whether the financial position is presented fairly, in all material respects,and on whether its internal controls are in conformity with accounting practices adopted inBrazil. Evaluates, also, the quality and adequacy of internal controls system, including thesystem of electronic data processing and risk management, and compliance with legal andregulatory provisions.

Activities

According to its attributions and following the Bank’s Annual Work Plan, approved by the Boardon at a meeting held on December 13th, 2010, the Audit Committee has held, among otheractivities, a total of 57 meetings on the first semester, considering internal work and meetingswith the Board of Directors , with the internal and independent auditors, with external inspectionagency, and with the chiefs from business, internal controls, legal, technology and riskmanagement areas.

During these meetings, it was approached, particularly, issues related to improvements of theinternal controls mechanisms, compliance with laws and standards, risk management, BaselAgreement, technology solutions, Government funds and programs management, legalcontingencies, adjustments to IFRS, reference form – instructions CVM 480/2009, and internaland independents audits and external inspection agencies.

At the meetings with the internal and independent audits, the Committee addressed theplanning, verified the work performed for the period and the main findings andrecommendations.

The financial statements for the year ended December 31, 2010, made in accordance with IFRSstandards and released in April 29

th, 2011 were examined.

It also monitored the process used for preparing the financial statements, examined relevantaspects, coverage, compliance and notes quality. The Committee verified the accountingpractices adopted, the criteria used to establish provisions and met the contents of thedocument issued by the independent audit.

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When improvements opportunities were identified, the Committee suggested that improvementsfor the specific area of the Institution.

Conclusions

Based on the activities undertaken during the period, and tanking in place its attributions andcoverage limitations, the Committee concluded that:

a) the internal control system is subjected to permanent attention by segments of theadministration;

b) the Group adopts a conservative posture in the assumption of risks and has appropriateinstruments in place for risk management and mitigation of risks;

c) the internal auditors’ duties have been assessed as effective and independent, as well asadequately reported at the Committee’s request;

d) the independent auditors work has been carried out effectively and nothing was noted thatwould indicate noncompliance with applicable independence rules and regulations; and

e) the financial statements for the semester ended June 30th, 2011 were prepared incompliance with legal standards and accounting practices adopted in Brazil, and present fairly,in all material respects, the financial situation of the Group for the period then ended.

Brasília-DF, August 4th, 2011.

José Danúbio Rozo Celene Carvalho de Jesus José Gilberto Jaloretto(Coordinator)

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MEMBERS OF THE MENAGEMENT BODIES

PRESIDENT Aldemir Bendine

VICE-PRESIDENTS Alexandre Corrêa Abreu Allan Simões Toledo Danilo Angst Geraldo Afonso Dezena da Silva Ivan de Souza Monteiro Osmar Fernandes Dias Paulo Rogério Caffarelli Ricardo Antônio de Oliveira Robson Rocha

DIRECTORS Adilson do Nascimento Anisio Admilson Monteiro Garcia Amauri Sebastião Niehues Antônio Pedro da Silva Machado Armando Medeiros de Faria Ary Joel de Abreu Lanzarin Carlos Eduardo Leal Neri Clenio Severio Teribele Dan Antônio Marinho Conrado Denilson Gonçalves Molina Edson de Araújo Lôbo Gueitiro Matsuo Genso Ives Cézar Fülber José Mauricio Pereira Coelho Luiz Henrique Guimarães de Freitas Márcio Hamilton Ferreira Marco Antonio Ascoli Mastroeni Marco Antônio da Silva Barros Nilson Martiniano Moreira Paulo Roberto Evangelista de Lima Paulo Roberto Lopes Ricci Renato Donatello Ribeiro Sandro José Franco Sandro Kohler Marcondes Sérgio Ricardo Miranda Nazaré Walter Malieni Júnior

ACCOUNTING DEPT. Eduardo Cesar Pasa General Accountant Accountant CRC-DF 017601/O-5 CPF 541.035.920-87

Daniel André Stieler Accountant CRC-DF 013931/O-2 CPF 391.145.110-53

BOARD OF DIRECTORS Nelson Henrique Barbosa Filho (Chairman) Aldemir Bendine (Vice-chairman) Adriana Queiroz de Carvalho Bernardo Gouthier Macedo Francisco de Assis Leme Franco Henrique Jäger Sérgio Eduardo Arbulu Mendonça

FISCAL COUNCIL Daniel Sigelmann (President) Anelize Lenzi Ruas de Almeida Clóvis Ailton Madeira Marcos Machado Guimarães Pedro Carvalho de Mello

AUDIT COMMITTEE José Danúbio Rozo (Coordinator) Celene Carvalho de Jesus José Gilberto Jaloretto