Consolidated Financial Statements 1st half/20161st half 2016 1 INDEX ... We were listed among the...

Consolidated Financial Statements

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Financial Statements


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INDEX

Index .............................................................................................................................................................1

Management Report ....................................................................................................................................3

Financial Statements ................................................................................................................................ 22

BALANCE SHEET.................................................................................................................................. 22

STATEMENT OF INCOME .................................................................................................................... 26

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY .............................................................. 27

STATEMENT OF CASH FLOWS ........................................................................................................... 28

STATEMENT OF VALUE ADDED ......................................................................................................... 29

Notes to the Consolidated Financial Statements .................................................................................. 30

- THE BANK AND ITS OPERATIONS ................................................................................................ 30 1

- COMPANY RESTRUCTURING........................................................................................................ 30 2

- PRESENTATION OF FINANCIAL STATEMENTS ........................................................................... 31 3

- DESCRIPTION OF SIGNIFICANT ACCOUNTING POLICIES ........................................................ 38 4

- INFORMATION BY SEGMENT ........................................................................................................ 44 5

- CASH AND CASH EQUIVALENTS .................................................................................................. 56 6

- SHORT-TERM INTERBANK INVESTMENTS .................................................................................. 56 7

- SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS ...................................................... 57 8

- INTERBANK ACCOUNTS ................................................................................................................ 65 9

- LOAN OPERATIONS ...................................................................................................................... 66 10

- OTHER RECEIVABLES ................................................................................................................. 72 11

- FOREIGN EXCHANGE PORTFOLIO ............................................................................................ 73 12

- OTHER ASSETS ............................................................................................................................ 74 13

- INVESTMENTS............................................................................................................................... 75 14

15 - PROPERTY AND EQUIPMENT ..................................................................................................... 81

- INTANGIBLE ASSETS ................................................................................................................... 82 16

- DEPOSITS AND SECURITIES SOLD UNDER REPURCHASE AGREEMENTS ......................... 83 17

- BORROWINGS AND ONLENDINGS ............................................................................................. 87 18

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- FUNDS FROM ACCEPTANCE AND ISSUANCE OF SECURITIES ............................................. 89 19

- OTHER LIABILITIES ....................................................................................................................... 90 20

- OTHER OPERATING INCOME/EXPENSES ................................................................................. 94 21

- NON-OPERATING INCOME .......................................................................................................... 96 22

23 - SHAREHOLDERS' EQUITY ........................................................................................................... 97

- TAXES .......................................................................................................................................... 103 24

- RELATED PARTY TRANSACTIONS ........................................................................................... 105 25

- EMPLOYEE BENEFITS ................................................................................................................ 109 26

27 - PROVISIONS, CONTINGENT ASSETS AND LIABILITIES, LEGAL LIABILITIES - TAXES AND

SOCIAL SECURITY ............................................................................................................................. 119

- RISK AND CAPITAL MANAGEMENT .......................................................................................... 122 28

- STATEMENT OF COMPREHENSIVE INCOME .......................................................................... 130 29

- OTHER INFORMATION ............................................................................................................... 131 30

Independent Auditor’s Report ............................................................................................................... 134

Summary of the Audit Committee Report ............................................................................................ 137

Members of Management ...................................................................................................................... 139

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Dear Shareholders,

We present Banco do Brasil (BB) Management Report for the first half of 2016, in conformity with the

requirements of the Brazilian Corporate Law, the CMN (National Monetary Council), the Bacen (Brazilian

Central Bank), the CVM (Brazilian Securities and Exchange Commission) and BB's Bylaws.

1. Macroeconomic Environment

The international economy has been growing in an unstable and unbalanced pace. In the U.S., the

Federal Reserve kept the interest rate to a 0.25 – 0.50% p.a. range. In Europe, economic activity has

been responding positively to monetary stimulus promoted by the European Central Bank, however, an

attention point arises related to England referendum, whose result surprised with the victory of the

proposition that supported the UK to leave European Union. In emerging markets, the main highlight

remains the attention to the growth of the Chinese economy and its potential impact on the prices of

major commodities, whose prices has shown an important recent recovery trend, at least with regard to

the price of some grains such as soy.

In Brazil, the macroeconomic indicators have been fluctuating, but it is already observed the first signs of

reversal of expectations and economic cycle stabilizing. Even in a very challenging environment

regarding inflation, fiscal results and economic dynamism, high frequency indicators, such as stock

indexes and country risk premium, reflecting somehow the expectations of agents, have shown favorable

performance. Since the beginning of the year, the Ibovespa index led gains of more than 50% and the

country risk premium, as measured by the CDS 5 years, recorded decline higher than 40%. The asset

prices recovery and the risk falling are anchored, among other things, both in the trend reversal in

confidence indexes of economic agents, as in indicators of the real economy, driven by exports and by

the first inversion signal trend of industrial production. Further, conjectures have that productive

investment begin to break through their own barriers and starring the turn of the economic cycle.

2. Highlights of the Period

We present below some important events in the period:

I. We have opened 155 branches for digital relationship, six of them targeted to Exclusivo customers (average to high income clients), 143 targeted to Estilo customers (high income clients) and six to very small and small companies.

II. Our mobile app has been considered as one of the five most important in people’s daily lives, as US consultancy eMarketer research.

III. We have launched Ourocard app, following a strategy started with Ourocard-e, which aims to make the credit card business more digital.

IV. Livelo was stablished. It started to consolidate the points of Ponto Pra Você program (loyalty program), aiming to facilitate the points redemption and improve clients benefits.

V. We were listed among the three most attractive employers of the country, according to swedish publication Universum Communications, in partnership with Exame ranking.

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3. Corporate Strategy for the 2015-2019 period

The strategic choices aimed at reconciling the capital plan, the risk adjusted return on business growth

and return to shareholders. Based on sustainability principles, we will continue to prioritize increase in

profitability, efficiency, productivity, and revenues from granting services.

In fulfilling our mission, we reinforce our calling to integrate productive links, approaching stakeholders in

several value chains, even through credit.

We will increase the performance in digital business models, seeking to improve customer experience. As

one of our strategies we have the expansion in Banco do Brasil Estilo digital model, in order to strengthen

the relationship with customers in an innovative and interactive way, and have gains in operational

efficiency.

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4. Economic-Financial Performance

4.1 Overview

Following our main results in the semester:

Table 1. Highlights

1 - Refers to the sum of Personnel Expenses and Other Administrative Expenses;

For further information about our economic-financial performance at the Management Discussion and Analysis Report at: www.bb.com.br/ir.

Earnings (R$ million) 1H15 1H16 1H15 1H16

Net Income 8,606 4,752 8,826 4,824

Gross Income from Financial Intermediation 9,843 16,724 12,904 15,512

Fee Income 7,896 8,560 10,797 11,621

Administrative Expenses¹ (16,598) (17,427) (17,227) (18,113)

Equity (R$ million) Jun/15 Jun/16 Jun/15 Jun/16

Assets 1,460,958 1,551,539 1,370,968 1,445,115

Classif ied Loan Portfolio 670,914 674,073 687,664 690,067

Total Deposits 435,821 435,652 444,329 440,879

Shareholders Equity 71,944 72,586 82,643 83,449

BIS Ratio (%) 16.2% 16.5% 16.2% 16.5%

Indicators 1H15 1H16 1H15 1H16

Earnings per Share (R$) 3.08 1.70 3.08 1.70

Return on Assets (%) 1.2 0.6 1.3 0.7

Return on Equity (%) 22.4 11.2 20.9 10.4

Dividend (R$ million) 1,301 - 1,301 -

Interest on Ow n Capital (R$ million) 2,212 1,411 2,212 1,411

Structural Information (thousand) Jun/15 Jun/16 Jun/15 Jun/16

Base Customers 63,040 64,192 63,040 64,192

Total Checking Account 38,157 37,755 38,157 37,755

Individuals 35,725 35,353 35,725 35,353

Companies 2,432 2,402 2,432 2,402

Branches 5.5 5.4 5.5 5.4

Asset Management (R$ million) 604,792 660,474 604,792 660,474

Market Ratios (R$) Jun/15 Jun/16 Jun/15 Jun/16

BBAS3 - Book Value 25.7 26.1 29.6 30.0

BBAS3 - Closing Price 24.3 17.2 24.3 17.2

Employee Profile Jun/15 Jun/16 Jun/15 Jun/16

Employees 112,325 109,615 112,325 109,615

Female 46,681 45,542 46,681 45,542

Male 65,644 64,073 65,644 64,073

Education's Level

High School 24,617 22,846 24,617 22,846

College 49,756 47,210 49,756 47,210

Specialization, Master's and Doctorate 37,580 39,250 37,580 39,250

Others 372 309 372 309

Turnover (%) 0.6 0.4 0.6 0.4

Consolidated Financial

Statements

Banco do Brasil Financial

Statements

http://www.bb.com.br/ir

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4.2 Stock Performance

Our market value totaled R$49.2 billion at the end of June, 2016. In the theoretical portfolio of Ibovespa in

force for the months of May-august of 2016, we occupied the 13th place, with a market share of 2.95%.

Our common shares (BBAS3) were traded at Novo Mercado of BM&FBovespa since its creation, and

continued to be listed in the theoretical portfolios of the main stock indexes: Ibovespa, Ibrx50, IGC, ISE

and Itag. Additionally, we are listed on international indexes MSCI LatAm Index, S&P Lac 40 and DJSI.

At the end of the period, our Level I American Depositary Receipt Program (ADR) had 29 million receipts

in outstanding at US$5.29 per certificate.

Payout was 25% of the net income in the form of dividends and interest on own equity with quarterly

periodicity.

4.3 Information on Affiliates and Subsidiaries

Table 2. BB Banco Múltiplo Consolidated Equity Interests

1 – Bank’s indirect interest in Cateno, through Bb Elo cartões Participações S.A. BB’s total interest is 50.10%, since Cielo S.A. has 70% stake at Cateno (Note 14).

Share (%)

Equity

Income

R$ thousand Activity Jun/16 Jun/15 Jun/16 1H16

Banco do Brasil - AG. Viena Banking 100.00 941,203 778,217 (140,350)

Banco Patagonia S.A. Multiple Bank 58.97 1,359,887 1,224,391 201,192

Banco Votorantim S.A. Multiple Bank 50.00 3,900,004 4,139,311 104,089

BB Adm. de Cartões de Crédito S.A. Service Rendering 100.00 29,462 30,796 11,846

BB Administradora de Consórcios S.A. Consortiums 100.00 167,522 167,522 117,806

Banco do Brasil Americas Multiple Bank 100.00 134,385 147,475 327

BB Banco de Investimento S.A. Investment Bank 100.00 2,858,693 2,951,414 574,645

Ativos S.A. Securitizadora de Créd. Financ. Credit Acquisition 100.00 1,045,981 1,135,358 78,891

Cielo S.A. Service Rendering 28.72 1,542,766 2,211,858 553,982

Companhia Brasileira de Securit. – Cibrasec Credit Acquisition 12.12 9,060 9,098 25

Kepler Weber S.A. Industry 17.45 82,394 83,302 (3,611)

Neoenergia S.A. Energy 11.99 1,168,686 1,175,389 29,692

Seg. Brasileira de Créd. à Exportação – SBCE Insurance Company 12.09 2,727 2,082 (269)

Tecnologia Bancária S.A. – Tecban Service Rendering 12.52 47,755 49,668 463

BB DTVM S.A. Asset Management 100.00 131,633 131,625 387,097

BB Elo Cartões Participações S.A. Holding 100.00 4,349,195 4,733,893 389,425

Elo Participações S.A. Holding 49.99 704,103 857,737 98,825

CBSS - Alelo Service Rendering 49.99 633,299 732,774 100,817

Elo Serviços Service Rendering 33.33 18,741 22,587 4,054

Cateno Gestão de Contas de Pagamento S.A.¹ Service Rendering 30.00 3,645,002 3,630,487 77,092

BB Leasing Company Ltd. Leasing 100.00 140,973 - -

BB Leasing S.A. – Arrendamento Mercantil Leasing 100.00 4,059,273 4,243,141 98,962

BB Securities LLC. Brokerage 100.00 170,639 189,700 10,534

BB Seguridade Participações S.A. Holding 66.36 3,942,743 4,439,687 1,356,406

BB Cor. Participações S.A. Holding 66.36 61,767 61,741 791,381

BB Corretora de Seg. e Adm. de Bens S.A. Brokerage 66.36 35,001 34,976 790,956

BB Seguros Participações S.A. Holding 66.36 5,742,105 6,381,764 1,263,042

BB Mapfre SH1 Participações S.A. Holding 49.77 1,897,640 2,087,506 606,617

Brasilcap Capitalização S.A. Capitalization 44.24 323,091 359,713 158,443

Brasildental Service Rendering 49.77 1,955 6,231 1,322

Brasilprev Seguros e Previdência S.A. Insur. Company/Pension Plan 49.77 1,829,344 1,924,164 348,493

IRB - Brasil Resseguros Reinsurance 13.61 620,214 620,085 58,818

Mapfre BB SH2 Participações S.A. Holding 33.18 1,538,918 1,744,987 80,618

BB Tecnologia e Serviços S.A. IT 99.97 227,740 217,183 (1,747)

BB Turismo Tourism 100.00 13,917 7,904 (4,136)

BB USA Holding Company, Inc. Holding 100.00 672 691 -

Besc DTVM S.A. Asset Management 99.62 7,125 7,165 112

Brasilian American Merchant Bank Banking 100.00 1,414,597 1,482,712 25,335

BB Securities Asia Pte. Ltd. Brokerage 100.00 15,730 17,760 3,863

BB Securities Ltd. Brokerage 100.00 159,402 166,707 17,404

Book Value

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5. Costumer Experience and Relationship

We kept improving customer experience through digital transformation. In this context, we are working in

a three axes base:

I. New services and business models – it approaches the customer and his account manager, with agility in problem solving and making business.

II. Giving processes, products and services a more digital feature – it creates operational efficiency and significantly reduces the waiting time for customer service.

III. Encouraging mobile use – it increases the number of customers who use mobile phones to do banking transactions and business.

Technological advances and the popularity of devices with internet access brought significant changes in

consumer relations. The digital relationship allows us to capture the opportunities of this scenario. So we

strengthen our customer knowledge systems and consumer behavior analysis practices in large

databases.

We analyzed more than eight billion monthly customer interactions in various service channels and used

external data, which allowed us to further know our customers profile, their needs and improve strategies

directed to each segment.

From this analysis, it was possible to fit more than 33 million customers in consumption propensity

patterns and make more assertive offers. The success of this model can be seen as 73% of customers

identified as likely to purchase actually purchased a product.

Furthermore, we deployed an innovative tool on the market, which allows the customer approach in real

time when he is using the BB web site. With this tool were performed over 800 thousand contacts with our

customers in the first half of 2016.

5.1 BB Estilo Digital

We have surpassed the milestone of one million customers in Estilo segment, consolidating our

leadership in the high-income market in Brazil. This was possible through the Banco do Brasil Estilo

Digital strategy implementation, which began in May 2015. In just over a year, we opened 143 digital

relationship branches to this public. The total number of clients served in the model to date is 552,000.

BB Estilo Digital customers rely on the assistance of a qualified staff, which can be reached with ease

and agility through digital tools - such as online chat, e-mail and video conferencing. In addition, digital

branches work in extended hours, from 8 am to 10 pm. Customers also have the possibility to consult

experts on topics such as investments, mortgage, pension plans and insurance. If these customers want,

still rely on the personal consult of a manager in more than 246 Estilo branches throughout the country,

within the banking service hours.

The digital relationship strategy is improving Estilo customer experience. We are managing to increase

the satisfaction levels, on average, in 16% with Estilo Digital and rise between 20% and 44% of the

profitability achieved with new customers.

5.2 Business Offices

We have expanded our Retail Strategy started in 2015 to individuals with income higher than R$4

thousand (Exclusivo) and very small and small companies. Just over a year after the implementation of

the first offices in Joinville (SC), we currently have 12 offices, six of them aimed to Exclusivo segment,

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which serve 52.1 thousand customers and six aimed to very small an companies, which serve 16.4

thousand.

We expect that by the end of this year, we implement over 26 new Exclusivo offices and 26 small and

very small companies offices. In all, it will be served approximately 650 thousand individual customers

and 80 thousand companies. These figures reflect our commitment to transform the retail banking market

in the country, providing differentiated customer experience through the intensive use of digital

technologies.

5.3 Network

We ended 1H16 with 59.1 thousand service points, comprising our own and shared network, and

correspondents, covering 99.8% of brazilian cities.

Our own network featured 17,181 points, with 5,428 branches, 1,738 points of service and 10,015 point of

electronic service.

In 1H16, we expanded to 19 the number of branches with specialized, exclusive service to very small and

small businesses. Became part of this new model three branches, located in Cuiabá (MT). They have

new ambiance with exclusive service for the very small and small companies with trained professionals in

financial consulting.

Our shared network had 27,804 service points in June, 2016, being 11,059 of Banco24horas, a 2.24%

increase to 1H15. Only in Banco24horas, 87 million transactions were carried out by BB clients, a 36%

growth to 1H15.

We ended 1H16 with 14 thousand ATM’s equipped with biometrical devices, and 24.7 million clients

already have their biometrical factors captured and recorded. Around 2.9 million transactions are

validated only by biometrical factor on a daily basis.

The correspondents’ network, identified by the MaisBB trademark, counted on 14,110 service points and

establishments under agreement, of which 6,148 points of the Banco Postal (Post Office Bank),

performing 171 million transactions in the period, including consults, financial movements and proposals

acceptance for account opening and credit transactions (direct consumer credit, real estate and

agribusiness).

Our presence abroad is still a reference for brazilian companies and individuals in international markets

and this strategic position is maintained with our service network and subsidiaries present in 23 countries.

In 1H16, there were 869 banks operating as our correspondents in 105 countries.

In Argentina, Banco Patagonia’s distribution network comprises all Argentinian provinces with 199 service

points. Banco do Brasil Americas, in the United States, has a network of six branches, offers internet

mobile banking services through established agreements, and provides a network with more than 65

thousand terminals for withdrawals and other services.

5.4 Internet and Mobile

In order to improve operational efficiency and offer new solutions to customers, we launched new

features in the Gerenciador Financeiro (Financial Manager) used by corporate clients, including,

consulting the court orders extracts, digital signature on foreign exchange contracts, new menu releases

and receivables extract. In the first half of 2016, 978 million transactions were carried out by this channel

and it was used by 881,000 companies.

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By the end of 1H16 we implemented investment advising to individual clients through web chat, available

in BB’s web site. From the interactions carried out with clients, 41% resulted in investments, amounting

R$485 million.

The self-service channels also delivered an outstanding performance:

I. Internet: 825 million transactions carried out, by 13.4 million individuals users.

II. Public Sector: 229.3 million transactions over internet and cell phone carried out by 59.1 thousand users.

III. The transactions in the internet and mobile channels represent 62.4% of total transactions in automated channels in 1H16.

Mobile Applications

Our smartphone and tablets app has established itself as a preference in internet self-service. In 1H16,

we recorded around 4.9 billion transactions per month, an increase of 164% to the same period of prior

year. These transactions were carried out through mobile by 8.4 million users, a growth of eight thousand

new users per day.

Aiming to bring even more convenience to customers, we made available, in our application, the

contracting of income tax anticipation 100% digital way, through the use of smartphones, pioneering

solution in the financial sector. From March on, when this solution was made available, R$ 27.7 million

was contracted by mobile. Another operation done through smartphone, allowing the whole process to be

done in a digital basis, is the auto financing, which reached R$72.3 million in disbursements in 1H16 (9%

of total).

In consumer direct credit, we recorded R$1.3 billion contracted via mobile phone, a growth of 208% to

1H15.

BB app closed 1H16 with 4.5 grade in the evaluation of users in the Apple Store and Google Play stores,

the highest score among banks. Research by Mobile Time and Opinion Box revealed that BB's app is the

sixth most present in the home screen of users, behind only some social networks.

5.5 Government

The partnership in training the staff of Brazilian municipalities, made possible by the Portal UniBB Public

Sector and launched in December 2015, resulted in 2,900 training sessions in 1H16. There was

significant progress in supporting the modernization of municipal management, financing projects that

provided efficiency gains and increased tax revenues in municipalities of different regions and population

profiles.

The 1H16 was also marked by the implementation of technological solutions for the judiciary as examples

electronic permits and the simplified redemption judicial deposits.

In addition, in partnership with the Federal Government in implementing the National Policy for Regional

Development, it was signed a transfer agreement in the amount of R$831.5 million, with the Office of

Midwest Development. The funds come from the Midwest Development Fund (FDCO) and are aimed at

strengthening the development of policies of productive activity in the Midwest.

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6. Business

6.1 Responsible Credit

We have implemented measures that encourage responsible use of credit, prioritizing lines with lower

risk, especially among customers who were using recurrently the overdraft and revolving limit. Customer

relationship management tools, Real Time, Portal Solução de Dívidas and self-service channels

contributed to increase the number of covered customers and support them in improving the

management of their finances. At the end of 1H16, there were more than 50 million approaches on

responsible use of credit. In the audience, we highlight costumer who receive their salary through the

Bank and the INSS beneficiaries.

The Portal Solução de Dívidas, which allows customers to individuals and very small and small

companies to renegotiate their overdue debt directly over the internet, reached the mark of 264,300

beneficiaries. The volume of contracted agreements through that channel, without the need of going to a

branch, reached R$2.7 billion. This measure, as well as operational efficiency and reduced delinquency

levels, seeks to maintain sustainable and long-lasting relationship with our customers.

6.2 Loan Portfolio

Our loan portfolio was R$674.1 billion in Banco do Brasil Financial Statements and R$690.1 billion in

Consolidated Financial Statements, growth of 0.5% and 0.3% in twelve months respectively. The most

important lines of the portfolio are presented as follows:

I. Loans and discounted securities was R$222.3 billion and R$233.8 billion in Banco do Brasil and Consolidated Financial Statements respectively.

II. Financing was R$156 billion and R$157.6 billion in Banco do Brasil and Consolidated Financial Statements respectively.

III. Rural and agribusiness financing was R$189.1 billion in Banco do Brasil and Consolidated Financial Statements respectively.

6.2.1 Credit to Individuals

Payroll Loans

Loans to civil servants continued as the most representative of this portfolio, with 88.5% of the total. The

rest of the portfolio is composed of retirees and pensioners (8.3%) and private sector employees (3.1%).

The payroll loans remains as the main line in the portfolio for individuals, with 34.3% of the total, already

considering acquired portfolio. The growth in the last 12 months was 1.2% thus maintaining our

leadership in the segment, with 22.6% of market share.

The organic portfolio, that considers the credit originated only on our branches and channels, was R$ 63

billion at June, 2016, an increase of 3.1% from June, 2015.

Auto Loans

The balance of auto loans transactions, including credit acquisitions, was R$21.5 billion, reduction of 12%

compared to 1H15.

The transactions originated in our branches reached R$7.3 billion. The profile of these new transactions

continued to be within the criteria adopted in recent years, ensuring the quality of the portfolio within the

historical performance data. From this portfolio, those contracted in our branches, 90.1% of customers

have account for more than five years and 71.4% receive their salary through us.

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Mortgage Loans

In 1H16, mortgage loans to individuals recorded a balance of R$39.7 billion, an increase of 20.9% in the

semester. Disbursements in the year totaled R$3.7 billion, R$2.6 billion with FGTS funding. The Pro-

Cotista + Aquisição FGTS credit line had R$768 million in disbursement, a 147% growth to 1H15.

Consumer Credit

Composed of the lines Salary Loans and Consumer Finance, presented in June was R$27.9 billion, an

increase of 9.1% in the semester. The Salary Loans, less risky line to customers receiving salaries with

us – 73% of the total Personal loan portfolio grew 9% to 1H15 and reached R$20.5 billion in the 1H16.

Additionally, 11.4% of the disbursement of Consumer Finance and payroll loans has been made in our

correspondent network.

6.2.2 Credit to Companies

Credit for Investments

Our disbursements for investment loans totaled R$12.7 billion in 1H16. Highlight to onlending funds with

resources from BNDES, agribusiness investment, FCO and PROGER.

Mortgage Loans

At the end of the period, we recorded R$1.1 billion of production financing. The portfolio balance was

R$11.9 billion in June, stable compared to 1H15.

Very Small and small companies

In 1H16, we had 2.3 million SME clients, strengthening our position as the “Bank of the Very mall and

small business”.

The balance of loan operations was R$81.2 billion. We allocated R$51.6 billion for working capital, which

represented 63.6% of loan operations of small and very small companies. The balance of financing

investment totaled R$28.3 billion.

We kept our partnership with to Arranjos Produtivos Locais (APL), expanding credit, encouraging

business training, expansion and technological innovation, contributing to sustainable growth of

communities. By June, we had 24.6 thousand enterprises, where we invested R$2.6 billion.

Wholesale Customers

In June, the loan portfolio of wholesale clients, recorded a balance of R$156.3 billion, 1.9% down on

1H15.

6.2.3 Agribusiness

We continued to act as principal partner of the Brazilian agribusiness with 62% market share of the Rural

Banking Industry. The agribusiness portfolio ended the semester with a balance of R$183.5 billion in

agricultural loan and agro industrial transactions for the BB Conglomerate. This sum represents an

increase of 9.7% over 1H15.

We remain leaders in financing small and medium producers. In the 2015/16 (July/15 to June/16)

harvests BB was responsible for 63.3% of loans through Pronaf and 75% through Pronamp. We also hold

the leadership in financing through Inovagro (Agriculture innovation program), PCA (Warehouse

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construction program) and ABC Program (Low-Carbon Agriculture Program), with a market share of

61.7%, 36.6% and 65.9% respectively.

Among the credit purpose, our leadership is once again proved. As the “Matriz de Dados do Crédito Rural

(BACEN)” data shows, in the 2015/16 crop BB was responsible for 57.9% of working capital, 37.9% for

investment and 42.4% in crop trading.

In the contracting of rural credit loans is placed on the use of risk mitigation mechanisms - bad weather

and prices. In June, 2016, 64.9% of the agricultural working capital operations contracted in the crop of

2015/2016 were covered with production insurance (Agricultural insurance or Proagro) and price

insurance (options contracts) or both (Revenue Insurance).

6.3 Funding

Our total deposits totaled R$435.7 billion in June, 2016 regarding Banco do Brasil Financial Statements,

among operations in the domestic and international markets.

In the Consolidated Financial Statements our total deposits was R$440.9 billion in the same period.

Besides that the following information are highlighted:

I. R$135.4 billion in Agribusiness Letters of Credit an R$18.1 billion in Mortgage Bonds;

II. R$86.6 billion in onlending of officials funds and programs. Among these funds the following are highlighted: Funcafé (Brazilian Coffee Fund), Finame/BNDES. They all generate funding for loan operation at BB.

III. R$25.3 billion in Subordinated Letters of Credit. The balance of operations qualified as Tier II capital amounted to R$9.5 billion.

6.4 Asset Management

We continued as a leading national investment fund industry through BB Asset Management (BB DTVM),

with 22.2% market share and a total R$660.5 billion in funds in custody (It includes funds in custody

managed by BBDTVM and funds managed by other firms). Comparing to 1H15, we had 9.5% growth in

funds managed. From the total funds in custody, we finished 1H16 with R$643.9 billion managed by

BBDTVM, a 21.1% market share.

6.5 Payment Methods

Volume billed with cards issued was R$132.1 billion in 1H16, 10.9% growth over prior 1H15. Highlight to

the 22.6% growth in debt purchase transactions, which performance comprises purchases in

agribusiness and reached R$9.8 billion in the semester, a 146.3% growth to 1H15.

In May, we launched Ourocard app, which has as main features payment by approaching a smartphone

of a NFC terminal, digital card (Ourocard-e) for safe on line shopping, cards blocking and unblocking,

purchase contestation, possibility of using the card abroad, spending timeline and electronic purchase

statement.

We have also launched BB Elo Cidade, solution to incentive commerce in small municipalities. Developed

in partnership with city halls, the project aims to discourage the use of currency paper and the dislocation

of people to other municipalities, privileging retail and the economic stimulus to small towns.

In continuance to reorganization and diversification of payment methods businesses strategy, Livelo,

customer loyalty company, formally started its operation in June 2016, reinforcing Ponto Pra Você

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program, the largest loyalty program among banking companies, with more than 10 million active

members.

6.6 Insurance, Pension Plans and Premium Bonds

In 1H16, insurance, pension and capitalization income reached R$2 billion, a 5.2% increase over 1H15,

and added R$1.4 billion profit to BB conglomerate.

The total volume of insurance premium, pension contributions and premium bonds revenues reached

R$32.5 billion in 1H16, an increase of 7% over 1H15, ensuring the company's leadership in total

revenues in the segments in which it operates, and market share of 27.4%, according to the

Superintendence of Private Insurance (SUSEP).

Special emphasis on BrasilPrev’s achievement of market leadership (achieved in March, 2015) in

PGBL/VGBL private pension funds reserves, with 29.7% market share and R$156.3 billion in volume.

Besides that, Brasilprev raised its total collection market share to 39.7%.

For more information: www.bancodobrasilseguridade.com.br.

6.7 Social Security Management

We developed, in partnership with BB DTVM, investment funds, besides specific pension services to

RPPS (Own Social Security System), which offer coverage to 7.6 million insured, from which five million

are civil servants, 1.9 million retired and 600 thousand pensioners. The volume of funds managed by us

totaled R$43.3 billion in 1H16, which represents 40.5% market share, besides R$53.1 million in service

fee.

In 1H16, BB Previdência’s assets rose to R$4.7 billion, which 46 from corporate plans and 55 from

sponsoring companies, 02 plans created by 02 professional entities and 81 thousand participants.

6.8 Capital Market

We are present in domestic capital market through BB - Banco de Investimento (BB-BI), focused on retail

and corporate investors and abroad with the securities (New York, London and Singapore). The stock

purchase and sale service in our branch network, Internet (home broker) and mobile devices amounted

R$16.1 billion traded, of which R$15.4 billion were by home broker.

According to the Anbima ranking, our main achievements in the period were as follows:

I. Coordinated 13 issues of fixed income securities, including promissory notes, debentures, Mortgage Rights Certificates (CRI) and Agribusiness Rights Certificate (CRA), totaling R$3 billion and ranked in 2nd place in the consolidated origination list and with 13.2% in market share.

II. In securitization market, we coordinated five Agribusiness Rights Certificate (CRA) operations, totaling R$570 million, which ranked us in 3rd place in origination ranking.

III. Participated in five overseas issuing transactions totaling US$9.1 billion obtaining the ranking’s 2nd place.

IV. We were main coordinators in Rumo Logistica Operadora Multimodal S.A. follow on, which placed R$2.6 billion in stocks. As a result, we reached the 1

st place in variable income without

related parties, with R$347 million and in 1st place in operations ranking.

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6.9 Services

We offer many banking services to our clients. Among those offered to businesses, including the

government, the following stood out over the period:

I. Bank collection, tax deposit form collection and standing order services, Banco do Brasil provided services to over 259.7 thousand companies. It amounted to R$479.5 billion and 324.4 million securities.

II. Bill payment processing, service provided to 2.8 thousand clients, involving 128 million payment documents and totaling an amount of R$26 billion.

III. Automated debt, provided to more than 8 thousand companies, amounting R$40 billion and 74 million entries.

IV. Payroll agreements, processing over R$210 billion, meeting 10 million public officers and employees from private enterprises.

V. Social benefit payments at an amount R$8.2 billion/month carried out by means of specific cards and credit to accounts.

VI. The taxes collection amounted to R$237.6 billion.

VII. The Licitações-e (e-bid) site, in which 16.6 thousand bidding process were undertaken in the total amount of R$13.2 billion.

VIII. For each checking account customer, we offer the DDA (Authorized Direct Debit) service which had 1.2 million electronic drawers and 10% market share, and over 32.5 million bank payment forms were electronically processed.

6.10 Foreign Trade

We maintained, in 1H16, our leadership of the export and import exchange market, with 23.4% and

16.8%, market share respectively.

The exports operations (Advance against Exchange and Advance against Draft Presentation) stood out

with 25.3% market share. In on-lending from governmental programs, financing disbursements under the

Proex (Export Financing Program) totaled US$226.8 million, 22.1% higher than in 1H15.

We launched, in 1H16, the challenge to expand the number of export credit borrowers, an initiative that

reaffirms our commitment to the economic development of the country via export support as well as our

role as the main sponsor of the Brazilian exporter. During the period, 2,424 clients took credit in

ACC/ACE and PROGER Export, 23.9% growth over the same period of 2015.

Online foreign exchange and trade services conducted via internet represented 69.4% of operations

(payment slips issued) of export exchange and 40.7% of import exchange. BB also offers training

services in international business. In 1H16, 1,053 people were trained, including businesspeople,

students and industry professionals all over the Brazil.

6.11 Consortium

BB Administradora de Consórios ended the semester with a portfolio of R$14.1 billion. During the year,

were sold over 56 thousand new consortium quotas, which represented R$2.2 billion in letters of credit,

5.3% higher than 1H15. The company reported consolidated net return on equity of 70.3% in the

semester.

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7. Corporate Management

7.1 Corporate Governance

Banco do Brasil’s corporate governance is structured by the Board of Directors (BoD) and the Executive

Board (EB). The BoD is composed of eight members and advised by the Audit Committee and the

Compensation Committee and by the Internal Audit Team. EB is composed of the Managing Board (CEO

and nine Vice-Presidents) and of twenty-seven Statutory Directors. We also have a permanent Fiscal

Council composed of five sitting members and five alternate members.

As a good corporate governance practice, the Bank keeps a process to evaluate the performance of the

Board of Directors, Audit Committee and Executive Board. The Bylaws, the Corporate Governance and

Ethics Codes also give support to the best governance practices adopted by Banco do Brasil.

Decisions are taken collectively at all levels of the Bank with the purpose of conducting the adequate

debate over strategic themes and business proposals. For such, the Management uses committees,

subcommittees and commissions at a strategic level, which ensure the agility and security for the decision

making.

In May, Mr. Paulo Rogério Caffarelli became CEO of Banco do Brasil.

For additional information on organizational structure, as well as management professional experience,

see Reference Form 2016 available in www.bb.com.br/ir.

7.2 Market Relations

We release reports and information to the CVM, and on the Investor Relations website. Also adopts the

posture of inviting the market to conferences whenever Management considers it necessary to elucidate

specific topics concerning the Company. In 1H16, we took part in four non-deal roadshow abroad, five

conferences in the country and seven abroad and organized two earnings teleconferences with analysts

and investors. We keep a team exclusively to meet analysts and investors. Altogether over 581 meetings

were conducted to investor and market analysts, including participation in meetings and telephone calls

by June, 2016.

7.3 Corporate Control

Risk Management

We improved our risk management governance, especially the centralization of management activities in

environmental risk and the assessment and monitoring of credit risk models. We implemented a systemic

worsening probability model for companies listed on the Stock Exchange, with prospective risk

assessment. As for the liquidity risk we found the short-term liquidity indicator - LCR, under Basel III,

aiming to maintain the resources to resist acute financial stress scenario.

More information see the Risk Management Report at www.bb.com.br/ir.

Internal Controls

Aligned with our corporate strategy, the Internal Control System continues with cohesive and coordinated

action in risk management and controls.

We improved the Referential Model, clarifying and highlighting key aspects of governance that permeate

all defense lines. Another important aspect was the insertion of security, organizational and legal among

the functions of the 2nd Line of Defense (risk management, controls and compliance).

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The model preserves the authority and independence of the Internal Controls Directorship, provided

responsible for consolidated assessment of the Internal Control System.

For further information on BB internal controls, see Reference Form 2016 available in www.bb.com.br/ir.

BB Ombudsman

We have been investing in customer service improvement, resulting in lower public bookmarks

complaints, such as the demands presented to the Central Bank and National Bureau of Consumer

Ministry of Justice (Senacon/MJ).

During 1H16, the amount of valid complaints against BB was 27% lower than the average of our peers. In

ten of the 12 past months, BB was not among the five financial institutions with most complain in Bacen

monthly ranking. We kept, during this semester, the 6th place in this ranking.

Considering the demands registered in Procon, integrated into the National Consumer Protection

Information System (Sindec), complaints against BB were 62% lower than the average for the main pears

in the semester comparison.

Institutional Security

We support and actively contributes to the actions taken within the National System for Prevention and

Combat Against Money Laundering through its participation in the meetings for the preparation and

implementation of the Enncla (National Strategy for the Combat Against Corruption and Money

Laundering) , and formalization of Technical Cooperation Agreements with institutions such as the

Ministério da Justiça (Ministry of Justice), the Coaf (Council for Financial Activities Control), linked to the

Ministério da Fazenda (Ministry of Finance), and the Ministério Público do Estado de São Paulo (São

Paulo State Public Prosecution Office). During the period, almost 17 thousand employees participated in

training promoted on the topic.

Our Board of Directors approved the Integrity Program. The preparation of this document is demanded in

the Decreto Federal 8,420/2015 and consolidates the integrity procedures established to mitigate the risk

of BB's involvement in situations set by Law 12,846/2013 as corruption acts.

7.4 Technology

Our guidelines on technology are focused on operational efficiency and are geared toward solutions for

mobility, convenience and technological integration in client relations as well as operational and

management processes.

Other highlights over the period were as follows:

I. The Technological Transformation Program (“PTT”), aimed at improving existing processes, platforms and infrastructure through the reorganization of the methodology for building and maintaining technology solutions and service-oriented architecture.

II. The Program for the Optimization of IT Resources (“PORTI”), which seeks efficiency in the use of technology resources, with the constant reassessment of assumptions involving architecture, hiring, and management of services, among others. In 1H16, in its 4

th year, the PORTI program

generated recurring savings of R$72 million.

III. Initiatives designed to make mobile one of the main business channels and good experiences for customers.


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8. People

In 1H16, we invested, through UniBB (Banco do Brasil Corporate University), R$49.7 million in corporate

education (equivalent to R$453.5 per employee). The investment has offered 46.8 hours of training

activities in different ways (in person, distance, and in service), in addition to allowing to obtain or

maintain legal certifications in investments (CPA 10 and 20) by 1,967 employees.

Other highlights over the period were as follows:

I. Completion of 1.5 million courses in Portal UniBB and offering of 18 educational pieces through Unibb Mobile, reaching 8,236 downloads.

II. Training of Business Offices employees in order to spread the strategy and the digital model functioning with Exclusivo and very small and small companies, enhancing the client service experience.

III. Conducting of the 18th event of BB’s Program of Internal Certification of Knowledge, with the

participation of 52,631 employees.

IV. Providing 4,000 first undergraduate scholarships and 500 for employees who already hold undergraduate courses. Granting of 42 slots for the Executive MBA in Financial Businesses and 36 for Sustainable Development Strategy MBA. For post-graduate lato sensu and strict sensu studies were awarded 2,000 and 100 scholarships, respectively.

V. Providing 1,000 English course sponsorships, with 400 of them allocated to entry level position and cashiers.

VI. Graduation of 250 new managers in Workshop for First Time Managers (GPI), in order to implement the benchmarks the sustainable people management, business processes and on the branches daily routine.

VII. Recognition of the ideas presented in the Incentive Innovation Corporate Program - Pensa BB. The program aims to encourage a culture of innovation and turn ideas into solutions for people, for the Bank and for society. For the 10 challenges proposed in the program were submitted 3,265 ideas by employees.

VIII. Internal selection process realization for first time managers with on-site assessment of 1,546 staff in the Programa de Ascensão Profissional na Rede de Agências program.

Compensation and benefits

PDG (Bonus Performance Program) is the reward regarding the results and performance of its

participants and is aimed at strengthening the partnership between the employee and the organization,

recognition of effort in building the result, the alignment of results strategies and encouraging the pursuit

of excellence in work expression. In June, 2016, R$49.4 million were awarded to 3,778 employees

regarding the second semester of 2015 program.

On 1H16 we distributed R$627 million in Profit and Results.

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

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Table 3. Compensation and Benefits

1 - Expenses with salaries, benefits, social charges and personnel provisions, as note of Personnel Expenses;

2 - Funding of supplementary pension and health care plans, pursuant to Note Benefit Plan;

3 - Amount set aside for Profit and Gain Sharing, as Statement of Income;

4 - As Note of Personnel Expenses.

9. Sustainable Development

With regard to our social and environmental activities, highlights are:

I. On MPO (Microcredit line), our work aims to offer credit for the development of the segment of entrepreneurs. In 1H16, we reached cumulative disbursement of R$6.2 billion in credit operations for working capital and investments. 1.7 million individual and corporate customers have benefited throughout the country, served by the network of branches and partners. Among the partners is Movera, our affiliate, which in the first half totaled 12,3 thousand operations, with R$ 20.5 million disbursed to over 9,600 customers. In addition, we provide hiring MPO by Ourocard Conta Fácil, prepaid card for informal entrepreneurs, operated by phone or by card.

II. Execution of 59.6 thousand new agreements of FIES (Student Loans), amounting to R$2.7 billion. This numbers contributed to the one million students granted in BB milestone.

III. Hiring of 5,396 thousand new operations in BB Crédito Acessibilidade. Since its launching, in February 2012, the credit facility has transformed the lives of more than 32 thousand people.

IV. Performance in 1,773 municipalities by means of the Business Strategy for Sustainable Regional Development (DRS), with 26,055 employees trained in the subject. 1,378 Business Plans are being implemented with 623,571 beneficiaries.

V. Donation of R$24.6 million to Fundação Banco do Brasil (FBB) to invest in social programs and projects, developed or supported, aiming the improvement of people’s lives, promoting socio productive inclusion, sustainable development and social technologies.

VI. Renovation of Água Brasil program between Banco do Brasil, Agência Nacional de Águas, WWF Brasil and Fundação Banco do Brasil, aiming at developing inovation related to waterl resources management and sustainability. The program is due to June, 2020 and intends to invest about R$50.8 million.

VII. Achievement of 25.7 thousand employees registered on the website BB Voluntariado.

VIII. Prospection, through our branch network, of 879 projects od socio productive inclusion, from which 98 are going to be supported with Fundação Banco do Brasil resources during 2016. In 1H16, 27 projects have been approved so far.

IX. In Minha Casa Minha Vida program, it were delivered 9,739 homes to Faixa 1 (income lower than R$1,600) recipients in 1H16, ensuring decent housing and social inclusion to those families.

For more information: www.bb.com.br/sustentabilidade

R$ million

1H15 1H16 1H15 1H16

Payroll¹ 8,482 8,670 9,110 9,305

Supplementary Pension² 632 677 632 677

Health Care Plans² 500 592 500 592

Statutory Profit Sharing³ 1,104 625 1,107 627

Training⁴ 26 26 28 28

Banco do Brasil Financial

Statements

Consolidated Financial

Statements

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10. Legal Information

In accordance with criteria defined by the Brazilian Statute of small and very small businesses (General

Law of small and very small businesses), 94.9% of BB's business clients are classified as very small and

small businesses. The volume of funds used by small and very small companies was R$51.2 billion in

June, 2016. The balance of working capital operations contracted by very small companies totaled R$1.5

billion, and of small companies totaled R$30.4 billion. Investment operations aimed at very small

companies was R$1.2 billion; for small companies, investments was R$17.9 billion.

In the engagement of services not related to external audits, we adopt 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.

During the period, the companies of Banco do Brasil’s Conglomerate contracted KPMG Auditores

Independentes to provide other services not related to the Bank's and its subsidiaries' external audit in

the amount of R$1,046.9 thousand, representing 4.3% of the fees related to the external audit service.

The contracted services were:

Table 4. Contracting of KPMG Auditores Independentes

In compliance with CVM Instruction 381, we report that in 2015, the Independent Auditors KPMG did not

provide services that could affect its independence, ratified by the adherence of its professionals to

relevant ethical standards and independence that meet or exceed the standards promulgated by IFAC,

PCAOB, SEC, AICPA, CFC, CVM, Central Bank, SUSEP PREVIC and by other regulatory agencies.

These policies and procedures covering areas such as: personal independence, post-employment

relationships, rotating professionals as well as the approval of audit and other services, are subject to

constant monitoring.

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

of the Audit Committee.

Engaging Party Hire Date End Date Type of Sevice

Total

Contracted

(R$

thousand)

BB Securities Asia Pte. Ltd. 04/01/2016 03/31/2017 Compliance - Tax Rules 23.1

Kepler Weber S.A. 02/18/2016 08/18/2016 Consulting - SAP 435.0

Banco Votorantim S.A. 01/21/2016 02/24/2016 Compliance NBC TO 3000 (ISAE 300) 10.0

Banco Votorantim S.A. 03/16/2016 04/30/2016 Compliance NBC TO 3000 (ISAE 300) 29.2

Votorantim Asset Management 03/16/2016 04/30/2016 Compliance NBC TO 3000 (ISAE 300) 14.6

Votorantim Asset Management 03/16/2016 04/30/2016 Report - Securities undewriting 65.3

Banco Votorantim S.A. 01/01/2016 05/25/2016 Documents review 186.6

Banco Votorantim S.A. 05/24/2016 07/31/2016 Review Underwriting - ECFs 2016 100.0

Elo Participações S.A. 02/23/2016 Ongoing Consulting - Expenses 8.1

Stelo S.A. 02/23/2016 Ongoing Consulting - Expenses 8.1

Livelo S.A. 02/23/2016 Ongoing Consulting - Expenses 8.1

Elo Serviços S.A 02/23/2016 Ongoing Consulting - Expenses 8.1

CBSS - Alelo 02/23/2016 Ongoing Consulting - Expenses 16.3

Ibi Promotora de Vendas 02/23/2016 Ongoing Consulting - Expenses 4.1

Movera 02/23/2016 Ongoing Consulting - Expenses 2.0

Cielo S.A. 03/17/2016 Ongoing Limited Assurance 88.4

Banco Patagonia S.A. 01/01/2016 12/31/2016 Review - Financial agent - new trust 39.7

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Additionally, BB explains that:

I. In the year, fixed investments amounted to R$463.9 million, emphasizing the investment in new service points and in the improvement of the ambience of the bank branches (R$269.4 million) as well as the investment made in information technology (R$148.7 million).

II. Has R$1.1 billion non-active tax credits arising from requirements defined by CMN Resolutions 3,059 of December 20, 2002 and 3,355 of March 31, 2006, and presented in Banco do Brasil Financial Statements and Consolidated Financial Statements note for 1H16.

III. Records in a memorandum account, according to rules provided for in Cosif (Financial Institutions Accounting Plan), the amount of R$8.4 billion deriving from Co-obligations and Risks in Guarantees Provided to clients and companies of the BB Conglomerate.

IV. In 2012 was entered Interbank Revolving Credit contract Line to release with Banco Votorantim, by the limit equivalent to the value of R$ 6.8 billion. The operation was accounted for in memorandum accounts, according to rules provided for in Cosif and was issued in the Notes of the Related Parties in the Banco do Brasil Financial Statements and Consolidated Financial Statements related to the 1H16.

V. During this period, there haven’t been any corporate reorganizations.

In accordance with art. 8 of the Central Bank Circular 3,068/2001, BB confirms that it has the intention

and ability to hold until maturity the securities classified as "Held to Maturity". The financial capacity is

supported by a cash flow projection that does not consider the possibility of selling these securities.

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

Banco do Brasil By-laws.

11. Main Awards Received in the Period

I. In February, we were ranked 63rd

in the world’s “Top 500 Banking Brands 2016" posted by Brand Finance and published on the magazine The Banker.

II. In April, we were ranked in the 5th place (US$3.5 billion) in the ranking of " The 10 most valuable

brands in the decade”, ranking published on the magazine Isto ÉDinheiro.

III. We were recognized as the only Brazilian bank in the 2016 edition of Global 100 ranking, among 100 most sustainable companies in the world. The Global 100 is a corporate sustainability ranking started in 2005 by Corporate Knights (CK), a communication and investment research company hosted in Toronto, Canada.

IV. We were listed by Gestão RH group among the “100 Best Companies in Corporative Citizenship 2016”, after survey with the companies listed among “The 1,000 Best and Largest (Exame) and 150 Best Companies to Work (Época and Exame)”. To build the list, the research also considered the pillars Work Life Quality, Social Responsibility, Environmental Responsibility, Diversity and Social Inclusion.

V. Our risk management team was granted with the Banking Awards - Best ESG Risk Management Team prize. The award was organized by the British magazine CFI.co – Capital Finance International, which seeks to identify and recognize individuals and organizations that aggregate value in risk management.

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Acknowledgments

We thank the dedication and diligence of our employees and collaborators, as well as the trust of

shareholders, clients and company.

For more information, visit Investor Relations Website: www.bb.com.br/ir.



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22

BALANCE SHEET

ASSETS Note Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Restated

CURRENT ASSETS 821,957,263 771,228,599 782,434,022

Cash and cash equivalents 6 14,052,402 18,054,422 16,591,088

Short-term interbank investments 7.a 413,436,276 351,419,935 350,155,149

Open market investments 374,966,585 303,356,591 312,366,645

Interbank deposits 38,469,691 48,063,344 37,788,504

Securities and derivative financial instruments 8 19,781,675 24,273,925 27,256,483

Own portfolio 16,278,894 20,534,138 23,066,482

Subject to repurchase agreements 986,242 1,257,846 2,317,403

Pledged in guarantee 97,065 113,777 913,895

Derivative financial instruments 2,419,474 2,368,164 958,703

Interbank accounts 73,565,770 65,050,180 65,264,683

Payments and receipts pending settlement 9.a 3,818,464 7,252 4,443,349

Restricted deposits 9.b 68,059,575 63,361,321 59,642,166

Deposits with Banco Central do Brasil 65,404,128 60,810,918 57,167,615

National Treasury - rural credits resources 64,192 54,205 67,446

National Housing Finance System 2,591,255 2,496,198 2,407,105

Interbank onlendings 1,495 -- 1,094

Correspondent banks 1,686,236 1,681,607 1,178,074

Interdepartmental accounts 132,293 597,676 204,771

Internal transfers of funds 132,293 597,676 204,771

Loan operations 10 178,585,686 188,807,055 189,599,694

Public sector 1,184,584 2,438,099 3,005,596

Private sector 190,217,383 196,989,843 195,475,969

Loan operations linked to assignment 649 431 229

(Allowance for loan losses) (12,816,930) (10,621,318) (8,882,100)

Leasing transactions 10 278,805 318,349 320,147

Private sector 322,129 352,475 339,067

(Allowance for leasing transactions losses) (43,324) (34,126) (18,920)

Other receivables 121,612,282 122,226,217 132,602,215

Receivables from guarantees honored 606,165 397,550 184,087

Foreign exchange portfolio 12.a 18,854,747 19,847,057 19,200,619

Accrued income 2,641,688 2,784,436 2,783,617

Securities trading 329,176 308,180 344,085

Sundry 11.b 101,215,592 100,389,034 111,481,224

(Allowance for other losses) (2,035,086) (1,500,040) (1,391,417)

Other assets 13 512,074 480,840 439,792

Assets not for own use and materials in stock 328,465 332,533 317,020

(Allowance for impairment) (124,846) (120,940) (127,320)

Prepaid expenses 308,455 269,247 250,092

See the accompanying notes to the financial statements.

Financial Statements


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23

ASSETS Note Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Restated

NON-CURRENT ASSETS 623,158,234 629,900,158 588,533,583

LONG-TERM RECEIVABLES 591,575,565 597,797,430 556,760,771

Short-term interbank investments 7.a 1,034,690 1,321,852 1,020,119

Open market investments 148,919 174,225 215,948

Interbank deposits 885,771 1,147,627 804,171

Securities and derivative financial instruments 8 100,968,583 93,011,125 84,556,856

Own portfolio 76,783,299 71,087,575 67,571,643

Subject to repurchase agreements 20,367,464 16,939,716 10,925,452

Pledged in guarantee 2,981,022 3,989,966 5,195,590

Derivative financial instruments 836,798 993,868 864,171

Interbank accounts 414,825 358,235 299,573

Restricted deposits 9.b 12,513 99 9,746

National Treasury - rural credits resources 12,513 99 9,746

Interbank onlendings 402,312 358,136 289,827

Loan operations 10 418,992,475 439,070,732 418,172,059

Public sector 72,563,235 76,374,043 67,068,438

Private sector 368,732,315 384,232,452 368,656,748

Loan operations linked to assignment 663,397 332,860 293,719

(Allowance for loan losses) (22,966,472) (21,868,623) (17,846,846)

Leasing transactions 10 354,420 507,440 611,746

Private sector 382,558 522,360 621,680

(Allowance for leasing transactions losses) (28,138) (14,920) (9,934)

Other receivables 69,798,783 63,512,259 52,050,729

Foreign exchange portfolio 12.a 945,955 1,573,065 165,797

Accrued income 45,846 36,398 34,343

Securities trading 697,994 1,344,984 989,062

Specific credits 11.a 355,509 334,604 1,633,805

Sundry 11.b 68,416,115 61,040,381 49,741,490

(Allowance for other losses) (662,636) (817,173) (513,768)

Other assets 13 11,789 15,787 49,689


PERMANENT ASSETS 31,582,669 32,102,728 31,772,812

Investments 16,504,684 15,452,248 15,049,530

Associates and joint ventures 14.a 16,350,824 15,281,217 14,906,031

Domestic 16,230,179 15,100,387 14,697,143

Abroad 120,645 180,830 208,888

Other investments 14.c 208,112 225,300 197,748

(Accumulated impairment) (54,252) (54,269) (54,249)

Property and equipment 15 7,140,829 7,323,034 6,989,993

Land and buildings 6,769,791 6,796,594 6,496,800

Other property and equipment 9,580,790 9,336,493 8,880,538

(Accumulated depreciation) (9,209,752) (8,810,053) (8,387,345)

Intangible 16 7,924,452 9,310,872 9,711,559

Intangible assets 17,590,378 17,543,048 17,031,610

(Accumulated amortization) (9,665,926) (8,232,176) (7,320,051)

Deferred 12,704 16,574 21,730

Organization and expansion costs 1,584,154 1,588,601 1,601,011

(Accumulated amortization) (1,571,450) (1,572,027) (1,579,281)

TOTAL ASSETS 1,445,115,497 1,401,128,757 1,370,967,605



1st

half 2016


24

LIABILITIES/SHAREHOLDERS’ EQUITY Note Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Restated

CURRENT LIABILITIES 1,011,489,183 909,357,947 901,591,873

Deposits 17.a 383,520,384 406,119,891 392,592,180

Demand deposits 62,549,870 66,549,760 64,754,810

Savings deposits 148,367,610 151,845,281 147,306,118


Time deposits 148,461,136 151,860,896 152,933,047

Other deposits 29,962 -- --

Securities sold under repurchase agreements 17.c 379,837,556 294,973,701 307,067,592

Own portfolio 18,677,267 30,332,240 16,782,333

Third-party portfolio 361,160,289 264,641,461 290,285,259

Funds from acceptance and issuance of securities 19 60,873,824 43,600,506 43,143,725

Bonds backed by real estate, mortgage and other credits 57,765,731 31,127,215 23,431,129

Foreign securities 3,108,093 12,473,291 19,686,140

Certificates of structured operations -- -- 26,456

Interbank accounts 3,112,659 30,621 3,342,611

Receipts and payments pending settlement 9.a 3,100,027 34 3,322,748

Correspondent banks 12,632 30,587 19,863

Interdepartmental accounts 3,238,264 5,438,786 3,248,560

Third-party funds in transit 3,236,114 5,438,146 3,244,729

Internal transfers of funds 2,150 640 3,831

Borrowings 18.a 18,577,980 22,214,249 16,829,480

Foreign borrowing 18,577,980 22,214,249 16,829,480

Domestic onlending - official institutions 18.b 38,264,763 39,015,494 36,454,684

BNDES 9,220,341 11,394,421 13,865,298

Caixa Econômica Federal 21,648,278 19,690,627 16,324,322

Finame 5,463,023 5,696,559 5,789,597

Other institutions 1,933,121 2,233,887 475,467

Foreign onlending 18.b 95 9,916 95

Derivative financial instruments 8.d 2,085,982 1,967,562 1,691,960

Other liabilities 121,977,676 95,987,221 97,220,986

Billing and collection of taxes and contributions 3,913,418 398,229 4,703,408


Shareholders and statutory distributions 1,622,869 1,588,380 2,283,063

Taxes and social security 20.a 23,523,261 19,149,334 21,778,400


Financial and development funds 20.b 8,606,530 10,021,062 7,682,327

Subordinated debts 20.c 2,448,477 1,845,639 3,474,834

Equity and debt hybrid securities 20.d 74,600 121,313 420,979

Other liabilities 20.e 62,948,167 48,561,791 43,164,369



1st

half 2016


25

LIABILITIES/SHAREHOLDERS’ EQUITY Note Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Restated

NON-CURRENT LIABILITIES 350,176,976 410,234,637 386,733,045

LONG-TERM LIABILITIES 349,737,563 409,775,429 386,318,655

Deposits 17.a 57,358,148 58,299,827 51,737,260


Time deposits 53,997,449 52,681,234 45,998,117

Securities sold under repurchase agreements 17.c 32,131,079 38,547,947 34,161,558

Own portfolio 32,131,079 38,547,900 34,161,558

Third-party portfolio -- 47 --

Funds from acceptance and issuance of securities 19 113,634,901 144,960,986 145,262,735

Bonds backed by real estate, mortgage and other credits 97,975,349 123,923,197 130,172,505

Foreign securities 15,522,755 21,026,465 15,087,275

Certificates of structured operations 136,797 11,324 2,955

Borrowings 18.a 4,185,001 7,441,111 6,244,435

Domestic loans - other institutions -- 38,494 --

Foreign borrowing 4,185,001 7,402,617 6,244,435

Domestic onlending - official institutions 18.b 48,337,873 51,049,914 53,577,116

National Treasury 165,578 178,145 288,105

BNDES 26,103,172 26,586,982 26,914,991

Finame 22,069,123 24,284,787 26,374,020

Foreign onlending 18.b 382 382 382

Derivative financial instruments 8.d 932,918 1,321,610 1,122,007

Other liabilities 93,157,261 108,153,652 94,213,162


Taxes and social security 20.a 734,114 784,824 468,117


Financial and development funds 20.b 5,134,590 4,981,462 4,721,403

Special operations 2,205 2,187 2,169

Subordinated debts 20.c 49,816,340 52,172,117 47,288,902

Equity and debt hybrid securities 20.d 5,322,793 7,745,195 5,238,526

Debt instruments eligible as capital 20.c and 20.d 23,953,240 27,293,304 24,340,502

Other liabilities 20.e 4,453,426 13,204,335 10,626,320

DEFERRED INCOME 439,413 459,208 414,390

SHAREHOLDERS' EQUITY 23 83,449,338 81,536,173 82,642,687

Capital 67,000,000 60,000,000 60,000,000

Local residents 53,699,220 47,321,901 47,063,549

Domiciled abroad 13,300,780 12,678,099 12,936,451

Instruments qualifying to common equity tier 1 capital 23.c 8,100,000 8,100,000 8,100,000

Capital reserves 15,509 14,326 14,326

Revaluation reserves 2,695 2,730 2,764

Profit reserves 25,402,333 29,031,090 25,767,559

Accumulated other comprehensive income (18,318,685) (17,042,671) (12,567,032)

(Treasury shares) (1,854,749) (1,697,380) (1,629,478)

Noncontrolling interests 3,102,235 3,128,078 2,954,548

TOTAL LIABILITIES 1,445,115,497 1,401,128,757 1,370,967,605



1st

half 2016


26

STATEMENT OF INCOME

Note 2nd quarter/2016 2nd quarter/2015

Restated 1st half/2016

1st half/2015

Restated

INCOME FROM FINANCIAL INTERMEDIATION 38,042,616 35,957,355 72,387,822 82,613,346

Loan operations 10.b 24,034,104 22,077,331 44,446,419 49,675,733

Leasing transactions 10.i 83,078 94,751 177,925 207,729

Securities 8.b 12,281,551 12,101,257 23,818,215 28,463,875

Derivative financial instruments 8.e (1,310,452) (352,012) (1,613,247) 259,939

Foreign exchange results 12.b 916,625 363,497 1,546,902 668,677

Compulsory investments 9.c 1,447,472 1,194,917 2,837,649 2,385,406

Operations of sale and transfer of financial assets 590,238 477,614 1,173,959 951,987

EXPENSES FROM FINANCIAL INTERMEDIATION (29,972,356) (28,768,063) (56,875,960) (69,709,838)

Deposits and securities sold under repurchase agreements

17.d (29,211,134) (24,036,642) (53,155,215) (45,996,062)

Borrowings and onlendings 18.c 6,365,973 606,300 10,597,691 (12,693,324)

Leasing transactions 10.i (47,580) (54,942) (102,955) (126,452)

Operations of sale and transfer of financial assets (19,207) (8,576) (28,044) (15,311)

Allowance for loan losses 10.f and 10.g (7,060,408) (5,274,203) (14,187,437) (10,878,689)

INCOME FROM FINANCIAL INTERMEDIATION 8,070,260 7,189,292 15,511,862 12,903,508

OTHER OPERATING INCOME/EXPENSES (3,459,173) (2,783,184) (6,837,682) (6,826,460)

Service fee income 21.a 3,986,862 3,642,669 7,605,977 7,476,684

Bank fee income 21.b 2,076,126 1,731,023 4,014,784 3,320,090

Personnel expenses 21.c (5,336,562) (5,113,851) (10,512,230) (9,859,553)

Other administrative expenses 21.d (3,798,862) (3,630,652) (7,600,784) (7,367,498)

Tax expenses 24.c (1,435,358) (1,197,345) (2,822,523) (2,783,382)

Equity in associates and joint ventures 14 1,091,144 1,297,520 2,115,208 2,294,962

Other operating income 21.e 2,521,303 2,248,530 5,287,110 4,737,209

Other operating expenses 21.f (2,563,826) (1,761,078) (4,925,224) (4,644,972)

OPERATING INCOME 4,611,087 4,406,108 8,674,180 6,077,048

NON-OPERATING INCOME 22 71,688 68,285 108,280 5,840,203

Incomes 84,781 87,620 152,810 5,902,788

Expenses (13,093) (19,335) (44,530) (62,585)

PROFIT BEFORE TAXATION AND PROFIT SHARING

4,682,775 4,474,393 8,782,460 11,917,251

INCOME TAX AND SOCIAL CONTRIBUTION 24.a (1,459,665) (609,415) (2,504,506) (1,101,481)

EMPLOYEE AND DIRECTORS PROFIT SHARING (320,452) (379,592) (626,769) (1,107,130)

NON-CONTROLLING INTERESTS (437,610) (477,828) (827,086) (882,732)

NET INCOME 2,465,048 3,007,558 4,824,099 8,825,908

EARNINGS PER SHARE 23.f

Weighted average number of shares - basic and diluted

2,788,217,354 2,796,175,715 2,790,389,280 2,796,131,188

Basic and diluted earnings per share (R$) 0.88 1.05 1.70 3.08



1st

half 2016


27

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

BB Consolidated Note Capital

Instruments qualifying to

common equity tier 1 Capital

Capital reserves

Revaluation reserves

Profit reserves Accumulated other

comprehensive income Treasury shares

Retained earnings/accumulated

losses

Non-controlling

interest Total

Legal reserve

Statutory reserves

Banco do Brasil

Associates and

subsidiaries

Balances at Dec 31, 2014 54,000,000 8,100,000 10,773 2,805 5,468,217 21,157,294 (9,437,805) (160,035) (1,621,507) -- 3,093,452 80,613,194

Capital increase - capitalization of reserves 6,000,000 -- -- -- -- (6,000,000) -- -- -- -- -- --

Accumulated other comprehensive income of securities and derivative financial instruments, net of taxes

-- -- -- -- -- -- (519,995) 15,543 -- -- -- (504,452)

Accumulated other comprehensive income - benefit plans, net of taxes -- -- -- -- -- -- (2,464,740) -- -- -- -- (2,464,740)

Share-based payment transactions -- -- 7,968 -- -- -- -- -- 4,741 -- -- 12,709

Repurchase of shares program -- -- (4,415) -- -- -- -- -- (12,712) -- -- (17,127)

Expired dividends/interest on own capital -- -- -- -- -- -- -- -- -- 3,658 -- 3,658

Realization of revaluation reserve in subsidiary/associated companies 23.d -- -- -- (41) -- -- -- -- -- 41 -- --

Change in noncontrolling interest -- -- -- -- -- -- -- -- -- -- (138,904) (138,904)

Net income for the period 23.h -- -- -- -- -- -- -- -- -- 8,825,908 -- 8,825,908

Interest on instruments elegible to common equity -- -- -- -- -- -- -- -- -- (174,982) -- (174,982)

Unrealized results -- -- -- -- -- 44,465 -- -- -- (44,465) -- --

Allocation - Reserves 23.g -- -- -- -- 430,323 5,928,721 -- -- -- (6,359,044) -- --

- Dividends 23.g -- -- -- -- -- (1,261,461) -- -- -- (39,046) -- (1,300,507)

- Interest on own capital 23.g -- -- -- -- -- -- -- -- -- (2,212,070) -- (2,212,070)

Balances at Jun 30, 2015 60,000,000 8,100,000 14,326 2,764 5,898,540 19,869,019 (12,422,540) (144,492) (1,629,478) -- 2,954,548 82,642,687

Changes in the period 6,000,000 -- 3,553 (41) 430,323 (1,288,275) (2,984,735) 15,543 (7,971) -- (138,904) 2,029,493

Balances at Dec 31, 2015 60,000,000 8,100,000 14,326 2,730 6,173,642 22,857,448 (16,678,569) (364,102) (1,697,380) -- 3,128,078 81,536,173

Capital increase - capitalization of reserves 7,000,000 -- -- -- -- (7,000,000) -- -- -- -- -- --

Accumulated other comprehensive income of securities and derivative financial instruments, net of taxes

-- -- -- -- -- -- 1,332,892 305,089 -- -- -- 1,637,981

Accumulated other comprehensive income - benefit plans, net of taxes -- -- -- -- -- -- (2,913,995) -- -- -- -- (2,913,995)

Share-based payment transactions -- -- 1,183 -- -- -- -- -- 6,157 -- -- 7,340

Shares received in order to comply with operation secured by the FGCN - Fundo Garantidor da Construção Naval

-- -- -- -- -- -- -- -- (163,526) -- -- (163,526)

Expired dividends/interest on own capital -- -- -- -- -- -- -- -- -- 4,554 -- 4,554

Realization of revaluation reserve in subsidiary/associated companies 23.d -- -- -- (35) -- -- -- -- -- 35 -- --

Change in noncontrolling interest -- -- -- -- -- -- -- -- -- -- (25,843) (25,843)

Net income for the period 23.h -- -- -- -- -- -- -- -- -- 4,824,099 -- 4,824,099

Interest on instruments elegible to common equity -- -- -- -- -- -- -- -- -- (46,227) -- (46,227)

Unrealized results -- -- -- -- -- 25,957 -- -- -- (25,957) -- --

Allocation - Reserves 23.g -- -- -- -- 237,595 3,107,691 -- -- -- (3,345,286) -- --

- Interest on own capital 23.g -- -- -- -- -- -- -- -- -- (1,411,218) -- (1,411,218)

Balances at Jun 30, 2016 67,000,000 8,100,000 15,509 2,695 6,411,237 18,991,096 (18,259,672) (59,013) (1,854,749) -- 3,102,235 83,449,338

Changes in the period 7,000,000 -- 1,183 (35) 237,595 (3,866,352) (1,581,103) 305,089 (157,369) -- (25,843) 1,913,165



1st

half 2016


28

STATEMENT OF CASH FLOWS

Note 1st half/2016 1st half/2015

Cash flows from operating activities

Income before taxation and profit sharing 8,782,460 11,917,251

Adjustments to income before taxation and profit sharing 24,332,245 (1,424,228)

Provision for credits, leasing and other credits 10.f e 10.g 14,187,437 10,878,689

Depreciation and amortization 21.d 2,134,991 2,016,818

(Revenues) / Expenses from impairment 15 e 16 -- (2,409)

Equity in subsidiaries and associates 14.a (2,115,208) (2,294,962)

Gain on the disposal of assets 22 (12,488) (10,904)

Gain on the disposal of investments 22 -- (2,545)

Capital gain 22 (71,810) (5,798,068)

Provision (reversal) for devaluation of other assets 22 6,091 (311)

Amortization of goodwill 14.d 103,748 100,951

Expenses with civil, labor and tax provisions 27 1,409,317 1,453,887

Adjustment of actuarial assets/liabilities and surplus allocation funds 26 (259,572) (898,268)

Commissions income deferred 342,383 451,585

Effect of changes in foreign exchange rates in cash and cash equivalents 9,489,726 (6,267,413)

Non-controlling interests (827,086) (882,732)

Other adjustments (55,284) (168,546)

Income adjusted before taxation and profit sharing 33,114,705 10,493,023

Equity variations (48,803,687) (4,703,750)

Increase in short-term interbank investments (94,929,936) (40,361,707)

Decrease in trading securities and derivative financial instruments 1,470,932 2,311,121

Increase in interbank and interdepartmental accounts (2,632,071) (2,734,406)

(Increase) decrease in compulsory deposits with Banco Central do Brasil (4,593,210) 6,056,622

(Increase) decrease in loan operations 16,546,482 (23,545,586)

(Increase) decrease in leasing transactions 149,181 (113,209)

Increase in other receivables net of deferred taxes (2,930,265) (6,214,548)

(Increase) decrease in other assets (20,839) 53,308

Income tax and social contribution paid (4,039,627) (3,925,249)

Decrease in deposits (23,541,186) (23,846,624)

Increase in securities sold under repurchase agreements 78,446,987 47,308,716

(Decrease) increase in funds from acceptance and issuance of securities (14,052,767) 40,815,686

(Decrease) increase in borrowings and onlendings (10,364,972) 3,433,283

(Decrease) increase in other liabilities 11,707,399 (3,930,177)

Decrease in deferred income (19,795) (10,980)

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (15,688,982) 5,789,273

Cash flows from investing activities

Increase in securities available for sale (23,202,854) (22,358,668)

Decrease in securities available for sale 16,620,658 17,807,484

Increase in securities held to maturity (2,471,171) (38,384)

Decrease in securities held to maturity 5,495,175 --

Dividends received from associated and subsidiaries companies 1,173,185 1,041,966

Acquisition of property, plant and equipment in use (417,960) (469,722)

Disposal of property, plant and equipment in use 38,172 15,480

Acquisition of investments (54,265) (174,554)

Acquisition of intangible assets (182,709) (477,398)

Disposal of intangible assets/deferred assets -- 138,288

Funds from partnership in the card segment -- 2,314,674

CASH USED IN INVESTING ACTIVITIES (3,001,769) (2,200,834)

Cash flows from financing activities

Change in non-controlling interests (25,843) (138,904)

(Decrease) increase in subordinated debts (1,287,877) 1,729,225

(Decrease) increase in equity and debt hybrid securities (6,274,240) 3,505,038

Acquisition of treasury shares (157,369) (7,971)

Dividends paid -- (1,512,720)

Interest on own capital paid (1,276,973) (1,864,728)

CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (9,022,302) 1,709,940

Net variation of cash and cash equivalents (27,713,053) 5,298,379

At the beginning of the period 102,707,171 61,859,479

Effect of changes in foreign exchange rates in cash and cash equivalents (9,489,726) 6,267,413

At the end of the period 65,504,392 73,425,271

Increase (decrease) in cash and cash equivalents (27,713,053) 5,298,379



1st

half 2016


29

STATEMENT OF VALUE ADDED

Note 1st half/2016 1st half/2015 Restated

Income 70,002,456 88,154,885

Income from financial intermediation 72,387,822 82,613,346

Income from service and bank fees 11,620,761 10,796,774

Allowance for loan losses (14,187,437) (10,878,689)

Capital gains 22 106,243 5,848,567

Other income/(expenses) 75,067 (225,113)

Expenses from financial intermediation (42,688,523) (58,831,149)

Inputs purchased from third parties (4,392,957) (4,307,880)

Materials, water, electric power and gas 21.d (354,655) (314,884)

Expenses with outsourced services 21.d (750,845) (772,837)

Communications 21.d (579,417) (612,679)

Data processing 21.d (394,052) (349,275)

Transportation 21.d (547,500) (578,697)

Security services 21.d (562,162) (522,465)

Financial system services 21.d (393,649) (352,866)

Advertising and marketing 21.d (125,973) (101,782)

Other (684,704) (702,395)

Gross added value 22,920,976 25,015,856

Depreciation and amortization 21.d (2,238,739) (2,117,769)

Value added produced by entity 20,682,237 22,898,087

Value added received through transfer 2,115,208 2,294,962

Equity in associates and joint ventures 2,115,208 2,294,962

Added value to distribute 22,797,445 100.00% 25,193,049 100.00%

Value added distributed 22,797,445 100.00% 25,193,049 100.00%

Personnel 9,928,148 43.55% 9,718,980 38.58%

Salaries and fees 6,505,872 6,091,224

Employee and directors profit sharing 626,769 1,107,130

Benefits and training programs 1,404,704 1,298,240

FGTS (Government severance indemnity fund for employees) 385,130 366,951

Other charges 1,005,673 855,435

Taxes, rates and contributions 6,537,881 28.68% 5,132,565 20.37%

Federal 5,859,273 4,508,860

State 416 587

Municipal 678,192 623,118

Interest on third parties' capital 680,231 2.98% 632,864 2.51%

Rent 21.d 680,231 632,864

Interest on own capital 23.g 5,651,185 24.79% 9,708,640 38.54%

Federal government's interest on own capital 767,567 1,280,734

Other shareholders’ interest on own capital 643,651 931,337

Federal government dividends -- 752,961

Dividends for other shareholders' dividends -- 547,546

Interest on the instrument eligible to the federal government's common equity tier 1 capital

46,227 174,982

Retained earnings 3,366,654 5,138,348

Non-controlling interest in retained earnings 827,086 882,732


Notes to the Consolidated Financial Statements

1st

half 2016


30

- THE BANK AND ITS OPERATIONS 1

Banco do Brasil S.A. (Banco do Brasil or the Bank) is a publicly-traded company established under private law, with

both public and private shareholders, subject to the rules of Brazilian Corporate Law. Its headquarters are located at

Setor de Autarquias Norte, Quadra 5, Lote B, Torre I, Edifício Banco do Brasil, Brasília, Distrito Federal, Brazil. The

Bank's business activities include the following:

all manner of asset, liability and advisory services;

banking and financial services, including foreign exchange transactions and other services such as insurance, pension plans, capitalization bonds, securities brokerage, credit/debit card management, consortium management, investment funds and managed portfolios; and

all other types of transactions available to banks within Brazil´s National Financial System.

As an agent for execution of the Brazilian Federal Government's credit and financial policies, Brazilian Law requires

the Bank to perform functions specifically those under article 19 of Law 4,595/1964.

- COMPANY RESTRUCTURING 2

) Partnership in the card segment a

BB Elo Cartões and Cielo S.A.

On November 19, 2014, the Bank announced to the market that BB Elo Cartões Participações S.A. (BB Elo Cartões)

and Cielo signed on that date the Association Agreement to form a new strategic partnership in the electronic

payment industry. BB Elo Cartões is a wholly-owned subsidiary of the Bank.

On February 27, 2015, BB Elo Cartões and Cielo completed the formation of the strategic partnership, forming a new

company called Cateno Gestão de Contas de Pagamento S.A. (Cateno). This partnership was completed after

approval by the relevant regulators, supervisors and inspectors, and subject to the fulfillment of all contractual

conditions precedent to the transaction closing.

Under the terms of the agreement, BB Elo Cartões contributed an intangible asset (representing the right to explore

its payments arrangements in relation to post-paid accounts transactions and purchase made via debt) to the

company. In addition, the agreement aims at the formation of associations with other partners in order to exploit

opportunities related to the electronic payment market. It also seeks to obtain synergies and optimize the structuring

of new businesses in the segment.

According to the appraisal report of an independent firm, the intangible asset (transferred by BB Elo Cartões to

Cateno) was valued at R$ 11,572,000 thousand. In return, in order to reach the agreed equity interests in Cateno,

BB Elo Cartões received from Cateno a consideration of R$ 4,640,951 thousand in cash, which was the tax cost of

this transaction to BB Elo Cartões, and R$ 3,459,449 thousand in debentures issued by Cielo. The net amount of

R$ 3,471,600 thousand represents the final equity interest of BB Elo Cartões in Cateno.

As a result of these transactions, Cateno’s share capital is held in the proportion of 30.00% by BB Elo Cartões and

70.00% by Cielo. However, taking into account the 28.75% Bank’s indirect holding in Cielo (through BB BI) on the

date of the agreement, Bank’s total indirect holding in Cateno is 50.13%.

Due to the conclusion of the transaction, the amount of R$ 3,211,700 thousand was recognized as income by the

Bank in the 1st half 2015, as shown in the table below:

1) BB Elo Cartões’ capital gain 11,572,000

2) Taxes (4,640,951)

3) Effect in BB Elo Cartões’ income, net of tax effects (1+2) 6,931,049

4) Unrealized result (50.13% of item 3) (3,474,189)

5) Effect in the consolidated income (3+4) 3,456,860

6) Profit sharing, net of tax effects (245,160)

7) Effect in the consolidated net income (5+6) 3,211,700



1st

half 2016


31

- PRESENTATION OF FINANCIAL STATEMENTS 3

The consolidated 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 (Conselho Monetário

Nacional - CMN), the Central Bank of Brazil (Banco Central do Brasil - Bacen) and the Securities and Exchange

Commission of Brazil (Comissão de Valores Mobiliários - CVM), as applicable. In the consolidated financial

statements, there was a reclassification of the Instrument qualifying as CET1 – hybrid capital and debt instrument to

Shareholder's equity. This adjustment is also performed in the prudential financial statements and to IFRS to improve

the quality and transparency of these consolidated financial statements.

The preparation of financial statements in accordance with accounting practices adopted in Brazil, applicable to

financial institutions, requires that Management use judgment 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 fixed assets, the allowance for loan losses, deferred tax assets, provision for labor, civil and tax

demands, valuation of financial instruments, assets and liabilities relating to post-employment benefits and other

provisions. The final amounts of transactions involving these estimates are only known upon their settlement.

The consolidated financial statements include the operations of the Bank performed by their domestic agencies and

abroad and also include the operations of the Bank’s controlled entities, as well as of the special purpose entities

(Dollar Diversified Payment Rights Finance Company and Loans Finance Company Limited) and of the investment

financial funds (Fênix Fundo de Investimento em Direitos Creditórios do Varejo, Fundo de Investimento em Direitos

Creditórios da Companhia Pernambucana de Saneamento - Compesa and BB Fund Class D) of which the

companies of Banco do Brasil’s Conglomerate are the main beneficiaries or detain the main obligations. The

consolidated financial statements reflect the assets, liabilities, income and expenses of Banco do Brasil and its

controlled entities.

In the preparation of the consolidated financial statements, amounts resulting from transactions between

consolidated companies, including the equity 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 in income of the controlled entities were separately disclosed in the financial statements. Leasing transactions

were considered based on the financial method, and the amounts were reclassified from the Leased assets line to

the Leasing transactions line, after deduction of residual amounts received in advance. The profit and loss with

foreign exchange from branches operations are presented in the groupings of income in which the charges and

income on these transactions are recognized. The foreign exchange profit and loss on overseas investments are

presented in the grouping of Borrowings and Onlendings, in order to eliminate the effect of protection for the

exchange rate fluctuations of these investments.

The Brazilian Accounting Pronouncements Committee (Comitê de Pronunciamentos Contábeis - CPC) is responsible

for issuing accounting standards and interpretations, based on international accounting standards, approved by the

CVM. Bacen adopted the following pronouncements of the CPC, applied by the Bank, as applicable: CPC 00 (R1) -

Conceptual framework, CPC 01 – Decrease in recoverable amount of assets, CPC 03 - Statement of cash flows

(DFC), CPC 05 – Related party disclosures, CPC 10 (R1) – Share-based payment, CPC 23 – Accounting policies,

changes in accounting estimates and errors, CPC 24 – Events after the reporting period, CPC 25 - Provisions,

contingent liabilities and contingent assets and CPC 33 (R1) - Employee benefits.

Additionally, Bacen issued CMN Resolution No. 3,533/2008, which became effective in January 2012 and

established procedures for classification, accounting and disclosure of sale and transfer transactions related to

financial assets. This Resolution establishes the criteria for the derecognition of financial assets as specified in the

CPC 38 – Financial instruments: recognition and measurement.

The Bank has also applied the following pronouncements which do not conflict with the Bacen rules, as established

by article 22, paragraph 2 of Law 6,385/1976: CPC 09 – Value Added Statement, CPC 12 – Adjustment at Present

Value, CPC 22 – Information by Segment, CPC 36 (R3) – Consolidated Financial Statements and CPC 41 – Income

per Share.

The application of other standards, which depend on Bacen’s regulations, results primarily in immaterial adjustments

or in changes in disclosure, except the following pronouncements, that may result in significant impacts on the

financial statements:


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CPC 04 (R1) – Intangible assets and CPC 15 (R1) - Business combinations - a) reclassification of intangible assets

identified in the acquisition of the equity interest in Banco Votorantim, in 2009, as well as in acquisition of controlling

interest of Banco Patagonia, in 2011, and of BB Americas, in 2012, from the investment account to the account of

Intangible assets, in the group of Non-current assets – permanent; b) derecognition of goodwill amortization

expenses from acquisitions; and c) recognition of amortization expenses of intangible assets with definite useful lives,

identified in the acquisitions.

CPC 18 (R2) – Investments in associates and joint ventures – a) recording at fair value of the equity interests

received in the partnership of the formation of the joint ventures BB Mapfre SH1 and SH2, on June 30, 2011; b) write-

off of the book value of the assets contributed by the Bank including any goodwill; and, c) recognition of the result of

the transaction in the new constituted companies by the proportion of the equity interest.

CPC 38 - Financial instruments: recognition and measurement - adjustment in the allowance for loan losses, due to

the adoption of the incurred loss criteria instead of the expected loss criteria.

These financial statements were approved by the Executive Board of Directors on August 08, 2016.


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a) Equity interest included in the consolidated financial statements, segregated by business segments:

Activity Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

% of Total Share

Banking Segment

Banco do Brasil - AG Banking 100.00% 100.00% 100.00%

BB Leasing Company Ltd. Leasing 100.00% 100.00% 100.00%

BB Leasing S.A. - Arrendamento Mercantil Leasing 100.00% 100.00% 100.00%

BB Securities Asia Pte. Ltd. Broker 100.00% 100.00% 100.00%

Banco do Brasil Securities LLC. Broker 100.00% 100.00% 100.00%

BB Securities Ltd. Broker 100.00% 100.00% 100.00%

BB USA Holding Company, Inc. Holding 100.00% 100.00% 100.00%

Brasilian American Merchant Bank Banking 100.00% 100.00% 100.00%

Banco do Brasil Americas Banking 100.00% 100.00% 100.00%

Besc Distribuidora de Títulos e Valores Mobiliários S.A. Asset Management 99.62% 99.62% 99.62%

Banco Patagonia S.A. Banking 58.97% 58.96% 58.96%

Investment Segment

BB Banco de Investimento S.A. Investment Bank 100.00% 100.00% 100.00%

Segment of Fund Management

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

Asset Management 100.00% 100.00% 100.00%

Segment of Insurance, Private Pension Fund and Capitalization

BB Seguridade Participações S.A. (1)

Holding 66.36% 66.25% 66.25%

BB Cor Participações S.A. (1)

Holding 66.36% 66.25% 66.25%

BB Corretora de Seguros e Administradora de Bens S.A. (1)

Broker 66.36% 66.25% 66.25%

BB Seguros Participações S.A. (1)

Holding 66.36% 66.25% 66.25%

Segment of Payment Methods

BB Administradora de Cartões de Crédito S.A. Service Rendering 100.00% 100.00% 100.00%

BB Elo Cartões Participações S.A. Holding 100.00% 100.00% 100.00%

Other Segments

Ativos S.A. Securitizadora de Créditos Financeiros Credits Acquisition 100.00% 100.00% 100.00%

Ativos S.A. Gestão de Cobrança e Recuperação de Crédito Credits Acquisition 100.00% 100.00% 100.00%

BB Administradora de Consórcios S.A. Consortium 100.00% 100.00% 100.00%

BB Tur Viagens e Turismo Ltda. (2)

Tourism 100.00% 100.00% 100.00%

BB Asset Management Ireland Limited Credits Acquisition 100.00% 100.00% 100.00%

BB Tecnologia e Serviços S.A. IT 99.97% 99.97% 99.97%

(1) Refers to the percentage of the equity interest, considering the acquisition of shares by the invested entity held in treasury.

(2) The financial statements refers to May/2016.

b) Information for comparability purposes

On June 30, 2015, the Bank prepared its consolidated financial statements including the assets, liabilities, income

and expenses of joint ventures proportionally to the direct or indirect equity interest held in each of them, according to

article 3 from CMN Resolution No. 2,723/2000, revoked by CMN Resolution No. 4,403/2015. The consolidated

financial statements also included the assets, liabilities, income and expenses of some associates determined by

Bacen.

Considering this revocation, from Dec 31, 2015, the consolidated financial statements started to be prepared in

accordance with article 249 from Law 6,404/1976 and with CPC 36 (R3) – Consolidated financial statements,

including the assets, liabilities, income and expenses of Banco do Brasil and its controlled entities.

According to CPC 19 (R2) – Joint Arrangements, it is required to use the equity method, and the option for

proportional consolidation method of joint ventures is not allowed.

O CPC 36 (R3) was applied retrospectively, considering certain simplifications contained in the transitional rules of

that pronouncement and in accordance with CPC 23 - Accounting policies, changes in accounting estimates and

errors. The Bank recorded its investments in associates and joint ventures using the equity method from the earliest

period presented. The initial investment was measured as the sum of the book value of the assets and liabilities that

the Bank had previously proportionally consolidated, including any goodwill.

So the balance amounts and the results related to June 30, 2015 are being presented again retrospectively,

considering the exclusion of equity interests listed below, which started being consolidated by the equity method.


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Equity interest not included in the consolidated financial statements, segregated by business segments

Activity Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

% of Total Share

Banking Segment

Banco Votorantim S.A. Banking 50.00% 50.00% 50.00%

Investment Segment

Kepler Weber S.A. Industry 17.45% 17.46% 17.46%

Companhia Brasileira de Securitização - Cibrasec Credits Acquisition 12.12% 12.12% 12.12%

Neoenergia S.A. Energy 11.99% 11.99% 11.99%

Segment of Insurance, Private Pension Fund and Capitalization

BB Mapfre SH1 Participações S.A. (1)

Holding 49.77% 49.68% 49.68%

Brasildental Operadora de Planos Odontológicos S.A. (1)

Service Rendering 49.77% 49.68% 49.68%

Companhia de Seguros Aliança do Brasil (1)

Insurance Company 49.77% 49.68% 49.68%

Mapfre Vida S.A. (1)


Brasilprev Seguros e Previdência S.A. (1)

Pension/Insurance 49.77% 49.68% 49.68%

Brasilcap Capitalização S.A. (1)

Capitalization 44.24% 44.16% 44.16%

Mapfre BB SH2 Participações S.A. (1)

Holding 33.18% 33.13% 33.13%

Aliança do Brasil Seguros S.A. (1)


Brasilveículos Companhia de Seguros (1)


Mapfre Seguros Gerais S.A. (1)


BB Mapfre Assistência S.A. (1)


Votorantim Corretora de Seguros S.A. Broker 50.00% 50.00% 50.00%

Seguradora Brasileira de Crédito à Exportação - SBCE Insurance Company 12.09% 12.09% 12.09%

IRB - Brasil Resseguros S.A. (1)

Reinsurer 13.61% 13.53% 13.53%

Segment of Payment Methods

Cateno Gestão de Contas de Pagamento S.A. (2)


Elo Participações S.A. Holding 49.99% 49.99% 49.99%

Companhia Brasileira de Soluções e Serviços CBSS - Alelo Service Rendering 49.99% 49.99% 49.99%

Elo Serviços S.A. Service Rendering 33.33% 33.33% 33.33%

Cielo S.A. (1)


Tecnologia Bancária S.A. - Tecban Service Rendering 12.52% 12.52% 12.52%

(1) Refers to the percentage of the equity interest, considering the acquisition of shares by the invested entity held in treasury.

(2) Refers to the percentage of the equity interest, considering the participation of Cielo S.A. and BB Elo Cartões Participações S.A. in the Institution.


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The effects of CPC 36 (R3) application on the consolidated financial statements are presented below.

Restated balance sheet

Jun 30, 2015

Original report Adjustments Restated balances

CURRENT ASSETS and LONG-TERM RECEIVABLES 1,512,672,311 (173,477,518) 1,339,194,793

Cash and cash equivalents 17,055,612 (464,524) 16,591,088

Short-term interbank investments 357,324,998 (6,149,730) 351,175,268

Securities and derivative financial instruments 239,571,251 (127,757,912) 111,813,339

Interbank accounts 65,798,457 (29,430) 65,769,027

Loan operations and leasing transactions 631,833,425 (23,129,779) 608,703,646

Other receivables 196,970,285 (12,317,341) 184,652,944

Other assets 4,118,283 (3,628,802) 489,481

PERMANENT ASSETS 21,191,933 10,580,879 31,772,812

Investments 3,376,636 11,672,894 15,049,530

Property and equipment 7,506,995 (517,002) 6,989,993

Intangible 10,275,170 (563,611) 9,711,559

Deferred 33,132 (11,402) 21,730

TOTAL ASSETS 1,533,864,244 (162,896,639) 1,370,967,605

CURRENT LIABILITIES and LONG-TERM LIABILITIES 1,450,793,081 (162,882,553) 1,287,910,528

Deposits 445,630,582 (1,301,142) 444,329,440

Securities sold under repurchase agreements 352,872,322 (11,643,172) 341,229,150

Funds from acceptance and issuance of securities 200,713,842 (12,307,382) 188,406,460

Interbank accounts 3,343,102 (491) 3,342,611

Interdepartmental accounts 3,276,724 (28,164) 3,248,560

Borrowings 26,536,758 (3,462,843) 23,073,915

Domestic onlending - official institutions 91,876,646 (1,844,846) 90,031,800

Foreign onlending 477 -- 477

Derivative financial instruments 3,637,799 (823,832) 2,813,967

Other liabilities 322,904,829 (131,470,681) 191,434,148

DEFERRED INCOME 428,476 (14,086) 414,390

SHAREHOLDERS' EQUITY 82,642,687 -- 82,642,687

TOTAL LIABILITIES 1,533,864,244 (162,896,639) 1,370,967,605


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Restated statement of income

2nd quarter/2015 Original report Adjustments Restated balances

INCOME FROM FINANCIAL INTERMEDIATION 38,894,865 (2,937,510) 35,957,355

Loan operations 23,508,802 (1,431,471) 22,077,331

Leasing transactions 172,243 (77,492) 94,751

Securities 12,648,350 (547,093) 12,101,257

Derivative financial instruments (400,538) 48,526 (352,012)

Foreign exchange results 363,707 (210) 363,497

Compulsory investments 1,194,917 -- 1,194,917

Operations of sale and transfer of financial assets 116,566 361,048 477,614

Financial income from insurance, pension plans and capitalization 1,290,818 (1,290,818) --

EXPENSES FROM FINANCIAL INTERMEDIATION (30,503,202) 1,735,139 (28,768,063)

Deposits and securities sold under repurchase agreements (24,803,740) 767,098 (24,036,642)

Borrowings and onlendings 915,269 (308,969) 606,300

Leasing transactions (134,431) 79,489 (54,942)

Operations of sale and transfer of financial assets (9,429) 853 (8,576)

Financial expenses from technical provisions of insurance, pension plans and capitalization

(857,186) 857,186 --

Allowance for loan losses (5,613,685) 339,482 (5,274,203)


OTHER OPERATING INCOME/EXPENSES (3,231,255) 448,071 (2,783,184)

Service fee income 4,667,972 (1,025,303) 3,642,669

Bank fee income 1,790,786 (59,763) 1,731,023

Personnel expenses (5,516,392) 402,541 (5,113,851)

Other administrative expenses (4,068,060) 437,408 (3,630,652)

Tax expenses (1,482,432) 285,087 (1,197,345)

Equity in associates and subsidiaries (228,301) 1,525,821 1,297,520


Other operating income 2,603,212 (354,682) 2,248,530

Other operating expenses (2,644,297) 883,219 (1,761,078)

OPERATING INCOME 5,160,408 (754,300) 4,406,108

NON-OPERATING INCOME (1,943) 70,228 68,285

Incomes 41,361 46,259 87,620

Expenses (43,304) 23,969 (19,335)

PROFIT BEFORE TAXATION AND PROFIT SHARING 5,158,465 (684,072) 4,474,393

INCOME TAX AND SOCIAL CONTRIBUTION (1,244,891) 635,476 (609,415)

EMPLOYEE AND DIRECTORS PROFIT SHARING (428,188) 48,596 (379,592)

NON-CONTROLLING INTERESTS (477,828) -- (477,828)

NET INCOME 3,007,558 -- 3,007,558


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1st half/2015 Original report Adjustments Restated balances


Loan operations 52,830,745 (3,155,012) 49,675,733

Leasing transactions 429,698 (221,969) 207,729

Securities 29,621,658 (1,157,783) 28,463,875

Derivative financial instruments 502,832 (242,893) 259,939

Foreign exchange results 787,703 (119,026) 668,677

Compulsory investments 2,385,406 -- 2,385,406

Operations of sale and transfer of financial assets 246,360 705,627 951,987


EXPENSES FROM FINANCIAL INTERMEDIATION (76,072,690) 6,362,852 (69,709,838)

Deposits and securities sold under repurchase agreements (48,360,270) 2,364,208 (45,996,062)

Borrowings and onlendings (14,160,936) 1,467,612 (12,693,324)

Leasing transactions (348,154) 221,702 (126,452)

Operations of sale and transfer of financial assets (30,372) 15,061 (15,311)

Financial expenses from technical provisions of insurance, pension plans and capitalization

(1,610,341) 1,610,341 --

Allowance for loan losses (11,562,617) 683,928 (10,878,689)

INCOME FROM FINANCIAL INTERMEDIATION 13,244,507 (340,999) 12,903,508

OTHER OPERATING INCOME/EXPENSES (5,881,914) (944,546) (6,826,460)

Service fee income 9,322,191 (1,845,507) 7,476,684

Bank fee income 3,446,032 (125,942) 3,320,090

Personnel expenses (10,705,821) 846,268 (9,859,553)

Other administrative expenses (8,190,026) 822,528 (7,367,498)

Tax expenses (3,327,988) 544,606 (2,783,382)

Equity in associates and subsidiaries 1,479,502 815,460 2,294,962


Other operating income 5,743,038 (1,005,829) 4,737,209

Other operating expenses (6,448,577) 1,803,605 (4,644,972)

OPERATING INCOME 7,362,593 (1,285,545) 6,077,048

NON-OPERATING INCOME 5,768,618 71,585 5,840,203

Incomes 5,885,754 17,034 5,902,788

Expenses (117,136) 54,551 (62,585)

PROFIT BEFORE TAXATION AND PROFIT SHARING 13,131,211 (1,213,960) 11,917,251

INCOME TAX AND SOCIAL CONTRIBUTION (2,229,074) 1,127,593 (1,101,481)

EMPLOYEE AND DIRECTORS PROFIT SHARING (1,193,497) 86,367 (1,107,130)

NON-CONTROLLING INTERESTS (882,732) -- (882,732)

NET INCOME 8,825,908 -- 8,825,908

Restated statement of cash flows


CASH PROVIDED BY OPERATING ACTIVITIES 8,865,091 (3,075,818) 5,789,273

CASH USED IN BY INVESTING ACTIVITIES (2,207,512) 6,678 (2,200,834)

CASH PROVIDED BY FINANCING ACTIVITIES 1,999,861 (289,921) 1,709,940

Increase (Decrease) in cash and cash equivalents 8,657,440 (3,359,061) 5,298,379


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Restated statement of value added


Income 97,971,663 (9,816,778) 88,154,885

Expenses from financial intermediation (64,510,073) 5,678,924 (58,831,149)

Inputs purchased from third parties (4,854,041) 546,161 (4,307,880)

Gross added value 28,607,549 (3,591,693) 25,015,856

Depreciation and amortization (2,234,956) 117,187 (2,117,769)

Value added produced by entity 26,372,593 (3,474,506) 22,898,087

Value added received through transfer 1,479,502 815,460 2,294,962

Added value to distribute 27,852,095 (2,659,046) 25,193,049

Value added distributed 27,852,095 (2,659,046) 25,193,049

Personnel 10,565,669 (846,689) 9,718,980

Taxes, rates and contributions 6,890,711 (1,758,146) 5,132,565

Interest on third parties' capital 687,075 (54,211) 632,864

Interest on own capital 9,708,640 -- 9,708,640

- DESCRIPTION OF SIGNIFICANT ACCOUNTING POLICIES 4

The accounting policies adopted by Banco do Brasil are applied consistently in all periods presented in these

financial statements and applied to all the entities of the Conglomerate.

) Statement of income a

In accrual basis accounting, revenues and expenses are reported in the closing process of the period in which they

are incurred, regardless of receipt or payment. The operations with floating rates are adjusted pro rata die, based on

the variation of the indexes agreed, and operations with fixed rates are recorded at future redemption value, adjusted

for the unearned income or prepaid expenses for future periods. The operations indexed to foreign currencies are

converted at the reporting date using current rates.

) Present value measurement b

Financial assets and liabilities are presented at present value due to the application of the accrual basis in the

recognition of their interest income and expenses.

Non-contractual liabilities are primarily represented by provisions for lawsuit and legal obligations, for which the

disbursement date is uncertain and is not under the Bank's control. They are measured at present value because

they are initially recognized at estimated disbursement value on the valuation date and are updated monthly.

) Cash and cash equivalents c

Cash and cash equivalents comprise available funds in local currency, foreign currency, investments in gold,

investments in repurchase agreements – own resources, interbank deposits and investments in foreign currencies,

with high liquidity and insignificant risk of change in fair value, with maturity at time of acquisition not exceeding 90

days.

) Short-term interbank investments d

Short-term interbank investments are recorded at their investment or acquisition amount, plus income accrued up to

the balance sheet date and adjustments for allowance for losses.

) Securities e

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 one of three categories, according to Bacen

Circular 3,068/2001:


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Trading Securities: these are securities purchased to be actively and frequently traded. They are adjusted monthly to

market value. The 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 Accumulated other comprehensive income in Shareholders' equity; and

Securities held to maturity: these are securities that the Bank owns and has the financial capacity and intent to hold

to maturity. These securities are not adjusted to market value. The Bank's financial capacity to hold to maturity 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 indicative price reported by

Anbima, or relationship between the unit price and the latest business value in the last 30 day, or the net expected

realizable value obtained through pricing models, using credit risk curves, future values of interest rates, foreign

exchange rates, price and currency indices, and similar financial instruments.

Income accrued on the securities, irrespective of the category in which they are classified, is appropriated on a pro

rata die basis on an accrual basis until the date of maturity or final sale, using the cumulative or straight-line method,

based on the contractual remuneration and purchase price, and recorded directly in the statement of income for the

period.

Impairment of 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.

) Derivative financial instruments f

Derivative financial instruments are adjusted to market value at each monthly trial balance and balance sheet date.

Increases or decreases in value are recorded in the appropriate income or expense accounts.

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, or the price of a similar financial instrument, considering at

least, the payment or maturity date, the credit risk and currency or index.

Derivative financial instruments used to offset, in whole or in part, the risks arising from exposure to variations in the

market value or asset cash flow or financial liabilities, commitment or future transaction, 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/expense 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 Accumulated other comprehensive income in

Shareholders' equity. 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 the hedge, considering the

accumulated effect of the transaction. Other variations in these instruments are recorded directly in the statement of

income for the period.


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) Loan and leasing operations, advances on foreign exchange contracts, other receivables with gloan 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 2,682/1999, 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. For atypical transactions with a term of more than 36 months, there is a double

counting on the days-past-due intervals defined for the nine levels of risk, as permitted by CMN Resolution

2,682/1999.

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 on the date of

renegotiation. The renegotiations of loans already written off against the allowance are rated as H level and any gains

from renegotiation are recognized as income when effectively received. Reclassification to a lower risk category is

allowed when there is significant amortization of the operation or when new material facts justify a change in risk

level, according to CMN Resolution 2,682/1999.

Allowance for loan losses, considered sufficient by management, satisfies the minimum requirement established by

the aforementioned CMN Resolution 2,682/1999 (Note 10.e).

) Taxes h

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

Taxes Rate

Income tax (15.00% + additional 10.00%) 25.00%

Social Contribution on Net Income (CSLL) (1)

20.00%

Social Integration Program/Public servant fund program (PIS/Pasep) (2)

0.65%

Contribution to Social Security Financing - (Cofins) (2)

4.00%

Tax on services of any kind - (ISSQN) Up to 5.00%

(1) Rate applied to financial companies and to non-financial companies in the areas of private insurance and capitalization, since September 01, 2015 (the rate was 15% until August 31, 2015). In January 2019, the rate will return to 15%. For others non-financial companies, the CSLL rate is 9%.

(2) For non-financial companies that have opted for the non-cumulative regime of calculation, the PIS/PASEP rate is 1.65% and the 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 the recording, maintaining and writing-off of deferred tax assets, the Bank follows the

established criteria by CMN Resolution 3,059/2002, amended by Resolutions CMN No. 3,355/2006, CMN 4,192/2013

and CMN 4,441/2015 and they are supported by a study of their realizability. Tax credits resulting from the increase

of the social contribution rate from 15% to 20% are being recognized in an amount sufficient for consumption by the

end of the term of the new rate (December 31, 2018), according to Law 13,169/2015.

) Prepaid expenses i

These expenses refer to the application of 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 incurred.

) Permanent assets j

Investments: investments in subsidiaries and associates in which the Bank has significant influence or an 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 accounted for by the equity method based on the Shareholders’ equity of the subsidiary or associates.


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In the consolidated financial statements, the subsidiaries are fully consolidated and the associates and joint ventures

are presented under the equity method.

Goodwill, the premium paid over the book value of the investment acquired due to expectations of future profitability,

is based on a financial-economic assessment which substantiate the purchase price of the business and is amortized

based on annual income projections as per the assessment. 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 2,397/1993 and

2,571/1995, and their impacts are recorded in the statement of income for the period.

Other permanent investments are valued at acquisition cost, less allowance for impairment losses, as 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 systems

- 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 restructuring costs, and the expenditures, up to September 30, 2008, with: third party properties,

as a result of opening branches, which are amortized according to rates based on rental terms, limited to 10 years;

and with the acquisition and development of information systems, which are amortized at 10% per annum (p.a.). New

values are not recorded in deferred assets, in accordance with Resolution CMN 3,617/2008. New values are not

recorded in deferred assets, in accordance with Resolution CMN 3,617/2008.

Intangible: intangible assets consist of rights over intangible assets used in the running of the Bank, including

acquired goodwill.

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.

Intangible assets with finite useful lives compromise: disbursements for the acquisition of rights to provide banking

services (rights to managing payrolls), amortized over the terms of contracts; goodwill paid on the acquisition of

merged company (Banco Nossa Caixa), amortized based on projections of annual results set in the economic-

financial study; software, amortized on a straight-line basis at a rate of 10% per year from the date it is available for

use. Intangible assets are adjusted by allowance for impairment losses, if applicable (Note 16). The amortization of

intangible assets is recorded in the Other administrative expenses account.

) Impairment of non-financial assets k

At the end of each reporting period, the Bank assesses whether there is any indication that a non-financial asset may

be impaired based on internal and external sources of information. If there is an indication that an asset may be

impaired, the Bank estimates the recoverable amount of the asset. The recoverable amount of the asset is the higher

of: i) its fair value less costs to sell it; and ii) its value in use.

The Bank tests, at least annually, the recoverable amount of intangible assets not yet available for use and goodwill

on acquisition of investments, regardless whether there is an indication of impairment or not. This test can be applied

any time during the year, provided it is performed at the same period every year.

If the recoverable amount of the asset is less than its carrying amount, the asset's carrying amount is reduced to its

recoverable amount through a provision for impairment, which is recognized in the Income statement.


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Methodologies in assessing the recoverable amount of the main non-financial assets:

Property and equipment in use

Land and buildings - in determining the recoverable amount of land and buildings, technical assessments are carried

out in accordance with the rules of the Brazilian Association of Technical Standards - ABNT.

Data processing systems - in determining the recoverability, the market value is considered, if it is available, or the

recoverable value for use in the operations of the Bank. Otherwise the calculation considers the projection of cash

flows arising from the use of each asset during its useful life, discounted to present value based on the rate of the

Interbank Deposit Certificate - CDI.

Other assets - although they are subject to impairment testing, other assets have little value individually and, given

the cost-effectiveness, the Bank does not assess the recoverable value of these items individually. However, the

Bank conducts inventory each year, and lost or damaged goods are properly derecognized.

Investments and goodwill on acquisition of investments

The methodology for calculating the recoverable amount of goodwill and investments for future profitability consists of

measuring the expected result of the investment using discounted cash flow (DCF). To measure this result, the

assumptions made are based on (i) operational projections, results and investment plans, (ii) macroeconomic

scenarios developed by the Bank, and (iii) internal methodology for calculating the cost of capital based on the

Capital Asset Pricing Model - CAPM.

Intangible

Rights to Managing Payrolls - The model for assessing the recoverable amount of the rights to managing payroll

involves monitoring contracts performance, that are calculated from the contribution margins of customer relationship

related to each contract in order to check if the projections that justified the acquisition of assets match the observed

performance. For the contracts that do not achieve the expected performance levels, a provision for impairment loss

is recognized.

Software - Software, substantially developed by the Bank in accordance with its needs, constantly receives

investments for modernization and adaptation to new technologies and business requirements. Considering that

there are no similar products on the market and considering the high cost to deploy metrics that allow calculation of

its value in use, the impairment test for software evaluates its usefulness to the company so that when software is

retired, its value is derecognized.

Goodwill on acquisition of merged company - The methodology for calculating the recoverable amount of goodwill on

the acquisition of Banco Nossa Caixa, merged into Banco do Brasil in November 2009, is to compare the value of the

goodwill paid, less the accumulated amortization, with the present value of the results of the Bank estimated for the

state of São Paulo, discounting the assets with finite useful lives. The projections are derived from the observed

results and assumptions of profitability growth for the Bank and are discounted at the rate of cost of capital calculated

using an internal methodology, based on Capital Asset Pricing Model – CAPM.

The losses recorded in the Statement of Income to adjust the recoverable value of these assets, if any, are stated in

the respective notes.

) Employee benefits l

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 benefits and medical

assistance for which the Bank is responsible, are assessed in accordance with criteria established by CPC 33 (R1) -

Employee benefits, approved by CVM Resolution 695/2012 (Note 26) and by the Resolution CMN 4,424/2015. The

evaluations are performed semiannually.


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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 the register of a liability when the amount of the actuarial

obligation 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 will be refundable in the future.

The Bank recognizes the components of defined benefit cost in the period in which the actuarial valuation was

performed, in accordance with criteria established by CPC 33 (R1) -Employee benefits, as follows:

the current service cost and the net interest on the net defined benefit liability (asset) are recognized in profit or loss; and

the remeasurements of the net defined benefit liability (asset) are recognized in other comprehensive income, in the Bank’s equity, net of tax effects.

Contributions to be paid by the Bank to medical assistance plans in some cases will continue after the employee’s

retirement. Therefore, the Banks obligations are evaluated by the present actuarial value of the contributions to be

paid over the expected period in which the plan participants and beneficiaries will be covered by the plan. Such

obligations are evaluated and recognized under the same criteria used for defined benefit plans.

) Deposits and securities sold under repurchase agreements m

Deposits and securities sold under repurchase agreements are recorded at the amount of the liabilities and include,

when applicable, related charges up to the balance sheet date, on a daily pro rata die basis.

) Provisions, contingent assets and liabilities and legal obligations n

The recognition, measurement and disclosure of provisions, contingent assets and liabilities and legal obligations are

made in accordance with the criteria defined by CPC 25 – Provisions, Contingent Assets and Contingent Liabilities,

approved by CMN Resolution 3,823/2009 (Note 27).

Contingent assets are not recognized in the financial statements however when there is evidence assuring 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, are recognized as assets.

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 the obligation and when the amounts involved are measurable with sufficient

assurance, being quantified when judicial noticed and revised monthly as follows:

Aggregated Method: cases that are similar and recurring in nature and whose values are not considered relevant.

Provisions are based on statistical data. It covers civil, tax or labor judicial proceedings (except labor claims filed by

trade unions and all proceedings classified as strategic) with probable value of award, estimated by legal advisors, up

to R$ 1 million.

Individual Method: 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 financial statements, they are disclosed

in notes, while those classified as remote do not require provisioning or disclosure.


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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, and have their amounts recognized in full in the financial

statements.

) Debt instrument issue expense o

Expenses related to transactions involving the issue of debt instruments are capitalized and presented as a reduction

of the corresponding liability. The expenses are recognized in the income statement over the term of the transaction.

) Other assets and liabilities p

Other assets are stated at their realizable amounts, including, when applicable, related income and monetary and

exchange variations on a pro rata die basis, and allowance for losses, when deemed appropriate. Other liabilities are

stated at their known and measurable amounts, plus, when applicable, related charges and monetary and exchange

variations on a pro rata die basis.

) Earnings per share q

Earnings per share is disclosed in accordance with CPC 41 – Earnings per Share, approved by Resolution

CVM 636/2010. The Bank's basic and diluted earnings per share were calculated by dividing the net profit attributable

to shareholders by the weighted average number of total common shares, excluding treasury shares (Note 23.f). The

Bank has no outstanding options, bonus of subscription nor its equivalents which provide their holders the right to

acquire shares. Thus, the basic and diluted earnings per share are equal.

- INFORMATION BY SEGMENT 5

The segment information were prepared based on the criteria applied by the chief operating decision maker in

assessing performance, in deciding how to allocate resources for investment and other purposes, also considering

the regulatory environment and the similarities between goods and services. These information are prepared based

on internal management reports (Management Information), which are reviewed regularly by Management.

The accounting practices adopted in the Management Information are different from those presented in the

description of significant accounting policies of BB-Consolidated (Note 4.j) because the investments in joint ventures

are consolidated proportionally to the holdings by the Bank.

The Bank's operations are mainly made in Brazil. They 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 business activities, such as consortium and other services, that were aggregated in

"Other Segments".

The measurement of managerial income and of managerial assets and liabilities by segment takes into account all

income and expenses as well as all assets and liabilities recorded by the companies that comprise each segment, as

presented in Note 3. There are no common income or expenses nor common assets or liabilities allocated between

the segments, for any distribution criteria.

Transactions between segments are eliminated in the column “Intersegment transactions”. They are conducted under

terms and rates consistent with those applied with third parties, when applicable. These transactions do not involve

payment risks.

Revenues from transactions with a single customer does not amount to ten percent or more of the Bank’s revenues.

) Banking segment a

Responsible for the most significant portion of Banco do Brasil results, predominantly from operations in Brazil, this

segment 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.


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The operations of the banking segment include business with the retail, wholesale and government markets, carried

out through the branch network and customer service teams, and business with micro-entrepreneurs and the with the

low income population, undertaken through banking correspondents.

) Investments segment b

Responsible for operations in the domestic capital markets, being active in the intermediation and distribution of

debts in the primary and secondary markets, as well as being responsible for equity investments and the rendering of

some financial services.

The income from financial intermediation of this segment is a result of the revenues accrued on investments in

securities less the interest expenses on funding from third parties. The principal equity investments are those in the

associates and subsidiary companies. Financial service fee income is derived from economic/financial advisory

services and the underwriting of fixed and variable income.

) Fund management segment c

Responsible for operations inherent to the purchase, sale and custody of securities, portfolio management, and

management of investment funds and clubs. Revenues mainly derived from commissions and management fees

charged to investors for services rendered.

) Insurance, pension, and capitalization segment d

In this segment, the products and services offered are related to life, property and automobile insurance,

complementary private pension plans and capitalization plans.

Income is derived 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.

) Payment methods segment e

This segment is responsible for the funding, transmission, processing and settlement of operations via electronic

means.

Revenues are derived mainly from commissions and management fees charged to commercial and banking

establishments for the services rendered, as well as income from rent, installation and maintenance of electronic

terminals.

) Other segments f

Other segments comprise the consortium and other services segments, which have been aggregated as they are not

individually significant.

Their revenues are originated mainly from rendering 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; and intermediation of air

tickets, lodging and organization of events.


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) Breakdown of managerial income by segment g

1st half/2016

Banking Investments Fund Management Insurance,

pension and capitalization

Payment methods Other segments Intersegment transactions

Management information

Income from financial intermediation 75,764,537 (49,087) 39,936 3,249,378 176,150 73,229 (334,952) 78,919,191

Income from loans and leases 47,880,584 -- -- -- -- -- (96,390) 47,784,194

Loans and discounted securities 29,725,876 -- -- -- -- -- (4,786) 29,721,090

Financing 10,130,359 -- -- -- -- -- -- 10,130,359

Leasing 223,018 -- -- -- -- -- -- 223,018

Other 7,801,331 -- -- -- -- -- (91,604) 7,709,727

Securities 24,675,779 (28,686) 39,936 68,991 176,150 73,071 (282,034) 24,723,207

Interbank investments 21,603,289 747 40,081 -- -- 19,553 (273,220) 21,390,450

Fixed-income securities 7,932,652 5,249 431 68,991 176,150 39,633 911 8,224,017

Variable-income securities (4,860,162) (34,682) (576) -- -- 13,885 (9,725) (4,891,260)

Derivative financial instruments (1,613,697) (20,401) -- -- -- -- -- (1,634,098)

Income from exchange operations and compulsory deposits 4,298,036 -- -- -- -- 158 (22) 4,298,172

Operations of sale and transfer of financial assets 523,835 -- -- -- -- -- -- 523,835

Financial results from insurance, pension and capitalization operations -- -- -- 3,180,387 -- -- 43,494 3,223,881

Expenses from financial intermediation (59,535,839) (220,138) (9) (2,193,512) (56) (58,164) 413,922 (61,593,796)

Expenses of market funding (55,256,241) (212,846) -- -- -- (58,512) 368,455 (55,159,144)

Deposits (18,073,827) (212,846) -- -- -- -- 221,907 (18,064,766)

Securities sold under repurchase agreements (23,510,811) -- -- -- -- -- 146,450 (23,364,361)

Acceptance and issuance of securities (12,053,109) -- -- -- -- (50,200) 98 (12,103,211)

Subordinated debt abroad and equity and debt hybrid securities (1,247,649) -- -- -- -- -- -- (1,247,649)

Other (370,845) -- -- -- -- (8,312) -- (379,157)

Loans, assignments, onlending and leases 10,342,799 -- -- -- -- -- 45,467 10,388,266

Allowance/reversal for loan losses (14,594,353) (7,292) (9) -- (56) 348 -- (14,601,362)

Operations of sale and transfer of financial assets (28,044) -- -- -- -- -- -- (28,044)

Interest and inflation adjustment of technical reserves -- -- -- (2,193,512) -- -- -- (2,193,512)

Other income 14,993,125 591,896 811,796 3,705,419 3,017,277 1,227,605 (1,095,654) 23,251,464

Income from service fees 5,265,437 338,021 590,836 1,119,196 2,561,290 742,738 (783,755) 9,833,763

Card income 80,415 -- -- -- 2,505,241 -- -- 2,585,656

Fund management 1,197,637 -- 517,584 678,339 -- 897 (4,027) 2,390,430

Insurance, pension and capitalization 78,580 -- -- 423,340 -- -- -- 501,920

Other 3,908,805 338,021 73,252 17,517 56,049 741,841 (779,728) 4,355,757

Income from fees, rates and commissions 3,933,039 24,556 213,747 -- -- -- -- 4,171,342

Equity in the earnings/(loss) of subsidiaries and associates 4,085 (10,788) -- 113 (62,835) 147 -- (69,278)

Results from insurance, pension plan and capitalization operations -- -- -- 2,377,213 -- -- 130,192 2,507,405

Other 5,790,564 240,107 7,213 208,897 518,822 484,720 (442,091) 6,808,232

Other expenses (26,915,437) (268,037) (147,956) (1,314,287) (1,820,754) (784,762) 1,016,684 (30,234,549)

Personnel expenses (10,571,310) (37,623) (42,650) (272,287) (155,476) (180,577) 4,318 (11,255,605)

Other administrative expenses (5,943,207) (35,330) (26,336) (356,793) (304,830) (155,235) 738,419 (6,083,312)

Amortization (1,626,451) (54,630) -- (55,196) (74,476) (1,071) -- (1,811,824)

Depreciation (566,901) (1,556) -- (9,357) (59,803) (5,136) -- (642,753)

Tax expenses (2,563,488) (25,014) (55,936) (377,546) (295,076) (113,631) 3,999 (3,426,692)

Other (5,644,080) (113,884) (23,034) (243,108) (931,093) (329,112) 269,948 (7,014,363)

Profit before tax and profit sharing 4,306,386 54,634 703,767 3,446,998 1,372,617 457,908 -- 10,342,310

Income tax and social contribution (1,730,917) (15,597) (316,248) (1,346,300) (476,051) (115,412) -- (4,000,525)

Profit sharing (671,043) -- (421) (17,950) (83) (1,103) -- (690,600)

Non-controlling interests (139,967) -- -- (687,118) -- (1) -- (827,086)

Net income 1,764,459 39,037 387,098 1,395,630 896,483 341,392 -- 4,824,099


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47

1st half/2015




Total

Income from financial intermediation 86,714,576 86,931 36,238 2,475,820 107,168 51,135 (154,671) 89,317,197

Income from loans and leases 53,290,590 -- -- -- -- -- (30,147) 53,260,443

Loans and discounted securities 26,519,025 -- -- -- -- 16,870 (17,544) 26,518,351

Financing 20,279,975 -- -- -- -- -- (41) 20,279,934

Leasing 429,698 -- -- -- -- -- -- 429,698

Other 6,061,892 -- -- -- -- (16,870) (12,562) 6,032,460

Securities 29,501,716 87,175 36,238 5,509 107,168 50,579 (166,727) 29,621,658

Interbank investments 18,965,424 761 31,966 -- -- 14,751 (190,420) 18,822,482

Fixed-income securities 7,144,174 3,613 6,135 5,509 107,168 2,184 23,693 7,292,476

Variable-income securities 3,392,118 82,801 (1,863) -- -- 33,644 -- 3,506,700

Derivative financial instruments 502,902 (244) -- -- -- 174 -- 502,832

Income from exchange operations and compulsory deposits 3,173,008 -- -- -- -- 382 (281) 3,173,109

Operations of sale and transfer of financial assets 246,360 -- -- -- -- -- -- 246,360

Financial results from insurance, pension and capitalization operations -- -- -- 2,470,311 -- -- 42,484 2,512,795

Expenses from financial intermediation (73,220,959) (150,593) (24) (1,610,341) (286) (22,980) 308,055 (74,697,128)

Expenses of market funding (48,484,137) (142,945) -- -- -- (24,373) 291,185 (48,360,270)

Deposits (15,951,046) (142,945) -- -- -- -- 159,789 (15,934,202)

Securities sold under repurchase agreements (20,268,292) -- -- -- -- -- 151,844 (20,116,448)

Acceptance and issuance of securities (10,635,232) -- -- -- -- (24,373) 255 (10,659,350)


Other (365,930) -- -- -- -- -- (20,703) (386,633)

Loans, assignments, onlending and leases (13,150,398) -- -- -- -- -- 16,870 (13,133,528)

Allowance/reversal for loan losses (11,556,052) (7,648) (24) -- (286) 1,393 -- (11,562,617)


Interest and inflation adjustment of technical reserves -- -- -- (1,610,341) -- -- -- (1,610,341)

Other income 13,594,554 567,515 729,927 3,838,513 8,455,995 1,081,208 (1,128,760) 27,138,952

Income from service fees 5,256,900 345,374 540,498 995,219 2,228,279 684,641 (728,720) 9,322,191

Card income 486,014 -- -- -- 2,130,787 -- -- 2,616,801

Fund management 1,079,820 -- 472,691 536,219 -- -- (3,863) 2,084,867

Insurance, pension and capitalization 76,168 -- -- 452,986 -- -- -- 529,154

Other 3,614,898 345,374 67,807 6,014 97,492 684,641 (724,857) 4,091,369

Income from fees, rates and commissions 3,242,592 19,026 184,414 -- -- -- -- 3,446,032

Equity in the earnings/(loss) of subsidiaries and associates 123,977 (1,655) -- 751 6,587 7,097 -- 136,757

Results from insurance, pension plan and capitalization operations -- -- -- 2,656,473 -- -- 143,262 2,799,735

Other 4,971,085 204,770 5,015 186,070 6,221,129 389,470 (543,302) 11,434,237

Other expenses (25,006,069) (265,219) (137,061) (1,212,075) (2,294,826) (687,936) 975,376 (28,627,810)

Personnel expenses (9,940,522) (33,469) (40,021) (261,624) (141,314) (160,235) 3,929 (10,573,256)

Other administrative expenses (5,842,781) (35,936) (25,784) (366,203) (277,815) (125,614) 719,063 (5,955,070)

Amortization (1,525,536) (47,597) -- (39,300) (47,062) (1,343) -- (1,660,838)

Depreciation (544,765) (1,484) -- (10,144) (13,569) (4,156) -- (574,118)

Tax expenses (2,066,306) (33,175) (50,270) (311,388) (760,624) (106,225) -- (3,327,988)

Other (5,086,159) (113,558) (20,986) (223,416) (1,054,442) (290,363) 252,384 (6,536,540)

Profit before tax and profit sharing 2,082,102 238,634 629,080 3,491,917 6,268,051 421,427 -- 13,131,211

Income tax and social contribution 1,616,177 (71,180) (250,656) (1,265,459) (2,122,462) (135,494) -- (2,229,074)

Profit sharing (1,163,221) -- (1,027) (25,495) (1,635) (2,119) -- (1,193,497)

Non-controlling interests (152,484) -- -- (730,241) -- (7) -- (882,732)

Net income 2,382,574 167,454 377,397 1,470,722 4,143,954 283,807 -- 8,825,908


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) Breakdown of managerial assets and liabilities by segment h

Jun 30, 2016





Current assets and long-term receivables 1,453,685,780 2,365,122 1,033,214 163,234,575 11,487,052 6,759,759 (14,830,445) 1,623,735,057

Cash and cash equivalents 14,110,358 8,447 2,159 202,431 100,512 15,650 (26,883) 14,412,674

Interbank investments 425,578,110 7,756 710,293 2,087,527 1,083,998 362,345 (6,717,661) 423,112,368

Securities 126,970,186 1,086,755 7,436 146,798,715 3,118,771 1,096,622 (2,069,301) 277,009,184

Trading securities 5,600,410 65,686 -- 80,241,202 -- 1,096,622 (312,110) 86,691,810

Securities available for sale 120,435,693 1,021,069 16 57,279,828 3,118,771 -- -- 181,855,377

Securities held to maturity 934,083 -- 7,420 9,277,685 -- -- (1,757,191) 8,461,997

Derivative financial instruments 5,037,846 335,361 -- -- -- -- (1,388) 5,371,819

Interbank and interdepartmental accounts 74,422,459 -- -- -- -- -- -- 74,422,459

Loan operations and leasing transactions, net of allowance for losses 619,004,077 -- -- -- -- 2,642,116 (2,747,819) 618,898,374

Loans and discounted securities 238,484,543 -- -- -- -- 2,642,116 (2,710,563) 238,416,096

Financing 416,407,542 -- -- -- -- -- (37,256) 416,370,286

Other receivables with loan characteristics 664,046 -- -- -- -- -- -- 664,046

Leasing 770,982 -- -- -- -- -- -- 770,982

Allowance for loan losses (37,323,036) -- -- -- -- -- -- (37,323,036)

Loan operations (37,246,896) -- -- -- -- -- -- (37,246,896)

Other receivables and leasing transactions (76,140) -- -- -- -- -- -- (76,140)

Other receivables 187,799,452 910,190 312,798 9,675,294 7,158,094 2,582,080 (3,266,947) 205,170,961

Other assets 763,292 16,613 528 4,470,608 25,677 60,946 (446) 5,337,218

Permanent assets 28,599,643 4,954,369 23,681 721,587 982,370 344,579 (16,168,197) 19,458,032

Investments 13,474,358 4,922,860 23,681 145,467 625,436 282,455 (16,159,707) 3,314,550

Investments in subsidiaries and associates 13,309,976 3,599,969 -- 96,994 648,745 -- (16,159,707) 1,495,977

Other investments 238,185 1,327,642 23,700 61,952 1,264 282,455 -- 1,935,198

Accumulated impairment (73,803) (4,751) (19) (13,479) (24,573) -- -- (116,625)

Property and equipment 7,131,563 19,721 -- 133,354 209,376 56,580 -- 7,550,594

Intangible 7,975,174 11,788 -- 442,766 147,558 5,544 (8,490) 8,574,340

Deferred 18,548 -- -- -- -- -- -- 18,548

TOTAL ASSETS 1,482,285,423 7,319,491 1,056,895 163,956,162 12,469,422 7,104,338 (30,998,642) 1,643,193,089

Current liabilities and long-term liabilities 1,400,232,132 4,368,077 925,270 157,196,029 5,492,523 3,487,540 (12,414,091) 1,559,287,480

Deposits 442,562,176 3,322,337 -- 402 -- -- (3,492,500) 442,392,415

Securities sold under repurchase agreements 434,528,709 -- -- -- -- -- (5,572,127) 428,956,582

Acceptance and issuance of securities 181,341,908 -- -- -- 904,942 2,796,516 -- 185,043,366


Borrowings 24,166,151 144,244 -- -- 1,193,530 68,448 (105,688) 25,466,685

Onlendings 88,256,084 -- -- -- -- -- -- 88,256,084

Derivative financial instruments 4,947,489 638 -- -- -- -- (1,389) 4,946,738

Other liabilities 218,062,736 900,858 925,270 157,195,627 3,394,051 622,576 (3,242,387) 377,858,731

Technical provisions for insurance, pension plans and capitalization -- -- -- 148,412,362 -- -- (11,461) 148,400,901

Subordinated debts and equity and debt hybrid securities 60,387,745 -- -- -- -- -- -- 60,387,745

Other 157,674,991 900,858 925,270 8,783,265 3,394,051 622,576 (3,230,926) 169,070,085

DEFERRED INCOME 456,717 -- -- -- -- -- (446) 456,271

SHAREHOLDERS' EQUITY 81,596,574 2,951,414 131,625 6,760,133 6,976,899 3,616,798 (18,584,105) 83,449,338

TOTAL LIABILITIES 1,482,285,423 7,319,491 1,056,895 163,956,162 12,469,422 7,104,338 (30,998,642) 1,643,193,089


1st

half 2016


49

Dec 31, 2015





Current assets and long-term receivables 1,409,073,850 2,329,479 1,240,081 146,093,675 12,747,355 7,173,216 (15,830,164) 1,562,827,492

Cash and cash equivalents 18,133,602 7,929 77 180,153 173,296 5,501 (142,051) 18,358,507

Interbank investments 361,260,988 5,516 910,185 1,668,826 525,161 377,959 (6,287,566) 358,461,069

Securities 124,492,021 1,426,399 16,685 129,887,846 3,901,426 621,833 (2,170,536) 258,175,674

Trading securities 9,306,703 85,061 9,638 114,352,196 325,744 467,560 (270,266) 124,276,636

Securities available for sale 111,259,972 1,341,338 21 3,417,303 1,055,790 154,273 (1,900,184) 115,328,513

Securities held to maturity 3,925,346 -- 7,026 12,118,347 2,519,892 -- (86) 18,570,525

Derivative financial instruments 4,637,397 1,278 -- -- 61,268 -- (1,873) 4,698,070


Loan operations and leasing transactions, net of allowance for losses 650,686,508 -- -- -- -- 3,212,445 (3,284,977) 650,613,976


Financing 428,031,499 -- -- -- -- -- (62,953) 427,968,546


Leasing 971,490 -- -- -- -- -- -- 971,490


Loan operations (34,072,735) -- -- -- -- -- -- (34,072,735)



Other assets 760,449 19,632 935 3,782,412 14,994 63,876 (446) 4,641,852

Permanent assets 29,586,286 4,494,814 23,682 704,052 1,078,740 360,083 (15,036,138) 21,211,519

Investments 12,900,909 4,461,766 23,682 250,811 550,904 296,361 (15,036,138) 3,448,295

Investments in subsidiaries and associates 12,718,420 3,209,678 1 196,509 508,230 -- (15,036,138) 1,596,700


Accumulated impairment (72,885) (4,751) (19) (9,501) (308) -- -- (87,464)


Intangible 9,347,037 11,338 -- 339,102 168,921 6,510 -- 9,872,908

Deferred 23,981 -- -- -- -- -- -- 23,981

TOTAL ASSETS 1,438,660,136 6,824,293 1,263,763 146,797,727 13,826,095 7,533,299 (30,866,302) 1,584,039,011

Current liabilities and long-term liabilities 1,358,397,939 3,937,451 1,132,134 140,402,507 7,536,739 4,136,328 (13,522,313) 1,502,020,785

Deposits 465,860,141 3,014,721 -- 386 462 -- (3,557,918) 465,317,792


Acceptance and issuance of securities 197,760,042 788 -- -- 479,284 3,447,244 -- 201,687,358


Borrowings 31,574,204 101,068 -- -- 2,355,094 48,073 (72,511) 34,005,928

Onlendings 91,908,322 -- -- -- -- -- -- 91,908,322

Derivative financial instruments 4,747,983 251 -- -- -- 4 (1,872) 4,746,366

Other liabilities 208,166,365 820,623 1,132,134 140,402,121 4,701,899 641,007 (4,496,585) 351,367,564


Subordinated debts and equity and debt hybrid securities 64,907,232 -- -- -- -- -- -- 64,907,232

Other 143,259,133 820,623 1,132,134 8,855,943 4,701,899 641,007 (4,482,553) 154,928,186

DEFERRED INCOME 482,500 -- -- -- -- -- (447) 482,053


TOTAL LIABILITIES 1,438,660,136 6,824,293 1,263,763 146,797,727 13,826,095 7,533,299 (30,866,302) 1,584,039,011


1st

half 2016


50

Jun 30, 2015





Current assets and long-term receivables 1,372,115,015 2,292,970 939,151 130,988,322 14,862,439 3,975,969 (12,501,555) 1,512,672,311

Cash and cash equivalents 16,680,951 20,140 1,261 224,766 163,299 1,023 (35,828) 17,055,612

Interbank investments 359,730,537 5,163 655,577 1,982,927 123,751 354,774 (5,527,731) 357,324,998

Securities 116,892,241 1,443,400 27,525 115,588,190 3,792,301 387,066 (1,094,108) 237,036,615

Trading securities 10,605,640 107,584 2,110 107,312,208 267,378 145,458 (6,187,415) 112,252,963

Securities available for sale 99,116,657 1,287,019 24,458 109,752 3,097,787 232,506 3,591,098 107,459,277

Securities held to maturity 7,169,944 48,797 957 8,166,230 427,136 9,102 1,502,209 17,324,375

Derivative financial instruments 2,534,334 1,280 -- -- 320 -- (1,298) 2,534,636


Loan operations and leasing transactions, net of allowance for losses 631,920,590 -- -- -- 7 1,558,466 (1,645,638) 631,833,425


Financing 409,438,746 -- -- -- -- -- (80,868) 409,357,878


Leasing 1,087,809 -- -- -- 7 -- -- 1,087,816


Loan operations (28,240,590) -- -- -- -- -- -- (28,240,590)



Other assets 740,762 31,600 450 3,274,595 19,029 52,296 (449) 4,118,283

Permanent assets 29,373,607 4,191,569 22,088 760,564 982,254 295,053 (14,433,202) 21,191,933

Investments 12,615,891 4,161,290 22,088 266,886 497,336 246,347 (14,433,202) 3,376,636

Investments in subsidiaries and associates 12,463,043 2,956,928 -- 213,213 405,363 -- (14,433,202) 1,605,345


Accumulated impairment (71,141) (4,751) (19) (9,251) (308) -- -- (85,470)


Intangible 9,730,576 9,925 -- 398,885 128,816 6,968 -- 10,275,170

Deferred 32,051 -- -- -- 1,081 -- -- 33,132

TOTAL ASSETS 1,401,488,622 6,484,539 961,239 131,748,886 15,844,693 4,271,022 (26,934,757) 1,533,864,244

Current liabilities and long-term liabilities 1,320,069,218 3,623,581 829,606 125,725,022 9,875,511 2,382,232 (11,712,089) 1,450,793,081

Deposits 446,189,007 2,517,935 -- 381 461 -- (3,077,202) 445,630,582


Acceptance and issuance of securities 198,423,907 1,260 -- -- 475,422 1,813,253 -- 200,713,842


Borrowings 25,317,086 79,036 -- -- 2,000,667 6,304 (866,335) 26,536,758

Onlendings 91,877,123 -- -- -- -- -- -- 91,877,123

Derivative financial instruments 3,639,078 19 -- -- -- -- (1,298) 3,637,799

Other liabilities 191,399,669 1,025,331 829,606 125,724,641 7,398,961 562,675 (4,036,054) 322,904,829


Subordinated debts and equity and debt hybrid securities 59,672,688 -- -- -- -- -- (174,519) 59,498,169

Other 131,726,981 1,025,331 829,606 8,469,911 7,398,961 562,675 (3,853,208) 146,160,257

DEFERRED INCOME 428,926 -- -- -- -- -- (450) 428,476


TOTAL LIABILITIES 1,401,488,622 6,484,539 961,239 131,748,886 15,844,693 4,271,022 (26,934,757) 1,533,864,244


1st

half 2016


51

) Reconciliation of managerial income by segment with the accounting income i

1st half/2016


Adjustments

BB Consolidated Banking Investments

Insurance, pension and capitalization


Income from financial intermediation 78,919,191 (3,353,603) -- (3,186,873) 70,876 (16,990) (44,779) 72,387,822

Income from loans and leases 47,784,194 (3,159,850) -- -- -- -- -- 44,624,344

Loans and discounted securities 29,721,090 (724,397) -- -- -- -- -- 28,996,693

Financing 10,130,359 (2,175,878) -- -- -- -- -- 7,954,481

Leasing 223,018 (45,093) -- -- -- -- -- 177,925

Other 7,709,727 (214,482) -- -- -- -- -- 7,495,245

Securities 24,723,207 (951,107) -- (6,486) 70,876 (16,990) (1,285) 23,818,215

Interbank investments 21,390,450 (509,709) -- -- -- (6) -- 20,880,735

Fixed-income securities 8,224,017 (408,057) -- (6,486) 70,876 (3,099) (1,285) 7,875,966

Variable-income securities (4,891,260) (33,341) -- -- -- (13,885) -- (4,938,486)

Derivative financial instruments (1,634,098) 20,851 -- -- -- -- -- (1,613,247)

Income from exchange operations and compulsory deposits 4,298,172 86,379 -- -- -- -- -- 4,384,551

Operations of sale and transfer of financial assets 523,835 650,124 -- -- -- -- -- 1,173,959

Financial results from insurance, pension and capitalization operations 3,223,881 -- -- (3,180,387) -- -- (43,494) --

Expenses from financial intermediation (61,593,796) 2,506,242 -- 2,193,512 56 -- 18,026 (56,875,960)

Expenses of market funding (55,159,144) 2,014,442 -- -- -- -- (10,513) (53,155,215)

Deposits (18,064,766) 130,499 -- -- -- -- (8,502) (17,942,769)

Securities sold under repurchase agreements (23,364,361) 1,102,155 -- -- -- -- (2,011) (22,264,217)

Acceptance and issuance of securities (12,103,211) 779,757 -- -- -- -- -- (11,323,454)

Subordinated debt abroad and equity and debt hybrid securities (1,247,649) (1) -- -- -- -- -- (1,247,650)

Other (379,157) 2,032 -- -- -- -- -- (377,125)

Loans, assignments, onlending and leases 10,388,266 77,931 -- -- -- -- 28,539 10,494,736

Allowance/reversal for loan losses (14,601,362) 413,869 -- -- 56 -- -- (14,187,437)


Interest and inflation adjustment of technical reserves (2,193,512) -- -- 2,193,512 -- -- -- --

Other income 23,251,464 (973,476) 368,601 (981,191) (2,703,806) (677) 214,974 19,175,889

Income from service fees 9,833,763 (119,326) -- 189,445 (2,561,033) (336) 263,464 7,605,977

Card income 2,585,656 (16,173) -- -- (2,505,241) -- -- 64,242

Fund management 2,390,430 (29,303) -- (678,339) -- -- 4,027 1,686,815

Insurance, pension and capitalization 501,920 145,054 -- 885,301 -- -- -- 1,532,275

Other 4,355,757 (218,904) -- (17,517) (55,792) (336) 259,437 4,322,645

Income from fees, rates and commissions 4,171,342 (156,558) -- -- -- -- -- 4,014,784

Equity in the earnings/(loss) of subsidiaries and associates (69,278) 99,411 590,719 1,255,751 238,752 (147) -- 2,115,208

Results from insurance, pension plan and capitalization operations 2,507,405 -- -- (2,377,213) -- -- (130,192) --

Other 6,808,232 (797,003) (222,118) (49,174) (381,525) (194) 81,702 5,439,920

Other expenses (30,234,549) 1,637,927 117,961 977,181 1,781,125 3,285 (188,221) (25,905,291)

Personnel expenses (11,255,605) 332,566 9,720 247,143 153,985 -- (39) (10,512,230)

Other administrative expenses (6,083,312) 300,940 7,429 252,077 304,253 1,975 (145,407) (5,362,045)

Amortization (1,811,824) 9,189 795 50,619 74,475 -- -- (1,676,746)

Depreciation (642,753) 10,143 1,556 9,258 59,803 -- -- (561,993)

Tax expenses (3,426,692) 105,741 2,917 223,815 271,623 73 -- (2,822,523)

Other (7,014,363) 879,348 95,544 194,269 916,986 1,237 (42,775) (4,969,754)

Profit before tax and profit sharing 10,342,310 (182,910) 486,562 (997,371) (851,749) (14,382) -- 8,782,460

Income tax and social contribution (4,000,525) 199,904 (960) 939,811 356,452 812 -- (2,504,506)

Profit sharing (690,600) 45,798 -- 17,950 83 -- -- (626,769)

Non-controlling interests (827,086) -- -- -- -- -- -- (827,086)

Net income 4,824,099 62,792 485,602 (39,610) (495,214) (13,570) -- 4,824,099


1st

half 2016


52

1st half/2015


Adjustments




Income from financial intermediation 89,317,197 (4,170,376) -- (2,475,323) 43,268 (34,040) (67,380) 82,613,346

Income from loans and leases 53,260,443 (3,377,022) -- -- -- -- 41 49,883,462

Loans and discounted securities 26,518,351 (675,394) -- -- -- -- -- 25,842,957

Financing 20,279,934 (2,002,263) -- -- -- -- 41 18,277,712

Leasing 429,698 (221,969) -- -- -- -- -- 207,729

Other 6,032,460 (477,396) -- -- -- -- -- 5,555,064

Securities 29,621,658 (1,137,062) -- (5,012) 43,268 (34,040) (24,937) 28,463,875

Interbank investments 18,822,482 (391,707) -- -- -- (4) -- 18,430,771

Fixed-income securities 7,292,476 (693,352) -- (5,012) 43,268 (392) (24,937) 6,612,051

Variable-income securities 3,506,700 (52,003) -- -- -- (33,644) -- 3,421,053

Derivative financial instruments 502,832 (242,893) -- -- -- -- -- 259,939

Income from exchange operations and compulsory deposits 3,173,109 (119,026) -- -- -- -- -- 3,054,083

Operations of sale and transfer of financial assets 246,360 705,627 -- -- -- -- -- 951,987

Financial results from insurance, pension and capitalization operations 2,512,795 -- -- (2,470,311) -- -- (42,484) --

Expenses from financial intermediation (74,697,128) 3,372,057 -- 1,610,341 286 -- 4,606 (69,709,838)

Expenses of market funding (48,360,270) 2,359,602 -- -- -- -- 4,606 (45,996,062)

Deposits (15,934,202) 113,517 -- -- -- -- (15,304) (15,835,989)

Securities sold under repurchase agreements (20,116,448) 820,919 -- -- -- -- (793) (19,296,322)

Acceptance and issuance of securities (10,659,350) 1,422,504 -- -- -- -- -- (9,236,846)


Other (386,633) 2,662 -- -- -- -- 20,703 (363,268)

Loans, assignments, onlending and leases (13,133,528) 313,752 -- -- -- -- -- (12,819,776)

Allowance/reversal for loan losses (11,562,617) 683,642 -- -- 286 -- -- (10,878,689)

Operations of sale and transfer of financial assets (30,372) 15,061 -- -- -- -- -- (15,311)

Interest and inflation adjustment of technical reserves (1,610,341) -- -- 1,610,341 -- -- -- --

Other income 27,138,952 (526,860) 363,106 (1,006,855) (2,430,324) (7,559) 201,273 23,731,733

Income from service fees 9,322,191 (103,686) -- 246,211 (2,228,052) (274) 240,294 7,476,684

Card income 2,616,801 (13,286) -- -- (2,130,787) -- -- 472,728

Fund management 2,084,867 (26,179) -- (536,219) -- -- 3,863 1,526,332

Insurance, pension and capitalization 529,154 157,468 -- 788,444 -- -- -- 1,475,066

Other 4,091,369 (221,689) -- (6,014) (97,265) (274) 236,431 4,002,558

Income from fees, rates and commissions 3,446,032 (125,942) -- -- -- -- -- 3,320,090

Equity in the earnings/(loss) of subsidiaries and associates 136,757 53,603 517,435 1,431,762 162,502 (7,097) -- 2,294,962

Results from insurance, pension plan and capitalization operations 2,799,735 -- -- (2,656,473) -- -- (143,262) --

Other 11,434,237 (350,835) (154,329) (28,355) (364,774) (188) 104,241 10,639,997

Other expenses (28,627,810) 1,255,037 120,361 922,715 1,748,595 1,611 (138,499) (24,717,990)

Personnel expenses (10,573,256) 321,284 10,833 241,513 140,073 -- -- (9,859,553)

Other administrative expenses (5,955,070) 271,478 11,347 232,336 277,691 1,286 (88,797) (5,249,729)

Amortization (1,660,838) 5,373 668 33,789 47,062 -- -- (1,573,946)

Depreciation (574,118) 5,141 1,484 10,101 13,569 -- -- (543,823)

Tax expenses (3,327,988) 105,232 4,030 216,050 219,059 235 -- (2,783,382)

Other (6,536,540) 546,529 91,999 188,926 1,051,141 90 (49,702) (4,707,557)

Profit before tax and profit sharing 13,131,211 (70,142) 483,467 (949,122) (638,175) (39,988) -- 11,917,251

Income tax and social contribution (2,229,074) (22,698) (1,225) 886,343 265,326 (153) -- (1,101,481)

Profit sharing (1,193,497) 59,237 -- 25,495 1,635 -- -- (1,107,130)

Non-controlling interests (882,732) -- -- -- -- -- -- (882,732)

Net income 8,825,908 (33,603) 482,242 (37,284) (371,214) (40,141) -- 8,825,908


1st

half 2016


53

) Reconciliation of managerial assets and liabilities by segment with the accounting assets and liabilities j

Jun 30, 2016


Adjustments




Current assets and long-term receivables 1,623,735,057 (43,699,092) (180,833) (159,576,552) (7,734,507) (309,878) 1,298,633 1,413,532,828

Cash and cash equivalents 14,412,674 (69,407) (41) (202,430) (100,491) (298) 12,395 14,052,402

Interbank investments 423,112,368 (7,806,086) (1,872) (97,554) (858,285) -- 122,395 414,470,966

Securities 277,009,184 (13,720,958) (40,854) (146,555,494) 328,156 (172,555) 646,507 117,493,986

Trading securities 86,691,810 (605,205) (2,469) (79,997,981) -- (172,555) 311,297 6,224,897

Securities available for sale 181,855,377 (13,014,812) (38,385) (57,279,828) 328,156 -- (1,421,981) 110,428,527

Securities held to maturity 8,461,997 (100,941) -- (9,277,685) -- -- 1,757,191 840,562

Derivative financial instruments 5,371,819 (2,115,547) -- -- -- -- -- 3,256,272

Interbank and interdepartmental accounts 74,422,459 (309,571) -- -- -- -- -- 74,112,888

Loan operations and leasing transactions, net of allowance for losses 618,898,374 (20,724,244) -- -- -- -- 37,256 598,211,386

Loans and discounted securities 238,416,096 (4,581,230) -- -- -- -- -- 233,834,866

Financing 416,370,286 (17,544,891) -- -- -- -- 37,256 398,862,651


Leasing 770,982 (66,295) -- -- -- -- -- 704,687

Allowance for loan losses (37,323,036) 1,468,172 -- -- -- -- -- (35,854,864)

Loan operations (37,246,896) 1,463,494 -- -- -- -- -- (35,783,402)

Other receivables and leasing transactions (76,140) 4,678 -- -- -- -- -- (71,462)

Other receivables 205,170,961 1,315,239 (121,453) (8,250,555) (7,078,210) (104,997) 480,080 191,411,065

Other assets 5,337,218 (268,518) (16,613) (4,470,519) (25,677) (32,028) -- 523,863

Permanent assets 19,458,032 3,907,591 (96,627) 6,069,749 186,073 (282,428) 2,340,279 31,582,669

Investments 3,314,550 4,008,527 (65,118) 6,645,867 543,007 (282,428) 2,340,279 16,504,684

Investments in subsidiaries and associates 1,495,977 4,041,831 1,258,699 6,694,340 519,698 -- 2,340,279 16,350,824

Other investments 1,935,198 (57,855) (1,323,817) (61,952) (1,034) (282,428) -- 208,112

Accumulated impairment (116,625) 24,551 -- 13,479 24,343 -- -- (54,252)

Property and equipment 7,550,594 (47,316) (19,721) (133,352) (209,376) -- -- 7,140,829

Intangible 8,574,340 (47,776) (11,788) (442,766) (147,558) -- -- 7,924,452

Deferred 18,548 (5,844) -- -- -- -- -- 12,704

TOTAL ASSETS 1,643,193,089 (39,791,501) (277,460) (153,506,803) (7,548,434) (592,306) 3,638,912 1,445,115,497

Current liabilities and long-term liabilities 1,559,287,480 (39,716,311) (277,460) (153,436,714) (5,336,577) (35,444) 741,772 1,361,226,746

Deposits 442,392,415 (1,604,379) -- -- -- -- 90,496 440,878,532

Securities sold under repurchase agreements 428,956,582 (17,110,459) -- -- -- -- 122,512 411,968,635

Acceptance and issuance of securities 185,043,366 (9,629,699) -- -- (904,942) -- -- 174,508,725


Borrowings 25,466,685 (1,403,170) (144,244) -- (1,193,530) -- 37,240 22,762,981

Onlendings 88,256,084 (1,652,971) -- -- -- -- -- 86,603,113


Other liabilities 377,858,731 (6,371,839) (133,216) (153,436,714) (3,238,105) (35,444) 491,524 215,134,937

Technical provisions for insurance, pension plans and capitalization 148,400,901 -- -- (148,412,362) -- -- 11,461 --

Subordinated debts and equity and debt hybrid securities 60,387,745 (2,725,535) -- -- -- -- -- 57,662,210

Other 169,070,085 (3,646,304) (133,216) (5,024,352) (3,238,105) (35,444) 480,063 157,472,727

DEFERRED INCOME 456,271 (16,858) -- -- -- -- -- 439,413

SHAREHOLDERS' EQUITY 83,449,338 (58,332) -- (70,089) (2,211,857) (556,862) 2,897,140 83,449,338

TOTAL LIABILITIES 1,643,193,089 (39,791,501) (277,460) (153,506,803) (7,548,434) (592,306) 3,638,912 1,445,115,497


1st

half 2016


54

Dec 31, 2015


Adjustments






Interbank investments 358,461,069 (5,531,652) -- (118,438) (128,729) (377) 59,914 352,741,787

Securities 258,175,674 (15,196,624) (46,248) (129,243,107) (394,870) (144,386) 772,579 113,923,018

Trading securities 124,276,636 (2,607,333) (27,137) (113,707,509) (325,744) (9,200) 260,628 7,860,341

Securities available for sale 115,328,513 (9,015,051) (19,111) (3,417,251) (1,055,668) (135,186) 511,865 102,198,111

Securities held to maturity 18,570,525 (3,574,240) -- (12,118,347) 986,542 -- 86 3,864,566

Derivative financial instruments 4,698,070 (1,274,770) -- -- (61,268) -- -- 3,362,032


Loan operations and leasing transactions, net of allowance for losses 650,613,976 (21,973,353) -- -- -- -- 62,953 628,703,576


Financing 427,968,546 (18,645,225) -- -- -- -- 62,953 409,386,274


Leasing 971,490 (96,655) -- -- -- -- -- 874,835


Loan operations (34,072,735) 1,582,794 -- -- -- -- -- (32,489,941)


Other receivables 201,836,175 720,613 (159,135) (9,277,521) (7,961,901) (70,856) 651,102 185,738,477

Other assets 4,641,852 (296,166) (19,632) (3,782,412) (14,994) (32,021) -- 496,627

Permanent assets 21,211,519 3,567,307 (23,444) 5,728,477 1,275,229 (296,334) 639,974 32,102,728

Investments 3,448,295 3,665,928 9,604 6,181,716 1,803,065 (296,334) 639,974 15,452,248

Investments in subsidiaries and associates 1,596,700 3,700,168 1,262,618 6,236,018 1,845,739 -- 639,974 15,281,217


Accumulated impairment (87,464) 23,616 -- 9,501 78 -- -- (54,269)


Intangible 9,872,908 (42,675) (11,338) (339,102) (168,921) -- -- 9,310,872

Deferred 23,981 (7,407) -- -- -- -- -- 16,574

TOTAL ASSETS 1,584,039,011 (40,110,410) (248,529) (136,873,150) (7,459,804) (544,024) 2,325,663 1,401,128,757

Current liabilities and long-term liabilities 1,502,020,785 (40,087,565) (246,235) (136,764,430) (6,929,341) (46,537) 1,186,699 1,319,133,376

Deposits 465,317,792 (1,350,136) -- -- (462) -- 452,524 464,419,718


Acceptance and issuance of securities 201,687,358 (12,645,794) (788) -- (479,284) -- -- 188,561,492


Borrowings 34,005,928 (1,957,338) (101,068) -- (2,355,094) -- 62,932 29,655,360

Onlendings 91,908,322 (1,832,616) -- -- -- -- -- 90,075,706




Subordinated debts and equity and debt hybrid securities 64,907,232 (3,022,968) -- -- -- -- -- 61,884,264

Other 154,928,186 (3,817,490) (144,379) (5,218,252) (4,094,501) (46,537) 649,582 142,256,609

DEFERRED INCOME 482,053 (22,845) -- -- -- -- -- 459,208

SHAREHOLDERS' EQUITY 81,536,173 -- (2,294) (108,720) (530,463) (497,487) 1,138,964 81,536,173



1st

half 2016


55

Jun 30, 2015


Adjustments






Interbank investments 357,324,998 (6,090,150) -- (52,811) (16,482) (67) 9,780 351,175,268

Securities 237,036,615 (12,149,893) (40,572) (115,500,679) (305,861) (125,389) 1,076,244 109,990,465

Trading securities 112,252,963 (2,572,875) -- (107,305,497) -- (125,389) 6,186,045 8,435,247

Securities available for sale 107,459,277 (6,050,517) (40,572) (31,996) -- -- (3,606,972) 97,729,220

Securities held to maturity 17,324,375 (3,526,501) -- (8,163,186) (305,861) -- (1,502,829) 3,825,998

Derivative financial instruments 2,534,636 (711,442) -- -- (320) -- -- 1,822,874


Loan operations and leasing transactions, net of allowance for losses 631,833,425 (23,210,640) -- -- (7) -- 80,868 608,703,646


Financing 409,357,878 (19,126,754) -- -- -- -- 80,868 390,311,992


Leasing 1,087,816 (127,062) -- -- (7) -- -- 960,747


Loan operations (28,240,590) 1,511,644 -- -- -- -- -- (26,728,946)


Other receivables 196,970,285 2,818,225 (139,872) (8,667,928) (7,146,952) (82,016) 901,202 184,652,944

Other assets 4,118,283 (278,504) (31,600) (3,273,774) (19,029) (25,895) -- 489,481

Permanent assets 21,191,933 3,700,087 22,308 5,508,195 (68,736) (246,320) 1,665,345 31,772,812

Investments 3,376,636 3,783,229 52,587 6,001,871 416,182 (246,320) 1,665,345 15,049,530

Investments in subsidiaries and associates 1,605,345 3,813,767 1,257,875 6,055,544 508,155 -- 1,665,345 14,906,031


Accumulated impairment (85,470) 21,892 -- 9,251 78 -- -- (54,249)


Intangible 10,275,170 (25,985) (9,925) (398,885) (128,816) -- -- 9,711,559

Deferred 33,132 (10,321) -- -- (1,081) -- -- 21,730

TOTAL ASSETS 1,533,864,244 (36,061,656) (189,781) (122,211,715) (7,720,668) (479,785) 3,766,966 1,370,967,605

Current liabilities and long-term liabilities 1,450,793,081 (36,047,570) (187,481) (122,145,433) (5,355,387) (43,540) 896,858 1,287,910,528

Deposits 445,630,582 (1,781,920) -- -- (461) -- 481,239 444,329,440


Acceptance and issuance of securities 200,713,842 (11,830,700) (1,260) -- (475,422) -- -- 188,406,460


Borrowings 26,536,758 (1,464,009) (79,036) -- (2,000,667) -- 80,869 23,073,915

Onlendings 91,877,123 (1,844,846) -- -- -- -- -- 90,032,277

Derivative financial instruments 3,637,799 (823,832) -- -- -- -- -- 2,813,967



Subordinated debts and equity and debt hybrid securities 59,498,169 (3,249,447) -- -- -- -- 174,519 56,423,241

Other 146,160,257 (3,371,250) (107,185) (4,890,703) (2,878,837) (43,540) 142,165 135,010,907

DEFERRED INCOME 428,476 (14,086) -- -- -- -- -- 414,390

SHAREHOLDERS' EQUITY 82,642,687 -- (2,300) (66,282) (2,365,281) (436,245) 2,870,108 82,642,687



1st

half 2016


56

- CASH AND CASH EQUIVALENTS 6

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Cash and cash equivalents 14,052,402 18,054,422 16,591,088

Local currency 9,270,852 8,990,683 9,960,372

Foreign currency 4,773,276 9,056,034 6,610,750

Investments in gold 8,274 7,705 19,966

Interbank investments (1)

51,451,992 84,652,749 56,834,183

Open market investments - sales pending settlement - held position 13,530,909 38,195,496 20,782,860


Foreign currency -- -- 76

Total 65,504,394 102,707,171 73,425,271

(1) Investments whose original maturity is less than or equal to 90 days and with insignificant risk of change in fair value.

- SHORT-TERM INTERBANK INVESTMENTS 7

) Breakdown a

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Open market investments 375,115,504 303,530,816 312,582,593

Reverse repos - own resources 13,530,909 38,196,143 20,981,569

Treasury financial bills -- -- 725,303

National Treasury bills 717,692 22,232,207 19,297,793

National Treasury notes 12,643,646 15,139,814 --

Other securities 169,571 824,122 958,473

Reverse repos - financed position 361,584,595 265,334,673 291,601,024

Treasury financial bills 137,934,313 399,992 37,581,264

National Treasury bills 138,941,666 117,887,474 134,995,030

National Treasury notes 84,559,697 146,872,982 118,867,312

Other securities 148,919 174,225 157,418


Total 414,470,966 352,741,787 351,175,268

Current assets 413,436,276 351,419,935 350,155,149

Non-current assets 1,034,690 1,321,852 1,020,119

) Income from short-term interbank investments b

1st half/2016 1st half/2015

Income from open market investments 20,660,456 18,274,186

Own resources 1,451,086 1,330,620

Financed position 19,209,370 16,943,566

Income from investments in interbank deposits 220,279 156,585

Total 20,880,735 18,430,771


1st

half 2016


57

- SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS 8

a) Securities

) Breakdown of the consolidated portfolio by category, type of bonds and maturity a.1

Maturity in days

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Market value Total Total Total

Without maturity

0 to 30 31 to 180 181 to 360 More than 360 Cost value Market value Mark to market

Cost value Market value Mark to market


1 - Trading securities 757,934 930,504 1,555,864 1,002,819 1,977,776 5,999,358 6,224,897 225,539 7,525,861 7,860,341 334,480 8,364,248 8,435,247 70,999

Federal government bonds 12 901,452 1,544,982 591,782 1,909,981 4,744,700 4,948,209 203,509 6,250,648 6,558,357 307,709 7,909,277 7,978,429 69,152

Treasury financial bills -- -- 770,509 54,379 315,279 1,140,647 1,140,167 (480) 1,035,232 1,035,362 130 1,154,655 1,154,189 (466)

National Treasury bills -- 3,648 13,549 45,525 1,043,507 1,104,549 1,106,229 1,680 1,189,094 1,184,359 (4,735) 1,649,605 1,605,586 (44,019)

National Treasury notes -- -- -- 3,092 184,387 184,737 187,479 2,742 85,030 84,783 (247) 246,999 244,576 (2,423)

Brazilian foreign debt securities

-- -- -- -- 19,423 20,531 19,423 (1,108) 72,333 65,760 (6,573) 70,101 67,584 (2,517)

Foreign Government bonds 12 897,804 759,355 484,812 292,621 2,233,928 2,434,604 200,676 3,754,840 4,084,718 329,878 4,726,280 4,845,264 118,984

Other -- -- 1,569 3,974 54,764 60,308 60,307 (1) 114,119 103,375 (10,744) 61,637 61,230 (407)

Corporate bonds 757,922 29,052 10,882 411,037 67,795 1,254,658 1,276,688 22,030 1,275,213 1,301,984 26,771 454,971 456,818 1,847

Debentures -- 29,052 -- 15,470 18,695 63,661 63,217 (444) 59,310 57,924 (1,386) 52,807 51,283 (1,524)

Shares in investment funds 749,809 -- -- 313,079 -- 1,031,071 1,062,888 31,817 1,071,605 1,113,316 41,711 265,530 276,273 10,743

Shares 32 -- -- -- -- 18 32 14 26 65 39 29 51 22

Rural product bills - commodities

-- -- -- -- -- -- -- -- 1 1 -- -- -- --

Certificate of deposit -- -- 1 -- -- 1 1 -- -- -- -- 93 93 --

Eurobonds -- -- 7,027 11,336 42,787 71,717 61,150 (10,567) 114,568 91,349 (23,219) 104,243 94,660 (9,583)

Other 8,081 -- 3,854 71,152 6,313 88,190 89,400 1,210 29,703 39,329 9,626 32,269 34,458 2,189


1st

half 2016


58

Maturity in days

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015


Without maturity




2 - Available for sale securities

672,771 1,365,590 4,099,021 3,916,615 100,374,530 113,802,295 110,428,527 (3,373,768) 107,308,851 102,198,111 (5,110,740) 99,673,779 97,729,220 (1,944,559)

Federal government bonds 1,633 1,091,900 1,342,618 1,469,883 63,661,497 67,441,566 67,567,531 125,965 57,430,254 56,038,610 (1,391,644) 53,714,240 53,113,773 (600,467)

Treasury financial bills -- -- 356 -- 43,678,915 43,716,189 43,679,271 (36,918) 36,475,017 36,474,678 (339) 33,603,060 33,598,485 (4,575)

National Treasury bills -- 1,091,725 -- 1,093,794 6,292,821 8,310,486 8,478,340 167,854 5,456,744 5,216,331 (240,413) 5,244,006 5,130,860 (113,146)

National Treasury notes -- -- 383,755 140,392 8,956,476 9,445,348 9,480,623 35,275 5,182,210 4,661,076 (521,134) 4,001,669 3,621,641 (380,028)

Agricultural debt securities -- 175 708 497 3,278 4,758 4,658 (100) 5,157 4,713 (444) 6,112 5,848 (264)

Brazilian foreign debt securities

-- -- -- -- 2,615,511 2,575,637 2,615,511 39,874 3,120,701 2,685,040 (435,661) 3,105,863 3,009,328 (96,535)

Foreign Government bonds -- -- 957,799 62,564 997,790 2,001,536 2,018,153 16,617 6,123,190 6,112,039 (11,151) 7,005,132 6,993,703 (11,429)

Other 1,633 -- -- 172,636 1,116,706 1,387,612 1,290,975 (96,637) 1,067,235 884,733 (182,502) 748,398 753,908 5,510

Corporate bonds 671,138 273,690 2,756,403 2,446,732 36,713,033 46,360,729 42,860,996 (3,499,733) 49,878,597 46,159,501 (3,719,096) 45,959,539 44,615,447 (1,344,092)

Debentures -- 18,974 821,126 2,176,844 34,574,325 38,406,034 37,591,269 (814,765) 40,004,158 39,289,630 (714,528) 35,327,942 34,901,804 (426,138)

Promissory notes -- 74,806 568,695 -- 109,524 746,659 753,025 6,366 918,460 931,194 12,734 900,365 906,527 6,162

Credit notes -- -- -- -- 46,185 49,368 46,185 (3,183) 50,936 46,771 (4,165) 52,045 49,889 (2,156)

Shares in investment funds 18,145 -- 461,312 -- 533,305 2,312,457 1,012,762 (1,299,695) 3,012,747 1,656,953 (1,355,794) 5,113,470 4,463,732 (649,738)

Shares 128,735 -- -- -- -- 103,226 128,735 25,509 810 457 (353) 810 705 (105)

Rural product bills - commodities

-- 97,394 623,671 189,534 2,413 907,147 913,012 5,865 1,066,970 1,068,167 1,197 1,034,285 1,031,177 (3,108)

Certificate of deposit -- 80,208 -- -- -- 80,234 80,208 (26) 97,628 97,608 (20) -- -- --

Certificates of agribusiness credit rights

-- -- -- -- -- -- -- -- -- -- -- 7,218 7,277 59

Financial bills -- -- 22,094 -- -- 22,195 22,094 (101) 20,542 20,500 (42) 86,099 85,749 (350)

Real estate receivables certificates

-- -- 251,075 80,354 68,855 408,223 400,284 (7,939) 479,761 468,783 (10,978) 487,306 479,316 (7,990)

Other 524,258 2,308 8,430 -- 1,378,426 3,325,186 1,913,422 (1,411,764) 4,226,585 2,579,438 (1,647,147) 2,949,999 2,689,271 (260,728)


1st

half 2016


59

Maturity in days

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015


Without maturity




3 - Held to maturity securities

-- -- -- -- 551,530 840,562 551,530 (289,032) 3,864,566 3,625,314 (239,252) 3,825,998 3,666,701 (159,297)

Corporate bonds -- -- -- -- 551,530 840,562 551,530 (289,032) 3,864,566 3,625,314 (239,252) 3,825,998 3,666,701 (159,297)

Debentures -- -- -- -- 447,490 450,595 447,490 (3,105) 3,506,434 3,506,434 -- 3,486,285 3,486,285 --

Shares in investment funds -- -- -- -- -- -- -- -- 7,026 7,026 -- -- -- --

Real estate receivables certificates

-- -- -- -- 96,620 382,547 96,620 (285,927) 351,106 111,854 (239,252) 332,854 173,564 (159,290)

Other -- -- -- -- 7,420 7,420 7,420 -- -- -- -- 6,859 6,852 (7)

Total 1,430,705 2,296,094 5,654,885 4,919,434 102,903,836 120,642,215 117,204,954 (3,437,261) 118,699,278 113,683,766 (5,015,512) 111,864,025 109,831,168 (2,032,857)

) Breakdown of the consolidated portfolio by financial statement classification and maturity date a.2

Maturity in days

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015


Without maturity

0 to 30 31 to 180 181 to 360 More than

360 Cost value Market value

Mark to market



Total by portfolio 1,430,705 2,296,094 5,654,885 4,919,434 102,903,836 120,642,215 117,204,954 (3,437,261) 118,699,278 113,683,766 (5,015,512) 111,864,025 109,831,168 (2,032,857)

Own portfolio 1,430,705 2,205,323 4,946,129 4,642,853 77,277,478 91,837,231 90,502,488 (1,334,743) 90,500,313 89,084,740 (1,415,573) 86,264,912 90,394,379 4,129,467

Subject to repurchase agreements

-- 10,563 691,899 276,581 22,645,336 25,725,431 23,624,379 (2,101,052) 24,095,222 20,495,283 (3,599,939) 19,486,731 13,327,304 (6,159,427)

Pledged in guarantee -- 80,208 16,857 -- 2,981,022 3,079,553 3,078,087 (1,466) 4,103,743 4,103,743 -- 6,112,382 6,109,485 (2,897)

) Breakdown of the consolidated portfolio by category and maturity in years a.3

Maturity in years

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015


Without maturity

Due in 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 1,430,705 12,870,413 74,179,206 23,595,804 5,128,826 120,642,215 117,204,954 118,699,278 113,683,766 111,864,025 109,831,168

1 - Trading securities 757,934 3,489,187 1,350,288 499,703 127,785 5,999,358 6,224,897 7,525,861 7,860,341 8,364,248 8,435,247

2 - Available for sale securities 672,771 9,381,226 72,828,735 22,648,611 4,897,184 113,802,295 110,428,527 107,308,851 102,198,111 99,673,779 97,729,220

3 - Held to maturity securities -- -- 183 447,490 103,857 840,562 551,530 3,864,566 3,625,314 3,825,998 3,666,701


1st

half 2016


60

) Summary of the consolidated portfolio by financial statement classification a.4

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Book value Book value Book value

Current Non-current Total Current Non-current Total Current Non-current Total

Total by portfolio 17,362,201 100,131,785 117,493,986 21,905,761 92,017,257 113,923,018 26,297,780 83,692,685 109,990,465

Own portfolio 16,278,894 76,783,299 93,062,193 20,534,138 71,087,575 91,621,713 23,066,482 67,571,643 90,638,125

Subject to repurchase agreements 986,242 20,367,464 21,353,706 1,257,846 16,939,716 18,197,562 2,317,403 10,925,452 13,242,855

Pledged in guarantee 97,065 2,981,022 3,078,087 113,777 3,989,966 4,103,743 913,895 5,195,590 6,109,485

) Summary of the consolidated portfolio by category a.5

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Total by category

1 - Trading securities 6,224,897 5% 7,860,341 7% 8,435,247 8%

2 - Available for sale securities 110,428,527 94% 102,198,111 90% 97,729,220 89%

3 - Held to maturity securities 840,562 1% 3,864,566 3% 3,825,998 3%

Portfolio book value 117,493,986 100% 113,923,018 100% 109,990,465 100%

Mark to market - held to maturity (289,032) -- (239,252) -- (159,297) --

Portfolio market value 117,204,954 -- 113,683,766 -- 109,831,168 --


1st

half 2016


61

) Income from operations with securities b


Short-term interbank investments (Note 7.b) 20,880,735 18,430,771

Fixed-income securities 7,875,966 6,612,051

Variable-income securities (4,938,486) 3,421,053

Total 23,818,215 28,463,875

) Reclassification of securities c

On April 27, 2016, Cielo's Board of Directors approved the partial repurchase of debentures issued by Cielo up to

R$ 2.000.000 thousand, causing early maturity of the debentures, although the BB Elo Cartões Participações had the

intention and financial capacity to hold Cielo's debentures to maturity (December 2023).

Due to this fact, on June 30, 2016, BB Elo Cartões Participações reclassified all of these securities in the category

"held to maturity" to the category "available for sale", resulting in a negative impact mark to market in Shareholders'

equity in the amount of R$ 39,326 thousand, net of tax effects.

1st half/2016

Market value 3,446,831

Book value before reclassification 3,506,416

Mark to market (59,585)

Tax effects 20,259

Shareholders' Equity impact (39,326)

There was no reclassification of securities in the June 30, 2015.

) Derivative financial instruments d

The Bank uses derivative financial instruments to manage, at the consolidated level, its positions and to meet clients'

needs, classifying its own positions as hedge (market risk and cash flow risk) and trading, both within limits approved

by committees of the Bank. The hedge strategy of the equity positions is in line with 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 main risks inherent to derivative financial instruments resulting from the business of the Bank and its subsidiaries

are credit, market, liquidity and operational, and the management process presented in note 28.

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 tools and systems to manage the derivatives. Trading in new derivatives, standardized or not, is

subject to a prior risk analysis.

Risk analysis of the subsidiaries is undertaken on an individual basis and its risk management is done on a

consolidated basis.

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.

Total credit exposure from swaps is R$ 325,571 thousand on Jun 30, 2016 (R$ 464,076 thousand on Dec 31, 2015

and R$ 601,082 thousand on Jun 30, 2015).


1st

half 2016


62

) Breakdown of the portfolio of derivatives for trading by index d.1

By Index Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Notional value Cost value Market value Notional value Cost value Market value Notional value Cost value Market value

Future contracts

Purchase commitments

10,742,812 -- -- 1,600,302 -- -- 6,303,347 -- --

Interbank deposits 5,004,419 -- -- 1,042,332 -- -- 2,875,966 -- --

Currencies 5,409,058 -- -- 530,810 -- -- 3,426,611 -- --

Libor 294,269 -- -- -- -- -- -- -- --

Commodities 35,066 -- -- 27,160 -- -- 770 -- --

Sales commitments 2,743,182 -- -- 9,188,542 -- -- 1,773,464 -- --

Interbank deposits 1,147,563 -- -- 6,205,028 -- -- 1,054,228 -- --

Currencies 1,590,796 -- -- 2,977,888 -- -- 437,293 -- --

T-Note -- -- -- -- -- -- 242,795 -- --

Bovespa Index -- -- -- -- -- -- 1,883 -- --

Commodities 4,823 -- -- 5,626 -- -- 37,265 -- --

Forward operations

Asset position 6,269,155 705,241 634,241 12,525,819 1,359,977 1,749,951 7,928,254 638,251 750,729

Term securities 36,023 36,023 36,023 -- -- -- 92,500 92,500 92,500

Term currencies 6,197,930 667,717 588,784 12,492,001 1,358,628 1,744,654 7,808,145 538,619 648,460

Term commodities 35,202 1,501 9,434 33,818 1,349 5,297 27,609 7,132 9,769

Liability position 13,490,707 (2,026,068) (1,528,419) 11,454,776 (783,298) (582,955) 6,337,137 (599,618) (308,904)

Term securities 36,023 (36,023) (36,023) -- -- -- 92,500 (92,500) (92,500)

Term currencies 13,432,210 (1,985,996) (1,483,687) 11,430,037 (778,007) (575,299) 6,208,087 (497,768) (207,566)

Term commodities 22,474 (4,049) (8,709) 24,739 (5,291) (7,656) 36,550 (9,350) (8,838)

Option market

Purchase commitments - long position

373 3 -- -- -- -- 6,323 64 58

Foreign currency -- -- -- -- -- -- 6,323 64 58

Commodities 373 3 -- -- -- -- -- -- --

Sale commitments - long position

336,338 401,317 334,783 -- -- -- -- -- --

Foreign currency 1,728 62 173 -- -- -- -- -- --

Shares 334,610 401,255 334,610 -- -- -- -- -- --

Purchase commitments - short position

330,949 (15,683) (14,841) 391,447 (15,121) (119,529) 877,576 (30,813) (167,376)

Foreign currency 269,422 (8,524) (924) 11,381 (522) (883) 19,559 (1,270) (1,279)

Pre-fixed -- -- -- 348,015 (9,830) (107,098) 848,187 (28,180) (163,208)

Interbank deposit 57,141 (7,032) (13,770) 32,051 (4,769) (11,548) 8,605 (1,358) (2,889)

Shares 1,084 (79) (111) -- -- -- 1,225 (5) --

Other 3,302 (48) (36) -- -- -- -- -- --

Sale commitments - short position

82,140 (1,591) (614) 426,369 (238,328) (166,391) 951,634 (672,169) (578,705)

Foreign currency 2,502 (55) (65) -- -- -- 6,323 (59) (2)

Pre-fixed -- -- -- 348,016 (237,202) (166,254) 848,186 (669,368) (573,378)

Flexible currency options

-- -- -- -- -- -- 4,304 (301) (1,119)

Commodities 79,638 (1,536) (549) 78,353 (1,126) (137) 92,821 (2,441) (4,206)

Swaps contracts

Asset position 13,648,406 2,192,062 2,198,991 6,649,135 1,362,026 1,562,039 8,610,146 909,820 1,017,341

Interbank deposits 7,467,078 1,258,280 1,314,564 1,170,012 28,463 11,245 1,148,160 15,558 23,118

Foreign currency 5,705,210 862,372 809,018 5,233,939 1,326,041 1,546,439 6,082,297 857,323 957,076

Pre-fixed 453,721 70,105 74,771 222,787 6,416 4,104 1,378,043 36,891 37,128

IPCA 22,397 1,305 638 22,397 1,106 251 1,646 48 19

Liability position 9,683,116 (1,405,235) (1,435,345) 15,978,320 (1,906,269) (2,354,368) 12,897,074 (1,375,418) (1,584,997)

Interbank deposits 2,626,621 (560,702) (567,284) 187,764 (6,638) (4,577) 1,169,705 (12,166) (23,326)

Foreign currency 6,823,029 (833,820) (853,286) 15,550,493 (1,897,600) (2,347,504) 11,686,562 (1,363,252) (1,561,555)

Pre-fixed 34,575 (7,230) (7,593) 41,172 (2,513) (1,190) 40,807 -- (116)

IPCA 198,891 (3,483) (7,182) 198,891 482 (1,097) -- -- --

Other derivatives (1)

Asset position

Foreign currency 2,573,607 178,671 88,257 1,123,416 32,242 50,042 1,800,286 61,620 54,746

Liability position

Foreign currency 1,146,261 (99,003) (39,681) 2,422,956 (46,492) (65,929) 2,137,265 (181,144) (173,985)

(1) Related, essentially, to Non Deliverable Forwards (NDF) which are traded in the over-the-counter (OTC) market and have as their object an exchange rate of a specific currency.


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) Breakdown of the derivatives portfolio by maturity (notional value) d.2

Maturity in days

0 to 30 31 to 180 181 to 360 More than 360 Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Futures 2,548,524 7,102,967 2,596,731 1,237,772 13,485,994 10,788,844 8,076,811

Forwards 19,312,611 184,714 137,694 124,843 19,759,862 23,980,595 14,265,391

Options 1,489 263,444 105,104 379,763 749,800 817,816 1,835,533

Swaps 2,362,946 7,118,783 6,577,456 7,272,337 23,331,522 22,627,455 21,507,220

Other 2,044,715 1,369,612 193,484 112,057 3,719,868 3,546,372 3,937,551

) Breakdown of the derivative portfolio by trading market and counterparty (notional value on d.3Jun 30, 2016)

Futures Forwards Option market Swaps Other

BM&FBovespa 13,191,725 -- 749,800 -- --

Over-the-counter

Financial institutions 294,269 1,377,969 -- 18,835,092 3,719,868

Client -- 18,381,893 -- 4,496,430 --

) Breakdown of margin given as guarantee for transactions with derivative financial d.4instruments

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Treasury financial bills 1,520,645 2,637,630 968,445

Total 1,520,645 2,637,630 968,445

) Portfolio of derivatives designated as hedge accounting d.5

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Market risk hedge

Hedging instruments

Assets 689,677 338,068 344,489

Swaps 355,067 338,068 344,489

Options 334,610 -- --

Hedged items

Assets 128,252 -- --

Securities 128,252 -- --

Liabilities 355,080 338,300 344,291

Other liabilities 355,080 338,300 344,291

In order to hedge against possible fluctuations in the interest and exchange rates on its securities and foreign

investments, the Bank uses swaps (cross currency interest rate swaps) to hedge a foreign funding and use option

contracts to offset the risks arising from market variations some actions. Cited hedges were assessed as effective , in

accordance with the provisions of Central Bank Circular No. 3,082 / 2002 , which require evidence of hedge

effectiveness is the range of 80 % to 125 % :

) Income gains and losses with hedging instruments and hedged items d.6


Hedged items losses -- (59,479)

Hedging instruments gains -- 58,894

Net effect -- (585)

Hedge items gains 103,015 --

Hedging instruments losses (102,837) --

Net effect 178 --


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) Derivative financial instruments segregated by current and non-current d.7

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Current Non-current Current Non-current Current Non-current

Assets

Forwards 626,336 7,905 1,280,205 469,746 649,776 100,953

Options 173 334,610 -- -- 58 --

Swaps 1,708,768 490,223 1,056,926 505,113 263,546 753,795

Other derivatives 84,197 4,060 31,033 19,009 45,323 9,423

Total 2,419,474 836,798 2,368,164 993,868 958,703 864,171

Liabilities

Forwards (1,527,870) (549) (558,119) (24,836) (275,147) (33,757)

Options (3,193) (12,262) (274,372) (11,548) (742,989) (3,092)

Swaps (517,982) (917,363) (1,086,815) (1,267,553) (507,727) (1,077,270)

Other derivatives (36,937) (2,744) (48,256) (17,673) (166,097) (7,888)

Total (2,085,982) (932,918) (1,967,562) (1,321,610) (1,691,960) (1,122,007)

) Income from derivative financial instruments e


Swaps 1,076,002 (81,013)

Forwards (1,683,634) 333,230

Options (17,651) (70,637)

Futures (906,160) 154,506

Other derivatives (81,804) (76,147)

Total (1,613,247) 259,939


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- INTERBANK ACCOUNTS 9

) Payments and receipts pending settlement a

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Assets

Rights against other participants of settlement systems (1)

Bank checks and other instruments 1,852,665 7,252 2,419,933

Documents sent by other participants 1,965,799 -- 2,023,416

Total 3,818,464 7,252 4,443,349

Current assets 3,818,464 7,252 4,443,349

Liabilities

Obligations to other participants of settlement systems (1)

Remitted receipts 2,182,958 -- 2,182,036

Bank checks and other instruments 908,121 -- 1,132,456

Other receipts 8,948 34 8,256

Total 3,100,027 34 3,322,748

Current liabilities 3,100,027 34 3,322,748

(1) There was no operation of the service of clearing checks and other securities on Dec 31, 2015.

) Restricted deposits b

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Compulsory deposits with Banco Central do Brasil 65,404,128 60,810,918 57,167,615

Additional reserve requirements on deposits 14,754,847 14,425,618 14,000,813

Savings deposit requirements 23,714,737 24,116,566 23,707,229

Demand deposit requirements 11,050,143 8,018,230 10,688,085

Time deposit requirements 13,912,434 12,238,303 8,615,480

Resources for microfinance 319,288 363,781 151,622

Resources for rural credit (1)

1,643,753 1,643,753 --

Other 8,926 4,667 4,386

Housing Finance System 2,591,255 2,496,198 2,407,105

Compensation of wage changes fund 2,757,928 2,663,942 2,570,989

Provision for losses (175,871) (173,192) (171,745)

Other 9,198 5,448 7,861

National Treasury - rural credit 76,705 54,304 77,192

Rural credit - Proagro 250,688 210,965 220,428

Provision for losses (173,983) (156,661) (143,236)

Total 68,072,088 63,361,420 59,651,912

Current assets 68,059,575 63,361,321 59,642,166

Non-current assets 12,513 99 9,746

(1) Refers to funds deposited with the Banco Central do Brasil, because they were not lent on to rural credits, according to Resolution CMN No. 3,745/2009. The special supply funds were provided by Banco Central do Brasil and recorded in Onlendings (Note 18.b.).


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) Compulsory investments c


Deposits linked to the Banco Central do Brasil 2,741,222 2,276,339

Additional reserve requirements on deposits 942,050 1,218,399

Savings deposit requirements 967,466 750,562

Time deposit requirements 831,706 307,378

Deposits linked to real state 94,693 80,786

Deposits linked to National Treasury - rural credit 22,320 19,588

Losses on restricted deposits (20,586) 8,693

Total 2,837,649 2,385,406

- LOAN OPERATIONS 10

) Portfolio by modality a

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Loan operations 633,361,563 660,367,728 634,500,699

Loans and discounted securities 233,834,866 250,648,163 243,894,759

Financing 157,634,154 180,849,464 173,653,681

Rural and agribusiness financing 189,424,384 178,902,040 172,303,045

Real estate financing 51,720,740 49,559,757 44,299,084

Financing of infrastructure and development 83,373 75,013 56,182

Loan operations sold under assignment (1)

664,046 333,291 293,948

Other receivables with loan characteristics 56,000,652 56,606,639 52,202,954

Credit card operations (2)

21,526,694 22,940,041 20,354,776

Advances on exchange contracts (3)

18,207,494 17,582,677 14,973,915

Other receivables purchase under assignment (4)

15,205,108 15,266,721 16,323,462

Guarantees honored 606,165 397,550 184,087

Other 455,191 419,650 366,714

Leasing transactions 704,687 874,835 960,747

Total loan portfolio 690,066,902 717,849,202 687,664,400

(Allowance)/reversal for loan losses (36,967,684) (33,577,000) (27,575,266)

(Allowance for loan losses - loan operations) (35,783,402) (32,489,941) (26,728,946)

(Allowance for other losses - other receivables) (5)

(1,112,820) (1,038,013) (817,466)

(Allowance for lease losses - leasing transactions) (71,462) (49,046) (28,854)

Total loan portfolio net of provisions 653,099,218 684,272,202 660,089,134

(1) Loan operations assigned with retention of the risks and benefits of the financial assets.

(2) On June 30, 2015, credit card bills to receive from clients of Banco Patagonia of R$ 1,385,473 thousand were reclassified from Other receivables without characteristics of credit, to harmonize the accounting practices with Banco do Brasil.

(3) Advances on exchange contracts are classified as a deduction to other liabilities.

(4) Loan operations acquired with retention of the risks and benefits by the assignor of the financial assets.

(5) Includes the amount of R$ 8,725 thousand as of June 30, 2016 (R$ 8,421 thousand as of December 31, 2015 and R$ 6,345 thousand as of June 30,2015) related to allowance for interbank onlendings losses.


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) Loan operations and leasing transactions income b


Loan operations income 44,446,419 49,675,733

Loans and discounted securities 28,996,693 25,842,957

Rural and agribusiness financing 7,194,939 5,574,178

Equalization of rates - agricultural crop- Law 8,427/1992 2,799,073 3,602,411

Real estate financing 2,476,376 1,901,322

Export financing 2,322,775 154,631

Recovery of loans previously written-off as loss (1)

2,244,654 1,750,915

Income from foreign currency financing 505,199 578,491

Guarantees honored 75,608 14,572

Financing (2)

(2,222,033) 10,223,721

Other 53,135 32,535

Leasing transactions income (Note 10.i) 177,925 207,729

Total 44,624,344 49,883,462

(1) The amount of R$ 78,842 thousand in the 1st half/2016 (with impact on the income of R$ 41,347 thousand) and R$ 55,958 thousand in the

1st half/2015 (with an impact on the income of R$ 32,014 thousand) was received from assignments without recourse of written-off credits to

entities outside the financial system, in accordance with CMN Resolution 2,836/2001. The book value of these transactions were R$ 71,075 thousand and R$ 85,065 thousand respectively.

(2) The debit balances presented arise from the negative exchange variation of the period (the appreciation of the Real against the Dollar)

) Breakdown of the loan portfolio by sector c

Jun 30, 2016 % Dec 31, 2015 % Jun 30, 2015 %

Public sector 74,009,980 10.7 79,036,961 11.0 70,074,034 10.3

Public administration 37,587,327 5.4 41,774,780 5.8 32,249,095 4.7

Oil sector 24,354,756 3.5 24,790,928 3.5 24,480,626 3.6

Electricity 10,700,482 1.6 11,142,352 1.6 11,886,840 1.7

Services 303,048 -- 325,448 -- 353,818 0.1

Other activities 1,064,367 0.2 1,003,453 0.1 1,103,655 0.2

Private sector (1)

616,056,922 89.3 638,812,241 89.0 617,590,366 89.7

Individuals 321,786,620 46.6 309,647,850 43.1 299,343,890 43.5

Companies 294,270,302 42.7 329,164,391 45.9 318,246,476 46.2

Mining and metallurgy 34,796,928 5.0 38,377,486 5.3 36,929,710 5.5

Agribusiness of plant origin 32,111,232 4.7 35,625,466 5.0 33,857,424 4.9

Automotive sector 21,428,415 3.1 25,412,588 3.5 23,662,189 3.4

Transportation 19,255,317 2.8 23,552,525 3.3 21,453,208 3.1

Real estate agents 19,088,566 2.8 20,162,150 2.8 18,575,023 2.7

Services 19,081,767 2.8 21,583,846 3.0 22,652,099 3.3

Fuel 17,236,190 2.5 21,594,810 3.0 19,877,514 2.9

Electricity 16,835,113 2.4 17,950,892 2.5 17,895,699 2.6

Agribusiness of animal origin 15,793,729 2.3 14,306,536 2.0 13,938,366 2.0

Retail commerce 15,616,673 2.3 17,872,597 2.5 17,275,585 2.5

Specific activities of construction 10,789,385 1.6 12,223,985 1.7 12,390,259 1.8

Textile and clothing 9,505,344 1.4 10,250,211 1.4 10,637,148 1.5

Agricultural inputs 9,106,380 1.3 10,410,596 1.5 9,300,941 1.4

Wholesale and various industries 7,304,806 1.1 7,112,589 1.0 6,416,271 0.9

Electronics 7,056,826 1.0 8,429,919 1.2 8,256,088 1.2

Pulp and paper 7,050,076 1.0 9,009,701 1.3 9,187,493 1.3

Chemical 6,771,913 0.9 8,038,385 1.1 7,751,272 1.1

Financial services 6,584,820 1.0 5,775,570 0.8 4,710,266 0.7

Heavy construction 5,465,235 0.8 6,076,581 0.8 5,661,723 0.8

Woodworking and furniture market 5,429,632 0.8 6,251,811 0.9 6,577,690 1.0

Telecommunications 3,866,926 0.5 4,185,482 0.6 4,776,296 0.7

Other activities 4,095,029 0.6 4,960,665 0.7 6,464,212 0.9

Total 690,066,902 100.0 717,849,202 100.0 687,664,400 100.0

(1) The amounts disclosed under individuals include loans to the sectors of agribusiness, housing and other sectors of economic activity carried out with individuals. To the highlighted economic sectors, operations are exclusive to companies.


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) Loan portfolio by risk level and maturity d

AA A B C D E F G H Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Current operations

Installments falling due

01 to 30 18,008,132 7,481,694 17,729,857 4,853,427 285,943 536,357 89,873 45,533 195,917 49,226,733 53,744,732 57,312,143

31 to 60 13,146,240 4,983,254 5,678,709 1,061,815 195,324 418,409 42,854 70,841 106,707 25,704,153 26,577,542 28,821,558

61 to 90 12,637,195 3,793,643 5,676,960 1,429,279 142,833 180,443 50,561 33,687 107,556 24,052,157 22,691,437 25,797,961

91 to 180 36,296,081 11,264,720 12,287,564 2,804,924 493,773 1,336,921 147,090 122,298 737,901 65,491,272 67,876,209 60,708,070

181 to 360 49,220,856 13,915,937 16,254,553 4,374,870 646,596 1,630,234 192,577 249,667 701,055 87,186,345 98,952,476 88,082,918

More than 360 211,945,781 90,627,566 60,658,089 22,544,164 4,759,096 7,390,197 1,702,658 1,246,521 4,907,424 405,781,496 421,212,532 404,651,784

Installments overdue

Up to 14 days 289,617 124,943 529,268 112,479 74,850 56,617 18,219 12,520 92,532 1,311,045 1,130,563 996,112

Other (1)

393,207 -- -- -- -- -- -- -- -- 393,207 373,113 365,420

Subtotal 341,937,109 132,191,757 118,815,000 37,180,958 6,598,415 11,549,178 2,243,832 1,781,067 6,849,092 659,146,408 692,558,604 666,735,966

Operations past due

Installments falling due

01 to 30 -- -- 97,779 148,136 93,732 158,532 107,899 125,660 540,479 1,272,217 1,154,552 1,038,606

31 to 60 -- -- 35,082 88,173 47,122 71,425 56,940 55,724 224,650 579,116 744,060 542,937

61 to 90 -- -- 35,628 75,851 46,464 76,317 60,530 56,521 232,028 583,339 520,178 502,866

91 to 180 -- -- 88,497 203,982 131,008 215,631 169,636 156,667 670,338 1,635,759 1,614,801 1,388,378

181 to 360 -- -- 152,551 338,106 234,109 389,070 300,536 272,927 1,107,017 2,794,316 2,743,742 2,357,356

More than 360 -- -- 635,957 1,080,425 891,710 2,215,770 1,482,626 1,209,007 4,148,209 11,663,704 9,768,847 7,704,623

Installments overdue

01 to 14 -- -- 10,199 36,542 35,669 50,258 28,880 24,658 90,444 276,650 261,878 234,898

15 to 30 -- -- 197,217 121,777 60,897 77,433 55,961 43,395 232,250 788,930 798,591 713,177

31 to 60 -- -- 14,029 273,461 108,607 196,591 91,153 93,709 344,543 1,122,093 1,185,605 1,064,931

61 to 90 -- -- 6 16,625 203,740 150,297 115,809 93,215 522,713 1,102,405 1,031,905 867,916

91 to 180 -- -- 5 3,369 12,669 269,999 387,163 499,322 1,793,404 2,965,931 2,827,156 2,034,784

181 to 360 -- -- 3 -- 549 22,102 59,779 123,874 2,800,083 3,006,390 2,429,502 2,169,112

More than 360 -- -- 2 -- 360 92 7 875 3,128,308 3,129,644 209,781 308,850

Subtotal -- -- 1,266,955 2,386,447 1,866,636 3,893,517 2,916,919 2,755,554 15,834,466 30,920,494 25,290,598 20,928,434

Total 341,937,109 132,191,757 120,081,955 39,567,405 8,465,051 15,442,695 5,160,751 4,536,621 22,683,558 690,066,902 717,849,202 687,664,400

(1) Operations with third party risk linked to government funds and programs, primarily Pronaf, Procera, FAT, BNDES and FCO. They include 11,705 thousand of overdue installments, which comply with rules defined in each program for reimbursement by the program managers and, therefore, do not represent a credit risk for the Bank.


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) Allowance for loan losses by risk level e

Level of risk

% Provision

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Value of loans Minimum required

allowance

Existent allowance


allowance

Additional allowance

(1)

Existent allowance


allowance

Additional allowance

(1)

Existent allowance

AA -- 341,937,109 -- -- 373,297,999 -- -- -- 389,666,751 -- -- --

A 0.5 132,191,757 660,959 660,959 144,777,671 723,888 145,036 868,924 111,258,792 556,294 73,063 629,357

B 1 120,081,955 1,200,820 1,200,820 124,924,839 1,249,248 181,690 1,430,938 121,022,735 1,210,227 -- 1,210,227

C 3 39,567,405 1,187,022 1,187,022 25,525,757 765,773 291,326 1,057,099 27,623,074 828,692 77,889 906,581

D 10 8,465,051 846,505 846,505 11,032,891 1,103,289 149,499 1,252,788 5,102,007 510,201 60,861 571,062

E 30 15,442,695 4,632,809 4,632,809 11,796,903 3,539,071 1,300,232 4,839,303 10,055,849 3,016,755 689,577 3,706,332

F 50 5,160,751 2,580,376 2,580,376 4,767,971 2,383,986 642,265 3,026,251 3,555,838 1,777,919 319,311 2,097,230

G 70 4,536,621 3,175,635 3,175,635 3,806,414 2,664,490 518,450 3,182,940 3,698,915 2,589,241 184,797 2,774,038

H 100 22,683,558 22,683,558 22,683,558 17,918,757 17,918,757 -- 17,918,757 15,680,439 15,680,439 -- 15,680,439

Total 690,066,902 36,967,684 36,967,684 717,849,202 30,348,502 3,228,498 33,577,000 687,664,400 26,169,768 1,405,498 27,575,266

(1) Refers to the additional provision over and above the minimum required by CMN Resolution 2,682/1999. This provision is established based on the experience of Management, by making projections for the loan portfolio, based on the history of default of operations and in accordance with good banking practice.


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) Changes in allowance for loan losses f

Includes loans, leases and other receivables with characteristics of credit.


Opening balance 33,577,000 25,294,947

Adittion/(reversal) 14,191,667 10,844,954

Minimum required allowance 17,420,165 10,844,954

Additional allowance (3,228,498) --

Exchange fluctuation - foreign allowances (191,558) 43,822

Write off (10,609,425) (8,608,457)

Closing balance 36,967,684 27,575,266

) Changes in allowance for other loan losses g

Includes provisions for other receivables without characteristics of credit.


Opening balance 1,287,621 1,041,399

Adittion/(reversal) (4,230) 33,735

Exchange fluctuation - foreign allowances (1,759) 1,897

Write off/ other adjustments (1)

311,995 17,033

Closing balance 1,593,627 1,094,064

(1) Includes the amount of R$ 239,998 thousand, which refers to the allowance for losses on not registered securities at CETIP, reclassified to the

Other receivables grouping, according to Resolution CMN 1,779/1990.

) Leasing portfolio by maturity h

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Up to 1 year (1)

322,129 352,475 339,067

More than 1 year and up to 5 years 375,038 519,337 613,717

Over 5 years 7,520 3,023 7,963

Total present value 704,687 874,835 960,747

(1) Includes amounts related to overdue installments.

) Income from leasing transactions i


Lease revenue 177,925 207,729

Leasing 177,925 207,729

Lease expenses (102,955) (126,452)

Leasing (102,830) (126,344)

Loss on disposal of leased assets (125) (108)

Total 74,970 81,277

) Concentration of loans j

Jun 30, 2016 % of credit portfolio

Dec 31, 2015 % of credit portfolio

Jun 30, 2015 % of credit portfolio

Largest debtor 24,902,493 3.6 25,120,839 3.5 25,100,781 3.7

10 largest debtors 84,799,603 12.3 92,471,599 12.9 82,162,771 11.9

20 largest debtors 114,021,590 16.5 122,894,723 17.1 112,630,340 16.4

50 largest debtors 156,854,968 22.7 168,071,302 23.4 153,352,012 22.3

100 largest debtors 183,403,024 26.6 197,567,210 27.5 181,753,314 26.4


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) Renegotiated credits k


Credits renegotiated during the period (1)

21,735,942 21,936,404

Renegotiated when past due (2)

8,637,612 5,328,070

Renovated (3)

13,098,330 16,608,334

Changes on credits renegotiated when past due

Opening balance 19,652,990 9,030,112

Contracts (2)

8,637,612 5,328,070

Interest (received) and appropriated (1,427,214) (496,087)

Write off (1,813,648) (1,160,752)

Closing balance (4)

25,049,740 12,701,343

Allowance for loan losses of the portfolio renegotiated when past due 10,369,188 6,615,903

(%) Allowance for loan losses on the portfolio 41.4% 52.1%

90 days default of the portfolio renegotiated when past due 5,641,907 1,728,559

(%) Portfolio default 22.5% 13.6%

(1) Represents the balance of all installments (past due and future) of loans renegotiated during the period using the internet, automated teller machines (ATM) or branch network.

(2) Renegotiated credit under debt composition as a result of payment delay by the clients.

(3) Renegotiated current credits (i.e. not past due) in the form of the extension or renewal of the credit or the granting of new loans for partial or full settlement of previous contracts or any other type of agreement that changes the maturity or the payment terms, originally agreed.

(4) Includes the amount of R$ 101,408 thousand (R$ 130,797 thousand as of June 30, 2015) related to renegotiated rural credits. The amount of R$ 5,332,452 thousand (R$ 5,208,149 thousand as of June 30, 2015), related to deferred credits from rural portfolio governed by specific legislation, is not included.

) Supplementary information l

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Undrawn credit lines 142,317,122 144,106,823 152,052,055

Guarantees provided (1)

7,045,332 9,730,748 8,049,135

Confirmed export credit 203,830 3,498,059 2,711,282

Contracted credit opened for import 634,725 1,239,989 1,044,972

Linked resources 4,058,376 2,772,443 1,472,590

Guaranteed values for linked deposits 3,970,387 2,723,589 1,464,779

(1) For these operations, the Bank maintains an allowance recorded in other liabilities - sundry, (Note 20,e) totaling R$ 525,327 thousand (R$ 541,312 thousand as of December 31, 2015 and R$ 362,654 thousand as of June 30,2015) calculated in accordance with Resolution CMN 2,682/1999.

) Loan Operations by line of credit from Fund for Workers’ Assistance (Fundo de Amparo ao mTrabalhador – FAT)

Lines of FAT TADE (1)

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Loans and discounted securities 2,498,505 2,682,826 2,877,731

Proger Urbano Investimento 18/2005 2,498,499 2,682,793 2,877,707

Proger Urbano Capital de Giro 15/2005 6 6 6

Proger Urbano Empreendedor Popular 01/2006 -- 27 18

Financing 532,361 551,349 608,521

Proger Exportação 27/2005 47,355 40,203 15,705

FAT Taxista 02/2009 348,850 306,224 283,933

FAT Turismo - Investimento 01/2012 119,630 138,424 153,942

FAT Turismo - Capital de Giro 02/2012 16,526 66,498 154,941

Rural and agribusiness financing 91,826 117,358 197,849

Proger Rural Custeio 02/2006 642 887 1,269

Proger Rural Investimento 13/2005 11,683 13,865 18,490

Pronaf Custeio 04/2005 2,511 2,709 3,168

Pronaf Investimento 05/2005 72,939 95,907 167,029

Giro Rural - Aquisição de Títulos 03/2005 4,051 3,990 7,893

Total 3,122,692 3,351,533 3,684,101

(1) TADE - Allocation Term of Special Deposits.


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72

- OTHER RECEIVABLES 11

) Specific credits a

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Extension of rural credits - National Treasury 354,793 333,908 1,632,924

Other 716 696 881

Total 355,509 334,604 1,633,805

) Sundry b

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Deferred tax asset - tax credit (Note 24.e) 43,853,106 39,995,482 29,656,398

Sundry debtors from escrow deposits - contingencies (Note 27.g.1) 30,309,783 27,359,764 24,163,666

Credit card operations (Note 10.a) 21,526,694 22,940,041 20,354,776

Sundry debtors from escrow deposits - lawsuit (Note 27.h.1) 16,911,249 16,399,235 15,873,150

Credit linked to acquired operations (Note 10.a) (1)

15,205,108 15,266,721 16,323,462

Income tax and social contribution to offset 11,137,929 8,046,349 11,838,067

Fund of allocation of surplus - Previ (Note 26.f) 9,501,682 9,079,921 8,780,131

Receivables - other 5,283,961 3,679,591 1,400,675

Receivables acquisition 3,244,115 3,862,570 3,331,166

National Treasury - interest rate equalization - agricultural crop - Law 8,427/1992

2,767,454 3,384,982 13,459,428

Sundry debtors - domestic 2,426,088 2,313,728 2,221,068

Premiums on credits linked to operations acquired in assignment 1,764,623 1,718,461 2,113,037

Receivables - non-financial companies 1,195,844 1,511,529 57,023

Receivables - National Treasury (2)

958,173 1,021,565 2,132,220

Rights for acquisition of royalties and government credits 917,654 996,876 1,030,875

Receivables – ECT – Banco Postal 799,869 1,498,881 1,401,972

Sundry debtors - foreign 519,077 191,166 190,132

Salary advances and other advances 215,840 286,804 211,766

Actuarial assets (Note 26.e) 186,398 169,474 3,157,539

Advances to cards transactions processing’s companies 123,834 1,093,351 2,908,973

Sundry debtors from escrow deposits - other 54,365 60,013 56,631

Sundry debtors for purchasing assets 24,898 41,142 44,769

Other 703,963 511,769 515,790

Total 169,631,707 161,429,415 161,222,714

Current assets 101,215,592 100,389,034 111,481,224

Non-current assets 68,416,115 61,040,381 49,741,490

(1) Refers to the portfolios of payroll loans and vehicle financing granted to individuals, acquired by the Bank through assignments with full recourse to the transferor, accounted for in accordance with CMN Resolution 3,533/2008.

(2) Refers mainly to amounts from subsidies in operations with MCR 6-2 resources, MCR 6-4 (Rural credit manual) and they are supported by specific legislation, like the CMN resolutions, the program of Bahia's cocoa farming recovery (CMN Resolution No. 2,960/2002), the Family Agriculture Price Guarantee Program (PGPAF) and the regional funds (FNDE, FDA and FDCO).


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73

- FOREIGN EXCHANGE PORTFOLIO 12

) Breakdown a

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Other receivables

Exchange purchases pending settlement 18,774,008 20,789,338 17,618,779

Bills of exchange and time drafts in foreign currency 40,098 48,204 38,298

Receivables from sales of foreign exchange 19,933,758 11,730,483 9,203,859

(Advances received in national/foreign currency) (19,198,715) (11,378,722) (7,653,199)

Foreign currency receivables 1,334 1,805 5,724

Income receivable on advances granted and on financed imports 250,219 229,014 152,955

Total 19,800,702 21,420,122 19,366,416

Current assets 18,854,747 19,847,057 19,200,619

Non-current assets 945,955 1,573,065 165,797

Other liabilities

Exchange sales pending settlement 18,376,250 14,025,881 12,815,286

(Financed imports) (17,465) (11,721) (24,646)

Exchange purchase liabilities 20,759,788 18,491,690 16,132,632

(Advances on exchange contracts) (17,597,845) (16,993,015) (14,498,113)

Foreign currency payables 55,872 72,204 64,819

Unearned income on advances granted 11,470 14,901 5,141

Total 21,588,070 15,599,940 14,495,119

Current liabilities 18,160,037 13,737,534 13,075,462

Non-current liabilities 3,428,033 1,862,406 1,419,657

Net foreign exchange portfolio (1,787,368) 5,820,182 4,871,297

Memorandum accounts

Credit opened for imports 1,025,129 1,293,982 1,155,917

Confirmed export credit 203,830 3,498,059 2,711,282

) Foreign exchange results b


Exchange income 10,198,797 9,104,884

Exchange expenses (8,651,895) (8,436,207)

Foreign exchange result 1,546,902 668,677


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74

- OTHER ASSETS 13

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Assets not for own use 267,107 271,143 259,153

Assets in special regime 167,726 166,729 160,373

Real estate 43,466 50,104 60,972

Residential properties 23,072 13,605 10,012

Machinery and equipment 3,630 3,693 3,896

Vehicles 509 516 482

Other 28,704 36,496 23,418

Materials in stock 61,358 61,390 57,867

Subtotal 328,465 332,533 317,020

(Impairment) (1)

(124,846) (120,940) (127,320)


Personnel expenses - meal program 165,511 162,348 121,499

Entities abroad 77,260 84,229 72,465

Tax expenses 31,363 27 27,385

Unearned insurance premiums 18,272 14,172 9,481

Promotion and public relations 14,397 -- 13,667

Rent 5,764 5,810 5,856

Premiums for purchased payroll credits (2)

2,264 11,953 43,302

Commissions paid to car dealers - financing of vehicles -- -- 54

Other 5,413 6,495 6,072

Total 523,863 496,627 489,481

Current assets 512,074 480,840 439,792

Non-current assets 11,789 15,787 49,689

(1) The Bank recognized, in the 1st half/2016, allowance expenses for impairment losses of assets not in use in the amount of R$ 6,091 thousand (reversal of allowance in the amount of R$ 311 thousand in the 1st half/2015).

(2) The amounts are amortized over the maturity of the installments of loans acquired from other financial institutions.


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half 2016


75

- INVESTMENTS 14

) Changes in subsidiaries and joint ventures a

Capital stock

Adjusted shareholders’

equity

Net income/(loss) - 1st half/2016

Number of shares (in thousands)

Ownership interest in the total capital %

Book value Changes - 1st half/2016 Book value Equity income

Common Preferred Dec 31, 2015 Dividends Other events Equity income Jun 30, 2016 Jun 30, 2015 1st half/2015

Domestic 15,100,387 (1,160,451) 175,035 2,115,208 16,230,179 14,697,143 2,294,962

Banco Votorantim S.A. (1) 7,826,980 8,282,418 194,410 43,114,693 9,581,043 50% 3,828,153 (28,602) 235,671 104,089 4,139,311 3,900,004 158,773

Cateno Gestão de Contas de Pagamento S.A. (2) 414,000 12,100,385 256,974 10,787,400 1,198,600 30% 3,631,654 (75,426) (2,833) 77,092 3,630,487 3,645,002 49,202

Cielo S.A. 3,500,000 7,702,180 1,923,645 540,500 -- 28.72% 1,834,175 (107,537) (68,762) 553,982 2,211,858 1,542,766 501,877

BB Mapfre SH1 Participações S.A. (3) 2,050,198 2,783,536 808,931 1,039,908 2,079,400 74.99% 1,978,221 (517,431) 20,098 606,617 2,087,505 1,897,640 587,730

Brasilprev Seguros e Previdência S.A. (3) 943,417 2,600,153 464,688 572 1,145 75% 1,790,343 (215,874) 1,202 348,493 1,924,164 1,829,344 543,872

Mapfre BB SH2 Participações S.A. (3) 1,968,380 3,490,882 161,236 369,163 384,231 50% 1,657,372 -- 6,997 80,618 1,744,987 1,538,919 93,160

Neoenergia S.A. 4,739,025 9,933,691 325,992 701,327 -- 11.99% 1,168,345 (22,648) -- 29,692 1,175,389 1,168,686 45,799

Elo Participações S.A. 800,227 1,715,817 197,690 372 -- 49.99% 747,076 -- 11,836 98,825 857,737 704,103 119,887

IRB Brasil Resseguros S.A. (3)(4) 1,453,080 3,033,558 412,638 63,727 -- 20.51% 659,379 (99,224) 1,112 58,818 620,085 620,214 73,085

Brasilcap Capitalização S.A. (3) 231,264 539,623 237,688 107,989 107,989 66.66% 294,480 (93,210) -- 158,443 359,713 323,091 134,446

Other investments 181,360 (499) 457 (1,461) 179,857 174,017 (12,869)

Goodwill/(bargain) purchase on acquisition of investments 707,512 -- (88,646) -- 618,866 788,943 --

Unrealized results (5) (3,377,683) -- 57,903 -- (3,319,780) (3,435,586) --

Overseas 180,830 -- (60,185) -- 120,645 208,888 --

Goodwill on acquisition of investments 180,830 -- (60,185) -- 120,645 208,888 --

Total investments in subsidiaries and joint ventures 15,281,217 (1,160,451) 114,850 2,115,208 16,350,824 14,906,031 2,294,962

Accumulated impairment (9,018) -- -- -- (9,018) (9,018) --

(1) Excluded unrealized result arising from transactions with the Banco do Brasil.

(2) Indirect interest of the Bank in Cateno, through its subsidiary BB Elo Cartões Participações S.A. The total share of the Bank is 50.10% (Cielo S.A. holds 70% of direct interest in Cateno).

(3) Equity interest held by BB Seguros Participações S.A. The percentage of total participation is in Note 3.b. It includes harmonization adjustments in accounting practices.

(4) Refers to the percentage of the equity interest, considering the acquisition of shares by the invested entity held in treasury. (Note 2).

(5) Unrealized profit arising from a new strategic partnership between BB Elo Cartões Participações S.A. and Cielo S.A., forming Cateno Gestão de Contas de Pagamento S.A. (Note 2).


1st

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76

) Summarized financial information of associates and joint ventures, not adjusted for the equity interest percentage held by the Bank b

Balance sheet

Jun 30, 2016

Brasilprev Seguros e

Previdência S.A.

Banco Votorantim S.A.

Cateno Gestão de Contas de

Pagamento S.A.

BB Mapfre SH1 Participações S.A.

Mapfre BB SH2 Participações S.A.

Neoenergia S.A. Cielo S.A. Other Total

Total assets 175,665,563 108,091,839 12,510,093 14,188,884 14,191,416 11,893,420 21,512,344 30,911,369 388,964,928

Cash and cash equivalents 3,786 141,137 -- 107,590 167,962 136 3,458 203,159 627,228

Interbank investments -- 19,855,391 914,730 -- -- -- 6,999 592,682 21,369,802

Securities and derivative financial instruments 173,801,541 31,689,370 -- 6,380,130 4,728,932 194,413 71,005 17,549,424 234,414,815

Loan operations -- 41,394,671 -- -- -- -- -- -- 41,394,671

Other credits and other assets 1,661,678 14,392,570 536,795 7,319,390 8,859,302 615,292 11,164,834 10,022,197 54,572,058

Permanent assets 198,558 618,700 11,058,568 381,774 435,220 11,083,579 10,266,048 2,543,907 36,586,354

Total liabilities 173,065,410 99,809,421 409,708 11,405,348 10,700,534 1,959,729 13,810,164 24,163,880 335,324,194

Deposits and securities sold under repurchase agreements -- 41,777,991 -- -- -- -- -- -- 41,777,991

Other liabilities 173,065,410 58,031,430 409,708 11,405,348 10,700,534 1,959,729 13,810,164 24,163,880 293,546,203

Technical provisions for insurance, pension plans and capitalization

171,816,005 -- -- 8,486,569 7,963,607 -- -- 19,689,151 207,955,332

Subordinated debts and equity and debt hybrid securities -- 5,451,069 -- -- -- -- -- -- 5,451,069

Other 1,249,405 52,580,361 409,708 2,918,779 2,736,927 1,959,729 13,810,164 4,474,729 80,139,802

Shareholders' equity 2,600,153 8,282,418 12,100,385 2,783,536 3,490,882 9,933,691 7,702,180 6,747,489 53,640,734

% of Total Share 75.00% 50.00% 30.00% 74.99% 50.00% 11.99% 28.72% -- --

Shareholders' equity (proportional to the equity interest) 1,949,985 4,141,209 3,630,116 2,087,374 1,745,441 1,190,761 2,211,858 2,079,282 19,036,026

Goodwill/(bargain) purchase on acquisition of investments (1,561) 91,364 -- -- -- -- 481,598 168,110 739,511

Other amounts (1) (25,821) (1,898) 371 131 (454) (15,372) -- (3,381,670) (3,424,713)

Balance of the investment 1,922,603 4,230,675 3,630,487 2,087,505 1,744,987 1,175,389 2,693,456 (1,134,278) 16,350,824

(1) It refers, mainly, to unrealized results and harmonization adjustments in accounting practices of non-financial companies to Chart of Accounts for Financial Institutions - Cosif.


1st

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77

Statement of income

1st half/2016


Previdência S.A.



Pagamento S.A.




Income from financial intermediation 281,259 1,614,449 -- 400,734 380,977 -- -- 787,189 3,464,608

Service fee income 904,512 236,271 1,349,699 -- 4,294 -- 4,032,324 68,312 6,595,412

Other administrative expenses (103,575) (576,624) (501,651) (119,939) (241,561) (7,919) (431,115) (172,293) (2,154,677)

Other operating income/expenses (234,938) (583,288) (458,711) 1,065,913 155,342 332,307 (781,347) 595,251 90,529

Non-operating income 85 5,503 -- 4,093 746 2,024 (19,627) 16,882 9,706

Result before tax 847,343 696,311 389,337 1,350,801 299,798 326,412 2,800,235 1,295,341 8,005,578

Tax about profit and profit sharing (382,655) (501,901) (132,363) (541,870) (138,562) (420) (876,590) (383,230) (2,957,591)

Net income 464,688 194,410 256,974 808,931 161,236 325,992 1,923,645 912,111 5,047,987

% of Total Share 75.00% 50.00% 30.00% 74.99% 50.00% 11.99% 28.72% -- --

Net income (proportional to the equity interest) 348,493 97,205 77,092 606,617 80,618 39,077 552,419 356,294 2,157,815

Other amounts (1) -- 6,884 -- -- -- (9,385) 1,563 (41,669) (42,607)

Result in the equity method investments 348,493 104,089 77,092 606,617 80,618 29,692 553,982 314,625 2,115,208



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78

Balance sheet

Jun 30, 2015


Previdência S.A.



Pagamento S.A.




Total assets 134,330,980 103,475,850 12,487,357 12,466,600 14,185,850 10,895,377 22,260,627 32,458,819 342,561,460

Cash and cash equivalents 6,851 220,552 1,935 84,366 305,953 200 18,034 41,933 679,824

Short-term interbank investments -- 18,207,687 -- -- -- -- -- 257,558 18,465,245

Securities and derivative financial instruments 132,873,320 25,752,917 710,164 5,702,603 4,046,085 181,255 72,353 18,327,734 187,666,431

Loan operations -- 46,455,677 -- -- -- -- -- -- 46,455,677

Other credits and other assets 1,258,799 12,054,437 331,836 6,416,285 9,159,206 609,706 11,606,710 10,476,480 51,913,459

Permanent assets 192,010 784,580 11,443,422 263,346 674,606 10,104,216 10,563,530 3,355,114 37,380,824

Total liabilities 131,855,739 95,628,782 337,350 9,936,252 11,107,109 1,017,597 16,896,629 25,564,560 292,344,018

Deposits and securities sold under repurchase agreements -- 32,970,626 -- -- -- -- -- 3,682 32,974,308

Other liabilities 131,855,739 62,658,156 337,350 9,936,252 11,107,109 1,017,597 16,896,629 25,560,878 259,369,710

Technical provisions for insurance, pension plans and capitalization

130,871,836 -- -- 7,359,037 7,632,886 -- -- 20,511,212 166,374,971

Subordinated debts and equity and debt hybrid securities -- 6,498,894 -- -- -- -- -- -- 6,498,894

Other 983,903 56,159,262 337,350 2,577,215 3,474,223 1,017,597 16,896,629 5,049,666 86,495,845

Shareholders' equity 2,475,241 7,847,068 12,150,007 2,530,348 3,078,741 9,877,780 5,363,998 6,894,259 50,217,442

% of Total Share 75.00% 50.00% 30.00% 74.99% 50.00% 11.99% 28.76% -- --

Shareholders' equity (proportional to the equity interest) 1,856,307 3,923,534 3,645,002 1,897,508 1,539,371 1,184,059 1,542,767 1,949,816 17,538,364

Goodwill/(bargain) purchase on acquisition of investments (1,561) 150,588 -- -- -- -- 582,362 266,442 997,831

Other amounts (1) (26,963) (23,531) (3,435,586) 132 (452) (15,373) -- (128,391) (3,630,164)

Balance of the investment 1,827,783 4,050,591 209,416 1,897,640 1,538,919 1,168,686 2,125,129 2,087,867 14,906,031



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79

Statement of income

1st half/2015


Previdência S.A.



Pagamento S.A.




Income from financial intermediation 293,078 1,612,951 -- 325,206 294,423 -- -- 677,229 3,202,887

Service fee income 715,007 210,791 874,942 -- 5,184 -- 3,802,578 781,219 6,389,721

Other administrative expenses (92,588) (567,780) (329,338) (90,335) (225,316) (8,113) (254,698) (640,971) (2,209,139)

Other operating income/expenses 292,326 (897,616) (297,122) 991,671 256,730 319,580 (1,191,448) 359,731 (166,148)

Non-operating income 67 (17,491) -- 108 (452) 2,008 (6,612) 35,014 12,642

Result before tax 1,207,890 340,855 248,482 1,226,650 330,569 313,475 2,349,820 1,212,222 7,229,963

Tax about profit and profit sharing (484,200) (73,079) (84,477) (442,906) (144,250) (1,159) (601,723) (346,099) (2,177,893)

Net income 723,690 267,776 164,005 783,744 186,319 312,316 1,748,097 866,123 5,052,070

% of Total Share 75.00% 50.00% 30.00% 74.99% 50.00% 11.99% 28.76% -- --

Net income (proportional to the equity interest) 542,731 133,888 49,202 587,730 93,160 37,438 502,779 343,368 2,290,296

Other amounts (1) 1,141 24,885 -- -- -- 8,361 (902) (28,819) 4,666

Result in the equity method investments 543,872 158,773 49,202 587,730 93,160 45,799 501,877 314,549 2,294,962



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80

) Other investments c

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Tax incentive investments 35,189 35,189 33,596

Equity securities 57 58 58

Stocks and shares 88,486 89,346 82,639

Other investments 7,868 7,625 7,501

Other equity abroad 76,512 93,082 73,954

Total 208,112 225,300 197,748

(Accumulated impairment) (45,234) (45,251) (45,231)

) Goodwill arising on acquisition of investments d

Changes of goodwill 1st half/2016 1st half/2015

Opening balance 889,903 1,077,869

Amortizations (1)

(103,748) (100,951)

Foreign exchange fluctuation (2)

(45,083) 22,474

Closing balance 741,072 999,392

(1) Recorded in other administrative expenses.

(2) Levied on the goodwill from BB Americas e do Banco Patagonia.

) Expected goodwill amortization e

2nd half/2016 2017 2018 2019 After 2020 Total

Banco do Brasil 43,252 87,268 27,079 27,611 26,799 212,009

Banco Votorantim 30,231 61,133 -- -- -- 91,364

Banco Patagonia 10,581 19,264 19,637 20,028 16,975 86,485

Banco do Brasil Americas 2,440 6,871 7,442 7,583 9,824 34,160

Tax effects (1)

(19,463) (39,271) (12,186) (12,425) (12,060) (95,405)

Net total 23,789 47,997 14,893 15,186 14,739 116,604

Other investments

BB-BI 53,835 123,517 141,696 162,550 -- 481,598

Cielo 53,835 123,517 141,696 162,550 -- 481,598

BB Seguros 10,398 10,743 11,040 10,028 5,256 47,465

Brasilcap 4,577 8,593 8,780 7,659 -- 29,609

IRB-Brasil Resseguros S.A. 5,821 2,150 2,260 2,369 5,256 17,856

BB Consolidated 107,485 221,528 179,815 200,189 32,055 741,072

Tax effects (1)

(47,224) (98,506) (79,703) (88,982) (13,847) (328,262)

Net total 60,261 123,022 100,112 111,207 18,208 412,810

(1) 25% of income tax and 20% of social contribution for financial companies and for non-financial companies of insurance, private pension plan and capitalization, and 25% of income tax and 9% of social contribution for other non-financial companies.

The expected amortization of goodwill arising on the acquisition of investments is based on the projections of results

made at the time of the purchase, prepared by specialized firms or technical departments within the Bank, and

considers the timing of the estimates and discount rates used in calculating the net present value of expected cash

flows.

) Goodwill impairment test f

The recoverable amount of goodwill arising on acquisition of investments is determined by the value in use, which is

the discounted value of the cash flow projections of the invested entity (cash-generating unit).


1st

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81

Assumptions used to project these cash flows are based on public information, budgets and / or business plans of the

purchased entities. These assumptions consider current and past performance, as well as expected market and

macroeconomic growth.

The cash flow of the entities below were actively projected for ten years and considered perpetual from the eleventh

year with fixed growth rates. For the periods that exceed the terms of the budget or business plan, the growth

estimates are in line with those adopted by the entities. The nominal discount rate is determined annually based on

the CAPM (Capital Asset Pricing Model) adapted for the Brazilian market and referenced in Reais (R$).

Entity (cash-generating unit) Growth rate p.a. (1)

Discount rate p.a. (2)

Banco Votorantim 4.2% 15.5%

BB Americas 2.0% 8.19%

Banco Patagonia 25.5% 34.65%

(1) Nominal growth in perpetuity.

(2) Geometric average of ten years of projections, except BB Americas, that considered a geometric average of seven years of projections.

According to the sensitivity analysis performed, there is no indication that changes in the assumptions would cause

the book value of the cash-generating units to exceed the recoverable amount.

The recoverable amount of the goodwill arising on the acquisition of Cielo, as well as of the goodwill recognized in

the BB Seguros/BB Seguridade, is determined by the net realizable value through sale, based on the share price of

the companies on BM&FBovespa.

Entity (cash-generating unit) Share price (1)

BB Seguridade (BBSE3) R$ 24,81

Cielo (CIEL3) R$ 36,66

(1) Share price quoted at September 30, 2015.

In the first half 2016 and in the first half 2015, there was no impairment loss on goodwill arising on the acquisition of

investments.

15- PROPERTY AND EQUIPMENT

Dec 31, 2015 1st half/2016 Jun 30, 2016 Jun 30, 2015

Book value Changes Depreciation Cost value Accumulated Depreciation

Accumulated impairment

Book value Book value

Buildings 3,867,155 (11,222) (180,185) 6,578,974 (2,893,695) (9,531) 3,675,748 3,741,067

Furniture and equipment in use 1,488,760 63,688 (125,793) 3,447,037 (2,020,357) (25) 1,426,655 1,421,761

Data processing systems 1,186,740 110,403 (215,084) 4,169,111 (3,087,052) -- 1,082,059 1,086,970

Constructions in progress 102,952 178,993 -- 281,945 -- -- 281,945 81,335

Land 197,476 2,872 -- 200,348 -- -- 200,348 198,641

Facilities 207,947 (89) (17,208) 985,966 (795,316) -- 190,650 201,354

Security systems 162,518 16,610 (14,064) 405,967 (240,903) -- 165,064 159,490

Communication systems 100,085 17,496 (9,109) 273,562 (165,090) -- 108,472 90,111

Transport systems 7,652 1,068 (550) 15,509 (7,339) -- 8,170 7,513

Furniture and equipment in stock 1,749 (31) -- 1,718 -- -- 1,718 1,751

Total 7,323,034 379,788 (561,993) 16,360,137 (9,209,752) (9,556) 7,140,829 6,989,993


1st

half 2016


82

- INTANGIBLE ASSETS 16

) Changes and breakdown a


Book value Changes Amortization Cost value Accumulated amortization

Accumulated impairment

Book value Book Value

Rights to manage payroll 5,301,265 22,895 (923,540) 9,305,139 (4,854,779) (49,740) 4,400,620 5,737,704

Softwares 1,709,152 135,577 (107,599) 2,758,269 (1,021,139) -- 1,737,130 1,439,076

Goodwill on acquisition of absorbed company (1) 1,907,615 -- (450,078) 4,961,028 (3,503,491) -- 1,457,537 2,311,492

Other intangible assets 392,840 23,664 (87,339) 615,682 (286,517) -- 329,165 223,287

Total 9,310,872 182,136 (1,568,556) 17,640,118 (9,665,926) (49,740) 7,924,452 9,711,559

(1) Refers to the goodwill from the merger of Banco Nossa Caixa on November 2009.

) Estimate for amortization b

2nd half/2016 2017 2018 2019 2020 After 2020 Total

Amounts to be amortized 1,469,919 2,667,571 1,492,287 947,702 366,010 980,963 7,924,452

) Impairment test c

The impairment test of goodwill on the acquisition of Banco Nossa Caixa, which was merged into Banco do Brasil,

considers the value in use of Banco do Brasil´s operations in the state of São Paulo (cash-generating unit). Cash

flows are based on cash-generating unit results in 2015, and on the 2016 and 2017 budgets and internal projections

of results from 2018, for five years.

The assumptions adopted for the calculation are based on Banco do Brasil's Corporate Strategy and macroeconomic

scenario. They consider the current and past performance and expected growth in the market segment.

Cash flows were discounted by the Bank’s cost of own capital. The nominal discount rate is measured annually

based on the Capital Asset Pricing Model – CAPM adapted for the Brazilian market and referenced in Reais (R$).

Entity (cash-generating unit) Growth rate p.a Discount rate p.a.

Banco do Brasil - state of São Paulo - Goodwill Banco Nossa Caixa (1) (2)

2.5% 15.3%

(1) Nominal growth in perpetuity.

(2) Geometric average of five years of projections.

According to the sensitivity analysis performed, there is no indication that changes in the assumptions would cause

the book value of the cash-generating unit to exceed its recoverable amount.

In the 1st half 2016 and 1

st half 2015, there was no impairment loss on goodwill on merged company.


1st

half 2016


83

- DEPOSITS AND SECURITIES SOLD UNDER REPURCHASE AGREEMENTS 17

) Deposits a

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Demand deposits 62,549,870 66,549,760 64,754,810

Individuals 29,142,429 31,156,677 28,768,045

Companies 20,065,846 23,101,575 22,058,809

Restricted 9,471,591 5,648,623 9,394,082

Government 1,488,770 1,808,898 1,543,079

Related companies 734,568 2,306,081 823,789

Foreign currency 705,597 774,883 892,616

Financial system institutions 398,904 617,029 809,028

Special from Federal Treasury 302,398 268,841 312,575

Domiciled abroad 86,528 75,041 38,333

Other 153,239 792,112 114,454

Saving deposits 148,367,610 151,845,281 147,306,118

Individuals 139,228,546 142,195,252 136,944,516

Companies 8,754,939 9,302,317 10,036,705

Related companies 367,514 332,789 311,232

Financial system institutions 16,611 14,923 13,665


Time deposits 202,458,585 204,542,130 198,931,164

Judicial 116,654,650 113,652,254 116,805,309

National currency 60,079,689 58,101,859 53,305,297

Foreign currency 20,385,582 27,256,485 23,395,054

Fundo de Amparo ao Trabalhador - FAT (Note 17.e) 3,741,432 4,102,449 4,164,447

Funproger (Note 17.f) 302,697 263,488 253,232

Other 1,294,535 1,165,595 1,007,825

Other deposits 29,962 -- --

Total 440,878,532 464,419,718 444,329,440



) Segregation of deposits by repayment date b

Without maturity

Up to 3 months

3 to 12 months

1 to 3 years 3 to 5 years More than 5

years Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Time deposits (1)

122,723,260 17,090,603 8,647,273 20,901,450 33,095,999 -- 202,458,585 204,542,130 198,931,164

Saving deposits 148,367,610 -- -- -- -- -- 148,367,610 151,845,281 147,306,118

Demand deposits 62,549,870 -- -- -- -- -- 62,549,870 66,549,760 64,754,810

Interbank deposits

1,631,525 9,128,205 13,352,076 2,335,109 996,355 29,235 27,472,505 41,482,547 33,337,348

Other deposits 29,962 -- -- -- -- -- 29,962 -- --

Total 335,302,227 26,218,808 21,999,349 23,236,559 34,092,354 29,235 440,878,532 464,419,718 444,329,440

(1) Includes the amount R$ 57,911,382 thousand (R$ 56,772,137 thousand as of Dec 31, 2015 and R$ 52,367,617 thousand as of Jun 30, 2015), relating to time deposits with early repurchase clause (liquidity commitment), classified based on the contractual maturity dates.


1st

half 2016


84

) Securities sold under repurchase agreements c

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Own portfolio 50,808,346 68,880,140 50,943,891

Corporate bonds 30,415,000 52,141,995 43,964,811

Treasury financial bills 19,241,233 14,615,322 5,143,850

Securities abroad 1,152,113 2,122,823 1,835,230

Third-party portfolio 361,160,289 264,641,508 290,285,259

National Treasury bills 138,623,309 117,828,280 134,709,182

Treasury financial bills 137,924,351 399,993 37,578,505

National Treasury notes 84,612,628 146,413,188 117,997,572

Securities abroad 1 47 --

Total 411,968,635 333,521,648 341,229,150



) Expenses with deposits and with securities sold under repurchase agreements d


Deposits (17,942,769) (15,835,989)

Saving deposits (6,000,428) (5,299,389)

Judicial deposits (5,886,330) (5,611,984)

Time deposits (4,231,748) (4,547,608)

Interbank deposits (1,824,263) (377,008)

Securities sold under repurchase agreements (22,264,217) (19,296,322)

Third-party portfolio (18,923,692) (16,730,403)

Own portfolio (3,340,525) (2,565,919)

Funds from acceptance and issuance of securities (1)

(11,323,454) (9,236,846)

Agribusiness letters of credit (7,814,270) (6,137,518)

Financial bills (1,972,745) (1,755,062)

Letters of credit – real estate (951,322) (827,478)

Securities issues abroad (585,117) (516,788)

Subordinated debt abroad (2)

(274,345) (265,144)

Equity and debt hybrid securities (3)(4)

(973,305) (998,492)

Other (377,125) (363,269)

Total (53,155,215) (45,996,062)

(1) Funds from acceptance and issuance of securities are disclosed in Note 19.

(2) Subordinated debt abroad are disclosed in Note 20.c.

(3) Equity and debt hybrid securities are disclosed in Note 20.d.


1st

half 2016


85

) Fund for worker's assistance (Fundo de Amparo ao Trabalhador – FAT) e

Program Resolution/

TADE (1)

Repayment of FAT Funds Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Type(2)

Initial date Final date Available

TMS(3)

Applied

TJLP(4)

Total

Available

TMS(3)

Applied

TJLP(4)

Total

Available

TMS(3)

Applied

TJLP(4)

Total

Proger Rural e Pronaf 18,503 78,120 96,623 55,004 98,318 153,322 65,901 189,660 255,561

Pronaf Custeio 04/2005 RA 11/2005 -- 91 1,705 1,796 181 1,841 2,022 87 2,198 2,285

Pronaf Investimento 05/2005 RA 11/2005 -- 17,054 69,457 86,511 53,075 88,252 141,327 62,641 174,070 236,711

Rural Custeio 02/2006 RA 11/2005 -- 84 369 453 104 485 589 256 783 1,039

Rural Investimento 13/2005 RA 11/2005 -- 1,274 6,589 7,863 1,644 7,740 9,384 2,917 12,609 15,526

Proger Urbano 667,719 2,341,018 3,008,737 753,477 2,523,289 3,276,766 475,319 2,720,669 3,195,988

Urbano Investimento 18/2005 RA 11/2005 -- 316,799 2,341,018 2,657,817 753,477 2,523,289 3,276,766 475,319 2,720,669 3,195,988

Urbano Capital de Giro 01/2016 RA 06/2016 -- 350,920 -- 350,920 -- -- -- -- -- --

Outros 115,339 520,733 636,072 132,916 539,445 672,361 113,393 599,505 712,898

Exportação 27/2005 RA 11/2005 -- 13,973 45,324 59,297 804 37,352 38,156 865 15,190 16,055

FAT Taxista 02/2009 RA 09/2009 -- 62,814 346,391 409,205 82,299 304,362 386,661 46,565 282,797 329,362

FAT Turismo Investimento 01/2012 RA 08/2012 -- 13,053 117,735 130,788 5,409 137,240 142,649 3,181 152,722 155,903

FAT Turismo Capital de Giro 02/2012 RA 08/2012 -- 25,499 11,283 36,782 44,404 60,491 104,895 62,782 148,796 211,578

Total 801,561 2,939,871 3,741,432 941,397 3,161,052 4,102,449 654,613 3,509,834 4,164,447

(1) TADE - Allocation Term of Special Deposits.

(2) RA - Automatic Return (monthly, 2% of the balance).

(3) Funds remunerated by the Taxa Média Selic (average selic rate - TMS).

(4) Funds remunerated by Taxa de Juros de Longo Prazo (long-term interest rate - TJLP).


1st

half 2016


86

FAT is a special accounting and financial fund, established by Law 7,998/1990, associated with the Ministério do

Trabalho e Emprego (Ministry of Labor and Employment) and managed by the Executive Council of the Fundo de

Amparo ao Trabalhador (Fund for Workers’ Assistance) - Codefat. Codefat is a collective, tripartite, equal level

organization, composed of representatives of workers, employers and government.

The main actions to promote employment using FAT funds are structured around the Programs for the Generating

Employment and Earnings (Proger), resources for which are allocated through special deposits, established by Law

8,352/1991, in official federal financial institutions. These programs include, among others, the urban Proger program

(Investment and Working Capital) and the rural Proger program and the National Program for Strengthening Family

Farming - Pronaf, in addition to the special lines such as FAT Integrar – Rural e Urbano, FAT Giro Setorial – Micro e

Pequenas Empresas (micro and small-sized companies), FAT Giro Setorial – Médias e Grandes Empresas (medium

and large-sized companies), FAT Giro Setorial Veículos – Micro e Pequenas Empresas (micro and small-sized

companies), FAT Giro Setorial Veículos – Médias e Grandes Empresas (medium and large-sized companies), FAT

Fomentar – Micro e Pequenas Empresas (micro and small-sized companies), FAT Fomentar – Médias e Grandes

Empresas (medium and large-sized companies), FAT Giro Agropecuário, FAT Inclusão Digital (digital inclusion), FAT

Taxista (taxi), FAT Turismo Investimento and FAT Turismo Capital de Giro.

The FAT special deposits allocated to Banco do Brasil incur interest on a daily pro rata die basis using the Average

Selic Rate (TMS) when not lent out. As they are disbursed as loans, the interest rate is swapped to the Long-term

Interest Rate (TJLP) until the maturity 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.

) Guarantee fund for generation of employment and earnings (Funproger) f

The Guarantee Fund for Generation of Employment and Earnings (Funproger) is a special accounting fund

established on November 23, 1999 by Law 9,872/1999, amended by Law 10,360/2001 and by Law 11,110/2005 and

regulated by Codefat Resolution 409/2004, and its amendments. It is managed by Banco do Brasil under the

supervision of Codefat/MTE and the balance at June 31, 2016 is R$ 302,697 thousand (R$ 263,488 thousand as of

December 31, 2015 and R$ 253,232 thousand as of June 30, 2015).

The objective of Funproger is to provide guarantees to entrepreneurs who would otherwise not have the necessary

guarantees to contract financing by Proger Urbano and Programa Nacional de Microcrédito Produtivo Orientado,

through the payment of a commission. The net assets of Funproger are accumulated through funds arising from the

difference between the Average Selic Rate (TMS) and the Long-Term Interest Rate (TJLP) 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 excess cash resources paid by Banco do Brasil, the fund manager.


1st

half 2016


87

- BORROWINGS AND ONLENDINGS 18

) Borrowings a

up to 90 days from 91 to 360

days from 1 to 3

years from 3 to 5

years Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Domestic -- -- -- -- -- 38,494 --

Borrowing from non-financial companies

-- -- -- -- -- 38,494 --

Overseas 4,624,159 13,953,821 3,759,069 425,932 22,762,981 29,616,866 23,073,915

Borrowings from bankers abroad 4,550,324 13,853,225 3,757,306 425,842 22,586,697 29,540,426 22,904,921

Imports 57,419 43,679 1,763 90 102,951 76,440 168,994

Exports 16,416 56,917 -- -- 73,333 -- --

Total 4,624,159 13,953,821 3,759,069 425,932 22,762,981 29,655,360 23,073,915



) Onlendings b

Domestic - official institutions

Programs Finance charges Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

National Treasury - rural credit 165,578 178,145 288,105

Pronaf TMS (if available)

Fixed 0.50% p.a. to 5.50% p.a. (if applied)

36,674 59,603 166,212

Cacau (cocoa) IGP-M + 8.00% p.a. or

TJLP + 0.60% p.a. or 6.35% p.a. 96,737 93,175 89,850

Recoop Fixed 5.75% p.a. to 8.25% p.a. or

IGP-DI + 1.00% p.a. or IGP-DI + 2.00% p.a.

19,877 23,136 30,688

Other 12,290 2,231 1,355

BNDES

Fixed 0.00% p.a. to 9.50% p.a. TJLP + 0.00% p.a. to 5.40% p.a. IPCA + 7.02% p.a. to 9.41% p.a. Selic + 0.40% p.a. to 2.50% p.a.

FX Variation + 1.80% p.a. to 6.89% p.a.

35,323,513 37,981,403 40,780,289

Caixa Econômica Federal Fixed 5.23% p.a. (average) 21,648,278 19,690,627 16,324,322

Finame Fixed 0.00% p.a. to 8.50% p.a.

TJLP + 0.50% p.a. to 5.50% p.a. FX Variation + 0.90% p.a. to 3.00% p.a.

27,532,146 29,981,346 32,163,617

Other official institutions 1,933,121 2,233,887 475,467

Special supply - deposits (Note 9.b) 1,643,753 1,643,753 --

Funcafé TMS (if available)

Fixed 5.50% p.a. to 10.50% p.a. (if applied)

289,341 590,106 475,439

Other 27 28 28

Total 86,602,636 90,065,408 90,031,800



Overseas

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Funds obtained under the terms of Resolution CMN 3,844/2010 -- 9,821 --

Special Fund for Support to Small and Medium Manufacturing Companies 477 477 477

Total 477 10,298 477

Current liabilities 95 9,916 95

Non-current liabilities 382 382 382


1st

half 2016


88

) Expense on borrowings and onlendings c


Borrowings expenses (1)

6,604,983 (4,955,942)

Onlendings expenses (1)

2,972,447 (5,754,462)

Foreign (1)

5,395,127 (3,371,285)

BNDES (1,298,342) (1,522,999)

Caixa Econômica Federal (726,023) (453,637)

Finame (291,557) (326,790)

National Treasury (49,722) (43,739)

Other (57,036) (36,012)

Expenses for obligations with bankers abroad (1)

3,490,657 (2,316,407)

Expenses for financial and development funds liabilities 69,833 (1,042,075)

Foreign exchange profit/(loss) on overseas investments (2,540,229) 1,375,562

Total 10,597,691 (12,693,324)

(1) The credit balances presented arise from the negative exchange variation of the period (the appreciation of the Real against the Dollar).


1st

half 2016


89

- FUNDS FROM ACCEPTANCE AND ISSUANCE OF SECURITIES 19

Funding Currency Issued value Remuneration

p.a. Issue year Maturity year Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Banco do Brasil 171,588,774 184,927,920 186,472,111

Global Medium - Term Notes Program 6,566,303 11,065,431 9,698,689

R$ 350,000 9.75% 2007 2017 355,080 338,300 344,290

USD 500,000 6.00% 2010 2020 1,643,530 1,994,618 1,584,528

EUR 750,000 4.50% 2011 2016 -- 3,321,757 3,585,741

JPY 24,700,000 1.80% 2012 2015 -- -- 630,510

EUR 1,000,000 3.75% 2013/2014 2018 3,667,774 4,321,203 2,643,380

CHF 275,000 2.50% 2013 2019 899,919 1,089,553 910,240

"Senior Notes" 7,442,474 9,075,400 7,522,987

USD 500,000 3.88% 2011 2017 1,630,511 1,981,340 1,573,629

USD 1,809,700(1)

3.88% 2012 2022 5,811,963 7,094,060 5,949,358

Structured notes 64,857 168,518 181,845

EUR 18,400 2.29% to 3.55% 2021 64,857 -- --

USD 37,458 2.10% to 3.55% 2016 -- 168,518 181,845

Certificates of deposits (2) 1,637,263 9,556,835 15,435,545

Short term 0.34% to 4.60% 1,508,173 9,003,872 15,228,332

Long term 2.88% to 4.60% 2020 129,090 552,963 207,213

Certificates of structured operations 136,797 11,324 29,411

Short term -- -- 26,456

Long term 2018 136,797 11,324 2,955

Letters of credit - real estate 18,066,485 18,121,444 18,526,015

Short term (3) 9,235,106 3,050,382 3,118,484

Long term (4) 2018 8,831,379 15,071,062 15,407,531

Letters of credit agribusiness 135,418,026 134,822,921 132,372,288

Short term (3) 48,530,625 28,076,833 17,650,853

Long term (4) 2020 86,887,401 106,746,088 114,721,435

Financial letters 2,256,569 2,106,047 2,705,331

Short term (3) 106.50% DI -- -- 2,661,792

Long term (4) 104.00% DI 2018 2,256,569 2,106,047 43,539

Banco Patagonia (5) 284,625 329,399 210,627

Short term ARS 130,600 147,662 210,627

Long term ARS 2019 154,025 181,737 --

Special purpose entities abroad (6) 2,796,517 3,447,244 1,813,254

Securitization of future flow of payment orders from abroad (6)

USD 60,000 5.25% 2008 2018 154,401 234,799 223,858

USD 200,000 Libor

3m+1.20% 2008 2015 -- -- 30,930

Structured notes (6)

USD 500,000 Libor

6m+2.50% 2014/2015 2034 1,613,402 1,961,854 1,558,466

USD 320,000 Libor

6m+3.25% 2015 2030 1,028,714 1,250,591 --

Eliminated amount on consolidation (7) (161,191) (143,071) (89,532)

Total 174,508,725 188,561,492 188,406,460



(1) Refers to the outstanding value since partial repurchases occurred.

(2) Securities issued abroad in USD, AUD, EUR, SGD and GBP.

(3) Securities issued in national currency with maturities up to 360 days.

(4) Operations with maturity between 361 and 1,800 days.

(5) Securities issued with rates from 25.50% p.a. to 33.00% p.a. and from Badlar+300 pts. to Badlar+425 pts.

(6) The Special Purpose Entities (SPE) "Dollar Diversified Payment Rights Finance Company" and "Loans Finance Company Limited" were organized under the laws of the Cayman Islands. The liabilities arising from securities issued by these entities are paid using the funds accumulated in their accounts. The SPE declare that have 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 a beneficiary of any of the results of operations of the SPE.

The Dollar Diversified Payment Rights Finance Company was organized for the following purposes: a) fund raising by issuance of securities in the international market; (b) use of resources obtained by issuing securities to pay for the purchase, with the Bank, of 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 any agency in Brazil (Rights on Consignment); and (c) making payments of principal and interest on securities issued and other payments defined in the contract of issuance of these securities.

The Loans Finance Company Limited was organized for the following purposes: a) fund raising by issuance of securities in the international market; (b) closing and booking repurchase agreements with the Bank; (c) purchasing of protection against credit risk of the Bank through a credit derivative, which is actionable only in case of Bank's default in any of the obligations assumed in repurchase agreements; and (d) making payments of principal and interest on securities issued and other payments defined in the contract of issuance of these securities.

(7) Refers to securities issued by Banco do Brasil Conglomerate, which are in possession of overseas subsidiaries/entities.


1st

half 2016


90

- OTHER LIABILITIES 20

) Taxes and social security a

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Legal liabilities (Note 27.h) 14,633,941 14,076,071 13,574,449

Provision for taxes and contributions on net income 4,909,677 556,313 5,257,156

Deferred tax liabilities (Note 24.d) 2,348,411 2,298,292 1,484,100

Taxes and contributions payable 1,355,457 1,392,468 1,187,165

Taxes and contributions on net income payable 425,088 1,048,359 232,640

Provision for tax litigation (Note 27.e) 267,932 245,695 194,151

Other 316,869 316,960 316,856

Total 24,257,375 19,934,158 22,246,517


Non-current liabilities 734,114 784,824 468,117

b) Financial and development funds

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Marinha Mercante 7,667,223 8,988,221 6,862,696

Pasep (1)

2,661,846 2,728,783 2,434,106

Fundo de Desenvolvimento do Nordeste - FDNE 2,123,251 1,987,918 1,856,651

Funds from Governo do Estado de São Paulo 744,582 736,035 713,418

Fundo de Desenvolvimento do Centro Oeste - FDCO 275,598 285,128 249,259

Fundo Nacional de Aviação Civil - FNAC 77,652 70,327 65,737

Other 190,968 206,112 221,863

Total 13,741,120 15,002,524 12,403,730



(1) The Bank is administrator of the Public Servant Heritage Formation Program (Pasep), guaranteeing a minimum return equal to the Long-Term Interest Rate - TJLP.


1st

half 2016


91

c) Subordinated debts

Funding Issued value

Remuneration p.a. Issue date Maturity Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Banco do Brasil

FCO – Resources from Fundo Constitucional do Centro-Oeste

23,841,572 22,994,912 21,627,115

Funds applied (1) 21,599,707 22,067,675 21,269,823

Resources available (2) 2,241,865 927,237 351,999

Charges to capitalize -- -- 5,293

Subordinated CDB issued in the country -- -- 1,752,102

1,000,000 105.00% of CDI 2009 2015 -- -- 1,752,102

Subordinated debt abroad 9,516,527 11,568,774 9,185,934

USD 660,000 5.38% 2010 2021 2,163,114 2,630,575 2,089,201

USD 1,500,000 5.88% 2011 2022 4,899,001 5,953,739 4,726,767

USD 750,000 5.88% 2012 2023 2,454,412 2,984,460 2,369,966

Subordinated letters of credit 25,296,723 25,387,942 23,699,194

1,000,000 108.50% of CDI 2010 2016 -- 1,852,172 1,722,733

2,055,100 111.00% of CDI 2011 2017 3,641,211 3,387,610 3,145,610

4,844,900

111.50% of CDI

1.06% to 1.11% + CDI

5.24% to 5.56% + IPCA

Fixed 10.51%

2012 2018 7,663,825 7,152,153 6,761,662

215,000 112.00% of CDI 2012 2019 341,133 317,168 294,315

4,680,900 111.00% of CDI 2013 2019 7,025,938 6,536,599 6,069,646

150,500 112.50% of CDI

5.45% + IPCA 2012 2020 241,746 224,433 208,769

377,100 112.00% to 114.00% of CDI 2014 2020 488,362 453,485 420,271

163,523 112.00% to 114.00% of CDI 2014 2020 217,972 202,528 187,809

1,594,580 113.00% to 115.00% of CDI 2014 2021 2,046,731 1,899,302 1,758,982

2,273,806 113.00% to 115.00% of CDI 2014 2021 3,067,795 2,847,744 2,638,237

400,000 8.08% + IPCA 2014 2022 562,010 514,748 491,160

Total subordinated debt from Banco do Brasil

58,654,822 59,951,628 56,264,345

Eliminated amount on consolidation (7,135) (16,063) (4,149)

Total subordinated debt consolidated (3)(4) 58,647,687 59,935,565 56,260,196



(1) Remunerated at the rates on the loans funded with these amounts less the del credere of the financial institution, according to article 9 of Law 7,827/1989.

(2) Remunerated based on extra-market rate announced by the Banco Central do Brasil (Bacen), according to article 9 of Law 7,827/1989.

(3) R$ 38,904,584 thousand (39,839,840 thousand as of Dec 31, 2015 and 38,144,335 thousand in Jun 30, 2015) of the total balance is considered tier II of the Referential Equity (RE).

(4) Includes the amount of R$ 6,382,870 thousand, relating to subordinated debt recorded in the line Debt Instruments eligible as capital.

d) Equity and debt hybrid securities

Funding Issued value(1) Remuneration

p.a. Issue date Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Perpetual bonds

USD 1,498,500 8.50% 10/2009 4,878,634 5,939,561 4,717,759

USD 1,398,727 9.25% 01 and 03/2012 4,661,142 6,632,211 5,510,658

USD 1,988,000 6.25% 01/2013 6,438,716 7,878,240 6,387,329

R$ 8,100,000 5.50%(2) 09/2012 8,146,227 8,355,877 8,274,981

USD 2,169,700 9.00% 06/2014 6,956,920 8,541,012 7,716,115

Total Banco do Brasil 31,081,639 37,346,901 32,606,842

Eliminated amount on consolidation (13,876) (4,898) (3,295)

Total reclassified to shareholders' equity (Note 23.c)

(8,100,000) (8,100,000) (8,100,000)

Total BB Consolidated 22,967,763 29,242,003 24,503,547

Current liabilities 74,600 121,313 420,979


(1) Refers in funding in US dollars, the outstanding value, as occurred partial repurchases of these instruments.

(2) Since August.28, 2014, the remuneration is fully variable (Note 23.c).


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R$ 22,223,710 thousand of the Perpetual Bonds is included in the Referential Equity (R$ 27,036,585 thousand as of

December 31, 2015, and R$ 20,917,586 thousand as of June 30, 2015). Of this amount, R$ 17,570,370 thousand are

recorded in debt instruments eligible as capital (Note 28.b).

The bonds of USD 1,500,000 thousand, issued in October 2009, have the option of redemption at the discretion of

the Bank from 2020 or on each subsequent, semi-annual interest payment date, as long as it has been previously

authorized by Banco Central do Brasil (Bacen). In case the Bank does not exercise the option to redeem on October

2020, the interest on the bonds will be adjusted on this date to 7.782% plus the traded rate on 10 year North

American Treasury bonds. Thereafter, every 10 years, the interest on the bonds will be adjusted by taking into

account the traded rate of the 10 year North American Treasury bonds.

The bonds issued in January 2012 and March 2012 (reopening), of USD 1,000,000 thousand and USD 750,000

thousand respectively, and the bonds issued in January 2013 of USD 2,000,000 thousand, had their terms and

conditions modified on September 27, 2013, in order to adjust them to the rules of Bacen through Resolution No.

4,192 of March 1, 2013, which regulates the implementation of Basel III in Brazil. The changes were effective from

October 1, 2013, when the instruments were submitted to Bacen to obtain authorization to be included in the

Supplementary Capital (Tier I) of the Bank. The authorization was granted on October 30, 2013.

The bonds issued in June 2014 of USD 2,500,000 thousand, have the option of redemption at the discretion of the

Bank from June 18, 2024 or on each subsequent, semi-annual interest payment date, as long as it has been

previously authorized by the Central Bank of Brazil. If the Bank did not exercise the option to redeem in June 2024,

the interest on the bonds will be adjusted to 6.362% plus the traded rate on 10 year North American Treasury bonds.

If the Bank does not exercise the redemption option in April 2023 for the bonds issued in 2012, in April 2024 for the

bonds issued in 2013, and in June 2024 for the bonds issued in 2014, the rate of bond interest is adjusted on that

date and every 10 years according to the 10 year North American Treasury bondsat the time plus the initial credit

spread. The bonds have the following options of redemption, subject to prior authorization of Bacen:

(i) the Bank may, at its option, redeem the bonds in whole but not in part in April 2023 for the bonds issued in 2012, in April 2024 for the bonds issued in 2013, and in June 2024 for the bonds issued in 2014, and on each subsequent, semi-annual interest payment date, at the base redemption price;

(ii) the Bank may, at its option, redeem the bonds in whole, but not in part, after five years from the date of issue, as long as it is before April 2023, for the bonds issued in 2012, before April 2024 for the bonds issued in 2013, and before April 2024 for the bonds issued in 2014, as a result of a tax event, at the base redemption price;

(iii) the Bank may, at its option, redeem the bonds in whole but not in part, after five years from the date of issue, as long as it is before April 2023, for the bonds issued in 2012, and in April 2024 for the bonds issued in 2013, on the occurrence of a regulatory event, at the higher value between the base redemption price and the Make-whole amount;

(iv) the Bank may, at its option, redeem the bonds in whole but not in part, after five years from the date of issue as long as it is before June 2024 for the bonds issued in 2014, on the occurrence of a regulatory event at the base redemption price.

The bonds issued in October 2009 determine that the Bank suspends the semi-annual payments of interest and / or

accessories on those securities issued (which will not be due or accrued) if:

(i) the Bank does not comply or the payment of such charges does not allow the bank to comply with the levels of capital adequacy, operating limits, or its financial indicators are under the minimum level required by Brazilian regulations applicable to banks;

(ii) Bacen or the regulatory authorities determine the suspension of payment of such charges; (iii) any event of insolvency or bankruptcy occurs; (iv) a default occurs; or (v) the Bank has not distributed dividends or interest on equity to common shareholders for the period of

calculation of such interest and / or accessories.

The bonds issued in January and March 2012, in January 2013 and in June 2014 determine that the Bank suspend

the semi-annual payments of interest and/or accessories on those securities issued (which will not be due or

accrued) if:

(i) distributable income for the period are not sufficient for making the payment (discretionary condition of the Bank);

(ii) the Bank does not comply or the payment of such charges does not allow the Bank to comply with the levels of capital adequacy, operating limits, or its financial indicators are under the minimum level required by Brazilian regulations applicable to banks;


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(iii) Bacen or the regulatory authorities determine the suspension of payment of such charges; (iv) any event of insolvency or bankruptcy occurs; or (v) a default occurs.

According to Basel III rules, the bonds issued in January 2012, March 2012, in January 2013 and in June 2014 have

mechanisms of loss absorption. Moreover, if the item (i) occurs, the payment of dividends by Bank to its shareholders

will be limited to the minimum required determined by applicable law until the semi-annual interest payments and / or

accessories on those titles have been resumed in full. Finally, these bonds will expire permanently and at the

minimum value corresponding to the balance recorded in the Tier I capital of the Bank if:

(i) the main capital of the Bank is less than 5.125% of the amount of risk-weighted assets (RWA); (ii) the decision to make a capital injection from the public sector or an equivalent capital contribution to the

Bank is taken, in order to maintain the bank’s viability; (iii) the Bank, on a discretionary assessment regulated by the CMN, sets out, in writing, the expiration of the

bonds to enable the continuity of the Bank.

e) Sundry

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Credit/debit card operations 19,170,677 20,727,736 18,061,782

Actuarial liabilities (Note 26.e) 14,546,091 9,513,475 8,187,620

Sundry creditors - domestic 7,250,687 7,429,931 6,873,888

Provisions for civil claims (Note 27.e) 6,811,150 7,150,581 6,030,316

Provisions for pending payments 5,374,592 5,251,114 4,488,867

Funds linked to loan operations 4,058,376 2,772,443 1,472,590

Provision for labor claims (Note 27.e) 2,598,301 2,169,106 1,933,760

Liabilities for rendering payment services 2,087,537 1,276,864 1,786,403

Liabilities for official agreements 1,218,125 1,072,568 1,035,605

Sundry creditors - abroad 817,678 1,097,487 937,694

Liabilities for premiums granted under customer loyalty schemes 792,490 772,616 601,577

Liabilities for operations linked to assignments 664,086 333,298 293,950

Creditors of resources to be disbursed 536,989 623,633 858,386

Provisions for guarantees provided 525,327 541,312 362,654

Provision for losses with the Fundo de Compensação de Variação Salarial - FCVS

299,913 288,542 277,032

Liabilities for assets acquisition 259,882 584,440 349,899

Liabilities for shares in investment funds 101,391 60,734 --

Guarantees on credits assigment 866 1,000 1,120

Other 287,435 99,246 237,546

Total 67,401,593 61,766,126 53,790,689




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94

- OTHER OPERATING INCOME/EXPENSES 21

) Service fee income a


Fund management 1,686,813 1,526,332

Insurance, pension and capitalization 1,532,275 1,475,066

Billing 840,200 844,324

Collection 517,380 532,617

Loans and guarantees provided 472,013 441,164

Interbank 425,283 379,072

Capital market income 283,917 262,352

National treasury and official funds management 281,807 202,425

Fiduciary services 238,002 205,355

Consortium management fees 227,574 210,209

Account fee 191,513 166,373

Provided to related companies 121,269 111,231

Card income 64,244 472,728

From non-financial subsidiaries 13,121 20,850

Other services 710,566 626,586

Total 7,605,977 7,476,684

) Bank fee income b


Service packages 2,454,404 1,960,853

Card income 587,395 481,504

Loans and customer registration 332,254 329,830

Funds transfer 198,461 155,826

Investment funds management 193,348 166,971

Deposit account 124,722 110,515

Fiduciary services 34,879 27,112

Other 89,321 87,479

Total 4,014,784 3,320,090

) Personnel expenses c


Salaries (4.937.729) (4.686.811)

Social charges (1.598.049) (1.619.693)

Personnel administrative provisions (1.437.535) (1.577.516)

Benefits (1.331.643) (1.225.501)

Labor lawsuits (767.079) (359.601)

Pension plans (387.484) (341.162)

Training (28.345) (27.584)

Directors' and advisors' fees (24.366) (21.685)

Total (10.512.230) (9.859.553)


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95

) Other administrative expenses d


Amortization (1,676,746) (1,573,946)

Expenses with outsourced services (750,845) (772,837)

Rent (680,231) (632,864)

Communications (579,417) (612,679)

Security services (562,162) (522,465)

Depreciation (561,993) (543,823)

Transport (547,500) (578,697)

Data processing (394,052) (349,275)

Financial system services (393,649) (352,866)

Maintenance and upkeep (328,407) (368,586)

Water, electricity and gas (295,657) (254,880)

Specialized technical services (195,517) (170,252)

Advertising and marketing (125,973) (101,782)

Promotion and public relations (120,592) (101,440)

Materials (58,998) (60,004)

Domestic travel (40,188) (62,117)

Other (288,857) (308,985)

Total (7,600,784) (7,367,498)

) Other operating income e


Update of deposits in guarantee 1,437,288 1,174,452

Income on receivables 1,185,998 414,943

Surplus allocation update - Previ Plan 1 (Note 26.f) 689,502 770,682

Recovery of charges and expenses 680,038 584,179

Cards transactions 429,830 514,243

From non-financial subsidiaries 157,513 101,544

Reversal of provisions - administrative and personnel expenses 79,042 95,559

Adjustment of tax recoverable 68,461 56,123

Income from specific credits and special operations - National Treasury 46,099 111,277

Royalties and special participation 39,102 89,734

Subsidy of the National Treasury - MPO 3,233 102,707

Previ - Defined benefit plan income -- 384,078

Other 471,004 337,688

Total 5,287,110 4,737,209


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96

) Other operating expenses f


Cards transactions (732,787) (871,578)

Actuarial liabilities update (730,656) (474,222)

Discounts granted on renegotiations (641,217) (325,870)

Compensation for transactions of Banco Postal (607,459) (571,186)

Adjustment of the provision for deposit in court (Note 27.h) (557,871) (433,049)

Business relationship bonus (260,453) (40,715)

From non-financial subsidiaries (207,252) (164,862)

Civil and tax claims (179,390) (956,381)

ATM Network (178,280) (107,630)

Failures/frauds and other losses (164,050) (129,417)

Compliance bonus (149,787) (36,608)

Life insurance premium - consumer credit (77,761) (91,626)

INSS - Social Security (49,678) (20,918)

Proagro Expenses (18,105) (13,911)

Fees for the use of Sisbacen - Banco Central do Brasil System (11,155) (11,088)

Provision for rendering of guarantees (9,730) (168,825)

Other expenses - provisions of non-financial subsidiaries (8,765) (17,251)

Update of interest on own capital/dividends (6,294) (4,429)

Other (334,534) (205,406)

Total (4,925,224) (4,644,972)

- NON-OPERATING INCOME 22


Non-operating income 152,810 5,902,788

Capital gains (1)

106,243 5,848,567

Profit on disposal of assets 13,308 15,258

Rental income 4,283 5,285

Reversal of provision for devaluation of other assets 2,410 7,669

Profit on disposal of investments/equity interest -- 2,545

Interest and inflation adjustment of debtors from disposal of property 1,499 2,899

Other non-operating income 25,067 20,565

Non-operating expenses (44,530) (62,585)

Devaluation of other assets (8,501) (7,358)

Loss on disposal of assets (820) (4,354)

Capital losses (34,433) (50,499)

Other non-operating expenses (776) (374)

Total 108,280 5,840,203

(1) Includes, in the 1st half/2015, the gain derived from the strategic partnership between BB Elo Cartões Participações with Cielo in the electronic means of payment business of R$ 5,787,797 thousand (Note 2).


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23- SHAREHOLDERS' EQUITY

a) Book value and market value per common share

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Shareholders' equity - Banco do Brasil 72,586,421 70,673,370 71,944,144

Book value per share (R$) (1)

26.07 25.31 25.73

Market value per share (R$) 17.18 14.74 22.91

Shareholders' equity - consolidated (2)

83,449,338 81,536,173 82,642,687

(1) Calculated based on the equity of Banco do Brasil.

(2) Conciled with the equity of Banco do Brasil (Note 23.h).

b) Capital

Banco do Brasil’s share capital of R$ 67,000,000 thousand (R$ 60,000,000 thousand in December 31, 2015 and in

June 30, 2015) is fully subscribed and paid-in and consists of 2,865,417,020 book-entry common shares with no par

value. The Federal Government is the largest shareholder and holds the majority of the Bank’s voting shares.

The share capital increase for the period from June 30, 2015 to June 30, 2016, in the amount of R$ 7,000,000

thousand, resulted from the use of Statutory reserve for operating margin, approved by the Special Meeting of

Shareholders held on April 28, 2016, pending to approval by the Central Bank of Brazil.

If approved by a Meeting of the Shareholders, the Bank may increase its share capital by up to R$ 120,000,000

thousand. The increase must be in accordance with the conditions approved by the shareholders. No amendments to

the by-laws are necessary. Capital increases are performed through the issuance of common shares, with existing

shareholders receiving preferential rights to the subscription based on their number of shares.

c) Instruments Qualifying to Common Equity Tier 1 Capital

The Bank signed a loan agreement with the federal government on September 26, 2012, with R$ 8,100,000 thousand

in funds available. There is no maturity date, a fixed interest rate and semi-annual interest payments. The funding

was used to finance agribusiness.

Up to August 27, 2014, Bacen had authorized the instrument to be included in Tier I referential equity (additional Tier

I capital) subject to the limitations set forth in Article 28 of CMN Resolution 4,192 of March 01, 2013 (Note 28.b).

The Bank signed an amendment to the contract on August 28, 2014, under the terms of Law 12,793 of April 02,

2013. The purpose of the amendment was to allow the instrument to qualify as common equity in Tier I capital, under

Article 16 of CMN Resolution 4,192/2013.

As a result of the amendment, the interest rate was changed to a variable rate, and the interest period was changed

to match the Bank’s fiscal year (January 1 to December 31). Each years’ interest is paid in a single annual

installment, adjusted by the Selic rate up to the effective payment date. Payment must be made within 30 calendar

days after the dividend payment for the fiscal year.

The interest payment must be made from profits or profit reserves available for distribution at the end of the fiscal

year preceding the calculation date. Payment is at Management’s discretion. Unpaid interest does not accumulate. If

the payment or dividend distribution is not made (including in the form of interest on own capital) prior to the end of

the subsequent fiscal year, the accrued interest is no longer owed.

If the Bank’s retained earnings, profit reserves (including the legal reserve) and capital reserve cannot fully absorb

losses calculated at the end of a fiscal year, no interest will be paid on the loan. The Bank will apply the accrued

interest and principal balance, in this order, to offset any remaining losses. This will be considered a pay-down of the

instrument.

The instrument does not have a maturity date. It is only payable if the Bank is dissolved or Bacen authorizes the

repurchase of the instrument. If the Bank is dissolved, the payment of principal and interest is subordinated to

payment of the Bank’s other liabilities.


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98

There will be no preferred interest on the loan under any circumstances, including in relation to other equity

instruments included in Reference Equity.

Bacen formally approved the instrument as common equity in Tier I capital on September 22, 2014, under

CMN Resolution 4,192/2013 from August 28, 2014. So the instrument mentioned was reclassified to the

Shareholders` Equity for purposes of disclosure in the consolidated financial statements.

d) Revaluation reserves

The revaluation reserves, totaling R$ 2,695 thousand (R$ 2,730 thousand as of December 31, 2015 and R$ 2,764

thousand as of June 30, 2015), refer to revaluations of assets made by the associates/subsidiaries.

In the first half of 2016, there was a reserve realization of R$ 35 thousand (R$ 75 thousand as of December 31, 2015

and R$ 41 thousand as of June 30, 2015), due to depreciation, transferred to Retained Earnings (Accumulated

Losses), net of taxes. In accordance with CMN Resolution 3,565/2008, the remaining amount will be maintained until

the date of its effective realization.

e) Capital and profit reserves

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Capital reserves 15,509 14,326 14,326

Profit reserves (1)

25,402,333 29,031,090 25,767,559

Legal reserve 6,411,237 6,173,642 5,898,540

Statutory reserves (1)

18,991,096 22,857,448 19,869,019

Operating margin 15,591,154 19,608,076 16,690,614

Equalization of dividends 3,399,942 3,249,372 3,178,405

(1) In the bank, on June 30, 2016, the value of profit reserves and statutory reserves in the bank is R$ 25,741,651 thousand and R$ 19,330,414 thousand, respectively, with the diference due to unrealized results from subsidiary companies, R$ 339,318 thousand (Note 23.h).

The legal reserve ensures the adequacy of the Bank’s capital structure and can only be used to offset losses or

increase capital. Five percent of net income, before any other allocations, is transferred to the legal reserve. The

amount of the reserve cannot exceed 20% of the share capital.

The operating margin statutory reserve ensures the adequacy of the Bank’s operating margins in accordance with its

business activities. The reserve consists of up to 100% of net income after allocation to legal reserve (including

dividends) and is limited to 80% of the share capital.

The dividend equalization statutory reserve provides funds for the payment of dividends. The reserve consists of up

to 50% of net income after allocation to legal reserve (including dividends) and is limited to 20% of the share capital.

f) Earnings per share


Net income (R$ thousand) 4,751,915 8,606,461

Weighted average number of shares (basic and diluted) 2,790,389,280 2,796,131,188

Earnings per share (basic and diluted) (R$) 1.70 3.08


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g) Interest on own capital/dividends and destination of the income

Calculation base of dividends are shown bellow, as well as destination of the income of the period:


1) Net income – Banco do Brasil 4,751,915 8,606,461

2) Interest on instrument elegible to common equity tier 1 46,227 174,982

3) Calculation base of dividends (item 1 + item 2) 4,798,142 8,781,443

Dividends - Payout 1,411,218 3,512,578

Required minimum dividend

1,129,727 2,044,959

Additional dividend 281,491 1,467,619

4) Allocation:

Net income 4,751,915 8,606,461

Retained earnings 4,589 3,700

Income allocation 4,756,504 8,610,161

Legal reserve 237,595 430,323

Dividends and interest on own capital 1,411,218 3,512,578

Statutory reserve 3,107,691 5,928,721

Use of statutory reserves for equalization of dividends -- (1,261,461)

Introducing payment schedule of interest on own capital and dividends:

Amount Amount per share (R$) Base date of payment Payment date

1st quarter/2016

Interest on own capital paid (1)

274,466 0.098 Mar 11, 2016 Mar 31, 2016

Complementary interest on own capital paid (1)

372,273 0.133 May 23, 2016 May 31, 2016

2nd quarter/2016


383,614 0.138 Jun 13, 2016 Jun 30, 2016

Complementary interest on own capital payable (1)

380,865 0.138 Ago 22, 2016 Ago 31, 2016

Total destined to shareholders 1,411,218 0.507

(1) Amounts subject to the rate of 15% Income Withholding Tax.

Amount Amount per share (R$) Base date of

payment Payment date

1st quarter/2015


1,054,134 0.377 Mar 23, 2015 Mar 31, 2015

Dividends paid 1,261,460 0.451 May 21, 2015 May 29, 2015

2nd quarter/2015


810,594 0.291 Jun 11, 2015 Jun 30, 2015

Complementary interest on own capital paid(1)

347,343 0.124 Ago 21, 2015 Sep 31, 2016

Dividends paid 39,046 0.014 Aug 21, 2015 Sep 01, 2015

Total destined to shareholders 3,512,577 1.257

(1) Amounts subject to the rate of 15% Income Withholding Tax.

In accordance with Laws 9,249/1995 and 9,430/1996 and the Bank's Bylaws, Management decided on the payment

of Interest on own capital to its shareholders.

The interest on own capital is calculated based on adjusted net equity value and is limited on a pro rata die basis to

the variation of long-term interest rate, as long as there is profit (before the deduction of interest on own capital) or

reserves for retained earnings and profit reserves of at least twice its value.

To comply with the Income Tax legislation, the amount of interest on own capital was recorded as "Financial

expenses" and, for purposes of disclosure in these financial statements, reclassified to "Retained earnings". The total

interest on own capital in 1st half of 2016, provided an expense reduction on tax charges totaling R$ 635,048

thousand (R$ 884,828 thousand in the first half of 2015).


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h) Reconciliation of net income and shareholders' equity

Net income Shareholders’ equity

1st half/2016 1st half/2015 Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Banco do Brasil 4,751,915 8,606,461 72,586,421 70,673,370 71,944,144

Instruments qualifying to common equity tier 1 capital (1)

46,227 174,982 8,100,000 8,100,000 8,100,000

Unrealized gains (2)

25,957 44,465 (339,318) (365,275) (356,005)

Non-controlling interests -- -- 3,102,235 3,128,078 2,954,548

BB Consolidated 4,824,099 8,825,908 83,449,338 81,536,173 82,642,687

(1) The Instrument Qualifying as CET1 was registered in the liabilities in the Individual Financial Statements and its interest recognized as expenses with securities sold under repurchase agreements, meanwhile, this Instrument was reclassified to Shareholder’s Equity in the consolidated financial statements, aiming to improve the quality and transparency of these consolidated financial statements (Notes 3 and 24.c).

(2) Refers to the realization of unrealized results arising from the assignment of credits from the Bank to Ativos S.A.

i) Accumulated Other Comprehensive Income


Opening balance

Net change Tax effects Closing balance Opening balance

Net change Tax effects Closing balance

Securities available for sale

Banco do Brasil (2,760,383) 1,696,514 (363,622) (1,427,491) (757,714) (682,346) 162,351 (1,277,709)

Subsidiary abroad (12,780) 52,021 (976) 38,265 30,118 (4,633) 398 25,883

Associates and subsidiaries (351,322) 382,453 (122,864) (91,733) (191,869) 35,856 (14,361) (170,374)

Cash flow hedge

Associates and subsidiaries -- (10,082) 4,537 (5,545) 1,716 (2,600) 884 --

Actuarial gains/(losses) on pension plans

(13,918,186) (4,856,506) 1,942,511 (16,832,181) (8,680,091) (3,884,109) 1,419,368 (11,144,832)

Total (17,042,671) (2,735,600) 1,459,586 (18,318,685) (9,597,840) (4,537,832) 1,568,640 (12,567,032)

j) Noncontrolling interests

Shareholders’ equity

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Banco Patagonia S.A. 851,794 1,006,300 946,308

Besc Distribuidora de Títulos e Valores Mobiliários S.A. 27 27 29

BB Tecnologia e Serviços S.A. 57 57 59

BB Seguridade S.A. 2,250,357 2,121,694 2,008,152

Non-controlling interest 3,102,235 3,128,078 2,954,548

k) Shareholdings (number of shares)

Number of shares issued by the Bank to shareholders which, directly or indirectly, hold more than 5% of the shares:

Sharedholders Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Shares % Total Shares % Total Shares % Total

Federal Government 1,558,511,715 54.4 1,653,379,882 57.7 1,659,005,282 57.9

Ministério da Fazenda 1,453,487,115 50.7 1,453,487,115 50.7 1,453,487,115 50.7

Fundo Fiscal de Investimento e Estabilização 105,024,600 3.7 105,024,600 3.7 110,650,000 3.9

Caixa F1 Garantia Construção Naval -- -- 87,368,167 3.0 87,368,167 3.0

Fundo Garantidor para Investimentos -- -- 7,500,000 0.3 7,500,000 0.3

Caixa de Previdência dos Funcionários do Banco do Brasil – Previ

286,025,314 10.0 297,403,914 10.4 297,337,914 10.4

Treasury shares (1)

80,666,466 2.8 72,864,196 2.5 69,240,496 2.4

Other shareholders 940,213,525 32.8 841,769,028 29.4 839,833,328 29.3

Total 2,865,417,020 100.0 2,865,417,020 100.0 2,865,417,020 100.0

Resident shareholders 2,297,735,034 80.2 2,259,949,653 78.9 2,247,611,570 78.4

Non resident shareholders 567,681,986 19.8 605,467,367 21.1 617,805,450 21.6

(1) Includes, in the first half of 2016, 50,100 shares of the Bank held by BB DTVM (42,709 shares in the June 30, 2015 and December 31, 2015).


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101

Number of shares issued by the Bank, held by the Board of Directors, the Executive Board and the Audit Committee:

Commom shares (ON)

(1)

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Board of Directors (except for Bank’s CEO, listed in the Bank’s Executive Committee)

145 1 1

Executive Committee 239,685 135,351 166,123

Fiscal Council -- 1,176 1,176

Audit Committee 10,075 10,075 10,075

(1) The shareholding interest of the Board of Directors, Executive Committee, Fiscal Council and Audit Committee represents approximately 0.009% of the Bank's capital stock.

l) Movement of shares outstanding/free float

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Total % Total % Total %

Free float at the period date 1,139,037,581 39.8 1,137,407,279 39.7 1,137,357,479 39.7

Disposal of shares by Caixa F1 Garantia Construção Naval 87,368,167 -- -- -- -- --

Disposal of shares by Fundo Garantidor para Investimentos 7,500,000 -- -- -- -- --

Disposal of shares by FFIE - Fundo Fiscal de Investmento e Estabilização

-- -- 5,625,400 -- -- --

Disposal/(acquisition) of shares by Previ -- -- -- -- 49,800 --

Acquisition of shares - repurchase program -- -- (4,183,700) -- (560,000) --

Shares received in order to comply with operations secured by the FGCN - Fundo Garantidor da Construção Naval

(8,075,350) -- -- -- -- --

Other changes (1)

168,602 -- 188,602 -- 157,830 --

Free float at the period end date (2)

1,225,999,000 42.8 1,139,037,581 39.8 1,137,005,109 39.7

Outstanding shares 2,865,417,020 100.0 2,865,417,020 100.0 2,865,417,020 100.0

(1) Refers mainly to changes coming from Technical and Advisory Bodies.

(2) According to the Law 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. The shares held by the Caixa de Previdência dos Funcionários do Banco do Brasil – Previ compose the free float shares.

m) Treasury shares

The Board of Directors approved a repurchase program for up to 50 million shares on July 13, 2012, within 180 days

from that date, with the objective of acquiring shares to be held in treasury for subsequent sale or withdrawal without

further capital reduction, aiming to generate value for shareholders. This program was concluded on January 8, 2013,

with the acquisition of 20,200,000 shares in the amount of R$ 461,247 thousand. The minimum, average and

maximum price per share under the program was R$ 18.28, R$ 22.83 e R$ 26.78 respectively.

The Board of Directors approved a repurchase program for up to 50 million shares on June 13, 2013. The conditions

were the same as the previous program however, valid for up to 365 days from that date. The program concluded on

June 6, 2014, with the acquisition of 43,126,700 shares in the amount of R$ 1,014,504 thousand. The minimum,

average and maximum price per share under the program was R$ 18.84, R$ 23.52 and R$ 28.67 respectively.

The Board of Directors approved a repurchase program for up to 50 million shares on June 06, 2014. The conditions

were the same as the previous program related to 2013. The program concluded on May 18, 2015, with the

acquisition of 6,021,900 shares in the amount of R$ 155,481 thousand. The minimum, average and maximum price

per share under the program was R$ 22.66, R$ 25.82 and R$ 29.27, respectively.

The Board of Directors approved a repurchase program of up to 50 million shares on May 18, 2015, under the same

conditions as the previous program. Up to December 31, 2015, the Bank had acquired 3,623,700 shares in the

amount of R$ 67,902 thousand. The minimum, average and maximum price per share under the program was

R$ 17.90, R$ 18.74 and R$ 21.10, respectively.

The Bank had 80,666,466 shares in treasury on June 30, 2015, representing R$ 1,854,749 thousand, 71,879,909 of

the shares were acquired in repurchase programs, 8,075,350 shares received in order to comply with operations

secured by the FGCN - Fundo Garantidor da Construção Naval, 711,175 related to share-based payment and 32

shares were from mergers.


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n) Share-based payment

The program of variable remuneration was based on the CMN Resolution 3,921 of November 25, 2010, which

governs compensation policies for executives of financial institutions. The resolution establishes that at least 50% of

variable compensation should be paid in shares or share-based instruments, of which at least 40% should be

deferred for future payment over a period of at least three years, defined according to the risks and activities

overseen by the executive, BB DTVM, as a result of this resolution, also adopted variable remuneration policy for its

directors, directly acquiring treasury shares of the Banco do Brasil. All shares acquired are BBAS3 and its fair value is

the quoted market price on the date of grant.

We present the statement of acquired shares, its distribution and its transfer schedule:

Total Shares

Purchased Acquisition Average

Cost Shares Distributed Shares to Distribute

Estimated Schedule Transfers

2012 program

Banco do Brasil 212,301 26.78 159,238 53,063 Mar 2017

Total shares to be distributed 53,063

BB DTVM 19,792 26.78 16,622 3,170 Mar 2017


2013 program


70,736 Mar 2018


BB DTVM 24,546 23.83 14,732 4,907 Apr 2017

4,907 Apr 2018


2014 program

Banco do Brasil 316,683 24.08 126,720 63,321 Fev 2017

63,321 Fev 2018

63,321 Fev 2019


BB DTVM 27,063 22.98 10,827 5,412 Apr 2017

5,412 Apr 2018

5,412 Apr 2019


2015 program


67,912 Mar 2018

67,912 Mar 2019

67,912 Mar 2020


BB DTVM 26,109 19.92 5,229 5,220 Mar 2017

5,220 Mar 2018

5,220 Mar 2019

5,220 Mar 2020



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- TAXES 24

) Breakdown of income tax (IR) and social contribution expenses (CSLL) a


Current values (5,318,459) (5,629,551)

Domestic income tax and social contribution (5,092,385) (5,360,259)

Foreign income tax (226,074) (269,292)

Deferred values 2,813,953 4,528,070

Deferred tax liabilities 62,424 (474,022)

Leasing transactions - portfolio adjustment and accelerated depreciation (3,836) 808

Mark to Market (MTM) 424,985 (214,431)

Actuarial gains 109,855 (97,375)

Interest and inflation adjustment of fiscal judicial deposits (219,692) (173,220)

Foreign profits (201,953) (39,767)

Transactions carried out on the futures market 37,981 49,059

Recovered term credits (84,916) 904

Deferred tax assets 2,751,529 5,002,092

Temporary differences 2,037,485 4,843,862

Tax losses/CSLL negative bases (121,588) 72

Mark to Market (MTM) 835,632 158,158

Total (2,504,506) (1,101,481)

) Reconciliation of income tax and social contribution charges b


Profit before taxation and profit sharing 8,782,460 11,917,251

Total charges of IR (25%) and CSLL (15% up to August/2015 and 20% since September/2015) (1)

(3,952,107) (4,766,900)

Charges upon interest on own capital 635,048 884,828

Equity in associates and joint ventures 951,844 917,984

Employee profit sharing 275,996 437,659

Other amounts (415,287) 1,424,948

Income tax and social contribution (2,504,506) (1,101,481)

(1) The Provisional Measure 675 of May 21, 2015, converted into Law 13,169 of October 6, 2015, increased the rate of CSLL of financial institutions and companies in the field of private insurance and capitalization from 15% to 20%, since September 1, 2015, increasing social contribution expenses, as well as corresponding tax credits.

) Tax expenses c


Cofins (1,837,638) (1,834,345)

ISSQN (470,259) (423,767)

PIS/Pasep (305,845) (325,060)

Other (208,781) (200,210)

Total (2,822,523) (2,783,382)


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) Deferred tax liabilities d

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Arising from mark-to-market 1,118,573 1,314,159 571,426

Arising from interest and inflation adjustment of fiscal judicial deposits 522,221 498,412 473,949

Arising from recovered term credits 293,310 208,394 182,906

Related to foreign profit 201,953 -- 39,767

Arising from leasing portfolio adjustment 86,868 83,032 78,092

Arising from positive adjustments of benefits plans 62,493 61,284 49,588

Overseas entities 59,587 87,507 82,764

Arising from futures market transactions 1,374 43,472 3,576

Other 2,032 2,032 2,032

Total deferred tax liabilities 2,348,411 2,298,292 1,484,100

Income tax 1,067,602 1,050,205 666,871

Social contribution 728,029 694,446 364,751

Cofins 475,509 476,250 389,146

PIS/Pasep 77,271 77,391 63,332

) Deferred tax assets (Tax credit) e


Balance Constitution Write off Balance Balance

Temporary differences 38,432,357 12,194,436 (7,675,609) 42,951,184 28,321,213

Allowance for loan losses 22,608,880 6,528,691 (5,004,577) 24,132,994 17,303,953

Provisions 8,994,864 1,567,430 (1,096,140) 9,466,154 7,633,321

Negative adjustments of benefits plans 2,953,170 2,053,576 (120,483) 4,886,263 1,251,440

Mark to Market (MTM) 2,217,768 846,641 (1,388,304) 1,676,105 1,133,999

Other provisions 1,657,675 1,198,098 (66,105) 2,789,668 998,500

CSLL written to 18% (MP 2,158/2001) 1,255,978 -- (551,870) 704,108 1,159,183

Tax losses/excess depreciation 155,100 -- (19,475) 135,625 171,856

Tax losses/negative bases 152,047 32,457 (122,315) 62,189 4,146

Total deferred tax assets 39,995,482 12,226,893 (8,369,269) 43,853,106 29,656,398

Income tax 21,895,424 6,995,772 (4,186,268) 24,704,928 18,038,868

Social contribution 17,894,105 5,147,904 (4,043,107) 18,998,902 11,495,037

Cofins 177,165 71,584 (120,340) 128,409 105,371

PIS/Pasep 28,788 11,633 (19,554) 20,867 17,122

) Deferred tax assets (Tax credit - not recorded) f

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Overseas tax credits 1,069,620 1,168,990 950,305

Temporary differences 89 -- 23,046

Portion of tax losses/negative bases 1,492 -- 18,880

Total tax credits 1,071,201 1,168,990 992,231

Income tax 669,675 730,619 620,144

Social contribution 401,526 438,371 372,087


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Realization expectative

The expectation of realization of the deferred tax assets (tax credits) is based on a technical study, prepared in

June 30, 2016, and the present value is determined based on the average rate of funding of Banco do Brasil.

Future value Present value

In 2016 3,881,332 3,394,030

In 2017 7,179,423 6,249,201

In 2018 7,189,222 5,987,221

In 2019 7,296,555 5,773,425

In 2020 7,578,454 5,756,792

In 2021 7,354,640 5,431,035

In 2022 3,029,847 2,152,305

In 2023 176,318 50,798

In 2024 64,446 7,368

In 2025 85,984 30,510

In 2026 16,885 9,721

Total tax credits on Jun 30, 2016 43,853,106 34,842,406

In the first half 2016 it was possible to observe the realization of tax credits at Banco do Brasil, in the amount of

R$ 7,889,044 thousand corresponding to 116.56% of the projection of use for the period of 2016 contained in the

technical study prepared on December 31, 2015.

The realization of the nominal value of tax credits registered, considering the recovery of those written-off during the

lawsuits (Note 27.h), based on a technical study conducted by Banco do Brasil on June 30, 2016, is projected for 10

years in the following proportions:

Tax losses/CSLL

recoverable (1)

Diferences

intertemporary (2)

In 2016 15% 8%

In 2017 10% 16%

In 2018 4% 16%

In 2019 10% 17%

In 2020 17% 17%

From 2021 44% 26%

(1) Projected consumption linked to the capacity to generate IR and CSLL taxable amounts in subsequent periods.

(2) The consumption capacity results from the movements of provisions (expectation of reversals, write offs and uses).

- RELATED PARTY TRANSACTIONS 25

Salaries and other benefits paid the Bank’s key management personnel (Executive Board, Audit Committee, Board of

Directors and Fiscal Council) are as follows:


Short-term benefits 27,751 28,241

Fees and social charges 18,842 17,480

Executive Board 17,027 15,983

Audit Committee 1,345 1,066

Board of Directors 259 235

Fiscal council 211 196

Variable remuneration (cash) and social charges 7,444 9,342

Other (1)

1,465 1,419

Benefits motivated by cessation of tenure 490 --

Share-based payment benefits 7,260 5,889

Total 35,501 34,130

(1) Includes contributions to pension plan and complementary healthy plan, housing and relocation benefits, group insurance, among others.


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The Bank's variable compensation policy (developed in accordance with CMN Resolution 3,921/2010) requires

variable compensation for the Executive Directors to be paid partially in shares (Note 23.n).

The Bank does not offer post-employment benefits to its key management personnel, except for those who are part

of the staff of the Bank.

Bacen prohibits all financial institutions from granting loans to key management personnel.

The transactions between the consolidated companies are eliminated in the consolidated financial statements.

The most important transactions involving the National Treasury include rural loans granted by the Bank under CMN

Resolution 2,238/1996 and receivables from the National Treasury for interest rate equalization under Federal

Government programs (Law 8,427/1992). Interest rate equalization represents an economic subsidy for rural credit,

which provides borrowers with discounted interest rates compared to the Bank’s normal funding costs (including

administrative and tax expenses). The equalization payment is updated by the Selic rate in accordance with the

National Treasury’s budgeting process (as defined by law) and is designed to preserve the Bank’s earnings.

Intercompany transactions with these related parties consist of interest bearing and non-interest bearing deposits

loans, sale and repurchase transactions, acquisitions of loan portfolios, provision of services and guarantees.

These transactions are conducted under normal market conditions. The terms and conditions reflect comparable

transactions with unrelated parties (including interest rates and collateral requirements). These transactions do not

involve unusual payment risks.

The resources applied in federal government securities and in funds and programs from onlendings of the Official

Institutions are listed in Notes 8 and 18, respectively.

Fundação Banco do Brasil (FBB) promotes, encourages and sponsors actions in the areas of education, culture,

health, social welfare, recreation and sports, science, technology and community development. In 1st half/2016, the

Bank’s contributions to FBB totaled R$ 24,644 thousand (R$ 23,502 thousand in the 1st half/2015).

The Bank transferred contractual rights to the receipt of interchanges fees on post-paid payment transactions and

debit purchases to BB Elo Cartões Participações S.A. (a wholly-owned subsidiary). This transfer did not have any

accounting implications and was designed to support the formation of a strategic partnership with Cielo (Note 2).

Additional information about the Bank’s contributions and other transactions with sponsored entities is contained in

Note 26.

Acquisition of portfolio of loans transferred by Banco Votorantim


Assignment with substantial retention of risks and rewards (with co-obligation) 4,922,158 6,632,066

Unrealized result, net of tax effects (balance) 1,898 23,530


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Summary of related party transactions

Jun 30, 2016

Controller (1)

Joint ventures and

associates(2)

Key management

personnel (3)

Other related

parties (4)

Total

Assets

Interbank deposits -- 394,493 -- -- 394,493

Securities -- 3,539,878 -- 487,463 4,027,341

Loan operations -- 16,271,520 -- 31,232,158 47,503,678

Receivables from related companies -- 244,530 -- 34,126 278,656

Other assets (5)

4,550,183 1,331,924 -- 208,625 6,090,732

Liabilities

Demand deposits 310,263 27,639 1,079 2,002,029 2,341,010

Saving deposits -- -- 747 334,014 334,761

Remunerated time deposits -- 3,856 506 10,936,597 10,940,959

Securities sold under repurchase agreements -- 3,863,625 -- 2,946,497 6,810,122

Borrowings and onlendings 2,098,699 -- -- 84,504,325 86,603,024

Other liabilities 254,766 1,226,639 -- 676,187 2,157,592

Guarantees and other coobligations (6)

-- 6,800,000 -- 664,121 7,464,121

1st half/2016

Income from interest, services and other income 2,879,694 3,977,171 -- 2,327,547 9,148,412

Expenses from raising funds (49,722) (201,203) (152) (2,863,464) (3,114,541)

(1) National Treasury and agencies under the direct administration of the Federal Government.

(2) Companies are listed in Note 3.b.

(3) Board of Directors, Executive Board, Audit Committee and Fiscal Council.

(4) Includes the transactions with state-owned companies and private companies controlled by the Federal Government, such as: Petrobras, CEF, BNDES, Eletrobras, Fundo de Amparo ao Trabalhador – FAT, Fundo de Aval para Geração de Emprego e Renda – Funproger. In addition, entities linked to employees and sponsored entities: Cassi, Previ and others.

(5) The transactions with the Controller refer mainly to Extension of rural credits – National Treasury transactions (Note 11.a), interest rate equalization – agricultural crop and receivables – National Treasury (Note 11.b).

(6) Includes Contract of Opening of a Revolving Interbank Credit Line with Banco Votorantim.


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Jun 30, 2015

Controller (1)

Joint ventures and

associates(2)

Key management

personnel (3)

Other related

parties (4)

Total

Assets

Interbank deposits -- 1,396,494 -- -- 1,396,494

Securities -- 3,528,686 -- 437,259 3,965,945

Loan operations -- 17,586,168 -- 31,422,915 49,009,083

Receivables from related companies -- 20,710 -- 168 20,878

Other assets (5)

17,843,615 2,868,790 -- 233,448 20,945,853

Liabilities

Demand deposits 316,922 66,677 1,109 1,805,116 2,189,824

Saving deposits -- -- 3,360 277,781 281,141

Remunerated time deposits -- 788,876 495 9,423,575 10,212,946

Securities sold under repurchase agreements -- 4,650,374 -- 3,118,722 7,769,096

Borrowings and onlendings 763,572 -- -- 89,270,486 90,034,058

Other liabilities 415,755 1,227,973 -- 286,931 1,930,659

Guarantees and other coobligations (6)

-- 6,800,000 -- 661,103 7,461,103

1st half/2015

Income from interest, services and other income 3,869,751 15,053,124 -- 1,646,220 20,569,095

Expenses from raising funds (43,739) (50,959) (203) (3,198,225) (3,293,126)

(1) National Treasury and agencies under the direct administration of the Federal Government.

(2) Companies are listed in Note 3.b.

(3) Board of Directors, Executive Board, Audit Committee and Fiscal Council.

(4) Includes the transactions with state-owned companies and private companies controlled by the Federal Government, such as: Petrobras, CEF,

BNDES, Eletrobras, Fundo de Amparo ao Trabalhador – FAT, Fundo de Aval para Geração de Emprego e Renda – Funproger. In addition, entities linked to employees and sponsored entities: Cassi, Previ and others.

(5) The transactions with the Controller refer mainly to Extension of rural credits – National Treasury transactions (Note 11.a), interest rate equalization – agricultural crop and receivables – National Treasury (Note 11.b).

(6) Includes Contract of Opening of a Revolving Interbank Credit Line with Banco Votorantim.


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- EMPLOYEE BENEFITS 26

Banco do Brasil sponsors the following pension and health insurance plans 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 Variable 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 Variable contribution

Plano de Benefícios I 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

Number of participants covered by benefit plans sponsored by the Bank

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Number of participants Number of participants Number of participants

Active Retired/users Total Active Retired/users Total Active Retired/users Total

Retirement and pension plans 113,565 109,845 223,410 112,847 110,020 222,867 116,073 105,479 221,552

Plano de Benefícios 1 - Previ 18,388 92,405 110,793 18,658 92,582 111,240 23,167 88,589 111,756

Plano Previ Futuro 79,224 1,017 80,241 78,340 942 79,282 76,225 838 77,063

Plano Informal -- 3,385 3,385 -- 3,472 3,472 -- 3,593 3,593

Other plans 15,953 13,038 28,991 15,849 13,024 28,873 16,681 12,459 29,140

Health care plans 114,393 99,571 213,964 113,952 99,783 213,735 117,152 96,286 213,438

Cassi 102,019 92,350 194,369 101,528 92,515 194,043 104,211 88,997 193,208

Other plans 12,374 7,221 19,595 12,424 7,268 19,692 12,941 7,289 20,230

Bank’s contributions to benefit plans


Retirement and pension plans 676,933 631,709

Plano de Benefícios 1 - Previ (1)

267,741 264,684

Plano Previ Futuro 256,895 217,526

Plano Informal 88,597 86,848

Other plans 63,700 62,651

Health care plans 592,466 499,932

Cassi 521,365 438,222

Other plans 71,101 61,710

Total 1,269,399 1,131,641

(1) Refers to the contributions relating to participants subject to Agreement 97 and Plan 1, whereby these contributions occur by the realization of Fundo Paridade and Fundo de Utilização (Note 26.f). Agreement 97 aims to regulate the funding required to constitute a portion equivalent to 53.7% of guaranteed amount relating to the supplementary pension due to the participants who joined the Bank up to April 14, 1967 and who have retired or will retire after the aforementioned date, except for those participants who are part of the Plano Informal.

The Bank estimates that contributions to benefit plans (post-employment) in the second half of 2016 will be

approximately R$ 757,327 thousand.


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110

Values recognized in income


Retirement and pension plans (631,532) (90,828)

Plano de Benefícios 1 - Previ (219,711) 277,859

Plano Previ Futuro (256,895) (217,526)

Plano Informal (86,646) (70,235)

Other plans (68,280) (80,926)

Health care plans (800,056) (653,147)

Cassi (729,915) (592,218)

Other plans (70,141) (60,929)

Total (1,431,588) (743,975)

) Retirement and pension plans a

Previ Futuro (Previ)

Participants in this plan include Bank employees hired after December 24, 1997. Depending on time of service and

salary, active participants may contribute between 7% and 17% of their salary (retired participants do not contribute).

The plan sponsor matches participants’ contributions up to 14% of their salaries.

Plano de Benefícios 1 (Previ)

Participants in this plan include Bank employees hired prior to December 23, 1997. Active and retired participants

may contribute between 1.8% and 7.8% of their salary or pension.

Prior to December 15, 2000, the Bank contributed 2/3 of the total amount to this plan. As from December 16, 2000,

considering the Federal Constitutional Amendment nº 20, the Bank and the participants started to make equal

contributions. As a result of this contributive parity, the Parity Fund was set-up in December 2000, and its funds are

being used to offset the Bank’s contributions (Note 26.f).

Plano Informal (Previ)

Banco do Brasil is fully responsible for this plan. The Bank’s contractual obligations include to:

(i) providing retirement benefits to the initial group of participants and pension payments to the beneficiaries of

participants who died prior to April 14, 1967; (ii) paying additional retirement benefits to plan participants who retired

prior to April 14, 1967, or had the right to retire based on time of service and at least 20 years of service with the

Bank; and (iii) increasing retirement and pension benefits due to judicial and administrative decisions related to

changes in the Bank’s career, salary and incentive plans (in excess of the plan’s original benefits).

The Bank and Previ formalized an agreement on December 31, 2012. Under the agreement, Banco do Brasil paid

100% of the mathematical reserves for the so-called Grupo Especial (for which it was fully liable) using funds from the

Fundo Paridade. As a result, this group migrated from the Plano Informal to Plano de Benefícios 1. The Grupo

Especial included participants from Plano de Benefícios 1 (Previ) listed in the paragraph of first clause of the contract

signed on December 24, 1997. These participants received additional retirement benefits due to administrative and/or

judicial decisions (Note 26.f).

Prevmais (Economus)

Participants in this plan include employees of Banco Nossa Caixa (a bank acquired by Banco do Brasil on November

30, 2009) who enrolled after August 01, 2006, or were part of the Regulamento Geral benefit plan and opted to

receive their vested account balances. The sponsor and participants make equal contributions, which may not

exceed 8% of participants’ salaries. The plan provides additional risk coverage, including supplemental health, work-

related accident, disability and death benefits.


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Regulamento Geral (Economus)

Participants in this plan include employees of Banco Nossa Caixa who enrolled prior to July 31, 2006. This plan is

closed to new members. The sponsor and participants contribute equally, averaging 12.11% of participants’ salaries.

Regulamento Complementar 1 (Economus)

Participants in this plan include employees of Banco Nossa Caixa. This plan offers supplemental health benefits and

annuities upon death or disability. The sponsor, participants and retired/other beneficiaries fund the plan.

Grupo B' (Economus)

Participants in this plan include employees of Banco Nossa Caixa admitted between January 22, 1974, and May 13,

1974, and their beneficiaries. This plan is closed to new members. Benefit levels are based on the fulfillment of

certain conditions outlined in the plan regulation.

Multifuturo I (Fusesc)

Participants in this plan include employees of the State Bank of Santa Catarina – Besc (acquired by Banco do Brasil

on September 30, 2008) who enrolled after January 12, 2003, or were part of the Plano de Benefícios I (Fusesc) and

chose to participate in this plan. Participants may contribute from 2.33% to 7% of their salaries. The plan sponsor

matches these contributions.

Plano de Benefícios I (Fusesc)

Participants in this plan include employees of Besc who enrolled prior to January 11, 2003. This plan is closed to new

members. The sponsor and participants contribute equally, averaging 9.89% of participants’ salaries.

Plano BEP (Prevbep)

Participants in this plan include employees of the State Bank of Piauí – BEP (acquired by Banco do Brasil on

November 30, 2008). The sponsor and participants contribute equally, averaging 3.58% of participants’ salaries.

) Health Care Plans b

Plano de Associados (Cassi)

The Bank sponsors a health care plan managed by Cassi. The plan covers health care services related to prevention,

protection, recovery and rehabilitation for participants and their beneficiaries. Each month, the Bank contributes 4.5%

of participants’ salaries or pension benefits. Monthly contributions by participants and pensioners total 3% of their

salary or pension, in addition to copayments for certain hospital procedures.

Plano Unificado de Saúde - PLUS (Economus)

Participants in this plan include employees from Banco Nossa Caixa. Participation in this plan requires a direct payroll

deduction of 1.5%, providing coverage for employees and certain preferred dependents. An additional 10%

copayment is required for each medical visit and low-cost exam performed by employees and their dependents (both

preferred and non-preferred).

Plano Unificado de Saúde - PLUS II (Economus)

Participants in this plan include employees from Banco Nossa Caixa. Participation in this plan requires a direct payroll

deduction of 1.5%, providing coverage for employees and certain preferred dependents. An additional 10%

copayment is required for each medical visit and low-cost exam performed by employees and their dependents and

adult children. This plan does not cover non-preferred dependents.


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Plano de Assistência Médica Complementar - PAMC (Economus)

Participants in this plan include employees of Banco Nossa Caixa located in the state of São Paulo. The plan serves

disabled employees under the Complementar and Regulamento Geral and their dependents. Participant costs vary

based on usage and in accordance with a progressive salary table.

Plano de Saúde (SIM)

Participants in this plan include employees of Besc and other sponsors of the plan (including Badesc, Codesc,

Bescor, Fusesc and SIM). For active members, monthly contributions total 3.44% of salary, including their 13th

salary. For inactive members, monthly contributions total 8.86% of salary, while the plan sponsors contribute 5.42%.

Beneficiaries also contribute 0.75% per dependent. The plan requires a copayment for ambulatory care procedures.

) Risk factors c

The Bank may need to make unplanned contributions to Previ, Economus, Fusesc and Prevbep, which could

negatively affect operating income.

Determination of the Bank’s obligations to these entities is based on long-term actuarial and financial estimates and

the application and interpretation of current regulatory standards. Inaccuracies inherent to the estimation process

could result in differences between recorded amounts and the actual obligations in the future. This could have a

negative impact on the Bank’s operating results.

) Actuarial valuations d

Actuarial evaluations are performed every six months. The information contained in the below tables refers to the

calculations at June 30, 2016, December 31, 2015 and June 30, 2015.


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) Changes in present value of defined benefit actuarial obligations d.1

Plano 1 - Previ Plano Informal - Previ Plano de Associados - Cassi Other plans

1st half/2016 2015 1st half/2015 1st half/2016 2015 1st half/2015 1st half/2016 2015 1st half/2015 1st half/2016 2015 1st half/2015

Opening balance (121,329,915) (122,884,677) (122,884,677) (909,280) (920,380) (920,380) (6,248,098) (5,830,331) (5,830,331) (6,301,921) (6,428,867) (6,428,867)

Interest cost (9,095,589) (15,217,436) (7,468,633) (66,578) (111,770) (55,620) (491,828) (731,014) (356,192) (470,692) (768,894) (391,616)

Current service cost (224,731) (428,722) (212,439) -- -- -- (39,524) (95,421) (46,337) (14,451) (34,274) (18,284)

Past service cost -- -- -- (20,068) (29,609) (14,614) -- -- -- -- -- --

Benefits paid net of retirees contributions 5,178,484 9,432,737 4,496,005 88,597 180,547 86,848 322,802 564,759 248,533 263,619 514,118 226,981

Remeasurements of actuarial gain/(losses) (14,235,442) 7,768,183 (3,972,084) (79,526) (28,068) (58,871) (1,062,240) (156,091) (334,409) (328,670) 415,996 270,336

Experience adjustment (1,566,291) (198,997) (2,188,038) (24,296) (35,065) (63,767) (379,749) (616,729) (232,114) 506,886 (183,233) 335,122

Changes to biometric assumptions -- (2,626,460) -- -- (44,338) -- -- (125,433) -- (64,339) 1,243 1,176

Changes to financial assumptions (12,669,151) 10,593,640 (1,784,046) (55,230) 51,335 4,896 (682,491) 586,071 (102,295) (771,217) 597,986 (65,962)

Closing balance (139,707,193) (121,329,915) (130,041,828) (986,855) (909,280) (962,637) (7,518,888) (6,248,098) (6,318,736) (6,852,115) (6,301,921) (6,341,450)

Present value of actuarial liabilities with surplus (129,888,116) (118,378,747) (130,041,828) -- -- -- -- -- -- (5,595,762) (5,394,014) (5,306,059)

Present value of actuarial liabilities without surplus (9,819,077) (2,951,168) -- (986,855) (909,280) (962,637) (7,518,888) (6,248,098) (6,318,736) (1,256,353) (907,907) (1,035,391)

) Changes in fair value of plan assets d.2


(1)

1st half/2016 2015 1st half/2015 1st half/2016 2015 1st half/2015 1st half/2016 2015 1st half/2015 1st half/2016 2015 1st half/2015

Opening balance 118,378,747 135,145,646 135,145,646 -- -- -- -- -- -- 5,394,014 5,115,870 5,115,870

Interest income 8,880,898 16,362,156 8,236,790 -- -- -- -- -- -- 405,153 627,308 311,455

Contributions received 267,742 549,275 264,684 88,597 180,547 86,848 322,802 564,759 248,533 79,768 156,514 69,444

Benefits paid net of retirees contributions (5,178,484) (9,432,737) (4,496,005) (88,597) (180,547) (86,848) (322,802) (564,759) (248,533) (263,619) (514,118) (226,981)

Actuarial gain/(loss) on plan assets 7,539,213 (24,245,593) (3,045,960) -- -- -- -- -- -- (19,554) 8,440 36,271

Closing balance 129,888,116 118,378,747 136,105,155 -- -- -- -- -- -- 5,595,762 5,394,014 5,306,059

(1) Refers to the following plans: Regulamento Geral (Economus), Prevmais (Economus), Regulamento Complementar 1 (Economus), Multifuturo I (Fusesc), Plano I (Fusesc) and Plano BEP (Prevbep).

) Amounts recognized in the balance sheet d.3


Jun 30, 2016 Dec 31, 2015 Jun 30, 2015 Jun 30, 2016 Dec 31, 2015 Jun 30, 2015 Jun 30, 2016 Dec 31, 2015 Jun 30, 2015 Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

1) Fair value of the plan assets 129,888,116 118,378,747 136,105,155 -- -- -- -- -- -- 5,595,762 5,394,014 5,306,059

2) Present value of actuarial liabilities (139,707,193) (121,329,915) (130,041,828) (986,855) (909,280) (962,637) (7,518,888) (6,248,098) (6,318,736) (6,852,115) (6,301,921) (6,341,450)

3) Surplus/(deficit) (1+2) (9,819,077) (2,951,168) 6,063,327 (986,855) (909,280) (962,637) (7,518,888) (6,248,098) (6,318,736) (1,256,353) (907,907) (1,035,391)

4) Net acturial (liability)/asset (1)

(4,909,538) (1,475,583) 3,031,664 (986,855) (909,280) (962,637) (7,518,888) (6,248,098) (6,318,736) (944,412) (711,040) (780,372)

(1) Refers to the portion of the surplus/(deficit) due from the sponsor.


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) Maturity profile of defined benefit actuarial obligations d.4

Duration(1)

Expected benefit payments

(2)

Up to 1 year 1 to 2 years 2 to 5 years Over 5 years Total

Plano 1 (Previ) 8.41 5,973,597 11,928,402 34,975,111 206,128,995 259,006,105

Plano Informal (Previ) 4.95 82,346 147,703 352,454 729,774 1,312,277

Plano de Associados (Cassi) 9.00 319,313 632,491 1,845,764 12,688,910 15,486,478

Regulamento Geral (Economus) 9.23 206,152 417,565 1,267,570 9,304,954 11,196,241

Regulamento Complementar 1 (Economus) 11.06 1,136 2,421 8,234 98,188 109,979

Plus I e II (Economus) 5.94 27,210 50,372 128,923 376,762 583,267

Grupo B' (Economus) 8.10 7,056 14,024 41,370 228,219 290,669

Prevmais (Economus) 10.93 9,142 18,496 55,978 608,765 692,381

Multifuturo I (Fusesc) 9.31 2,611 5,181 15,273 112,053 135,118

Plano I (Fusesc) 7.15 24,901 48,525 137,279 579,854 790,559

Plano BEP (Prevbep) 9.37 2,003 4,420 14,736 110,883 132,042

(1) Weighted average duration, in years, of the defined benefit actuarial obligation.

(2) Amounts considered without discounting at present value.

) Breakdown of the amounts recognized in statement of income relating to defined benefit plans d.5


1st half/2016 1st half/2015 1st half/2016 1st half/2015 1st half/2016 1st half/2015 1st half/2016 1st half/2015

Current service cost (112,365) (106,219) -- -- (39,524) (46,337) (7,242) (9,159)

Interest cost (4,547,794) (3,734,317) (66,578) (55,621) (491,828) (356,192) (253,932) (211,416)

Expected yield on plan assets 4,440,448 4,118,395 -- -- -- -- 202,201 155,420

Unrecognized past service cost -- -- (20,068) (14,614) -- -- -- --

Expense with active employees -- -- -- -- (198,563) (189,689) (82,895) (74,676)

Other adjustments/reversals -- -- -- -- -- -- 3,447 (2,024)

(Expense)/income recognized in the Statement of income (219,711) 277,859 (86,646) (70,235) (729,915) (592,218) (138,421) (141,855)


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) Composition of the plan assets d.6

Plano 1 - Previ Other plans

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015 Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Fixed income 55,618,091 49,198,207 48,793,698 4,692,337 4,827,283 4,707,270

Floating income (1)

59,683,589 55,353,902 73,170,131 294,664 131,884 206,671

Real estate investments 8,728,481 8,203,647 8,288,804 211,968 205,422 167,583

Loans and financing 5,117,592 4,770,664 4,899,786 97,135 104,914 107,094

Other 740,363 852,327 952,736 299,658 124,511 117,441

Total 129,888,116 118,378,747 136,105,155 5,595,762 5,394,014 5,306,059

Amounts listed in fair value of plan assets

In the entity’s own financial instruments 8,516,001 7,887,153 10,792,928 23,270 22,087 22,825

In properties or other assets used by the entity 150,823 152,194 153,568 8,996 9,168 7,443

(1) Includes, in Plano de Benefícios 1 from Previ, the amount of R$ 23,151,174 thousand (R$ 20,521,220 thousand on December 31, 2015 and R$ 25,534,844 thousand on June 30, 2015), related to the assets that are not quoted in active markets.

) Main actuarial assumptions adopted d.7


Jun 30, 2016 Dec 31, 2015 Jun 30, 2015 Jun 30, 2016 Dec 31, 2015 Jun 30, 2015 Jun 30, 2016 Dec 31, 2015 Jun 30, 2015 Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Inflation rate (p.a.) 5.44% 7.96% 5.95% 5.54% 8.10% 5.93% 5.43% 7.97% 5.97% 5.44% 7.94% 5.96%

Real discount rate (p.a.) 6.20% 7.35% 6.18% 6.18% 7.37% 6.33% 6.20% 7.28% 6.14% 6.20% 7.35% 6.17%

Nominal rate of return on investments (p.a.) 11.98% 15.90% 12.50% -- -- -- -- -- -- 11.98% 15.88% 12.50%

Real rate of expected salary growth (p.a.) 1.01% 1.01% 1.01% -- -- -- -- -- -- 0.95% 0.88% 0.73%

Actuarial life table Soft AT-2000 (reduced by 10%) AT-2000 Soft AT-2000 (reduced by 10%) AT-2000 Soft AT-2000 (reduced by 10%) AT-2000 AT-2000

Capitalization method Projected credit unit Projected credit unit Projected credit unit Projected credit unit

In order to determine the values for the defined benefit plans, the Bank uses methods and assumptions different from those submitted by the entities sponsored.

CPC 33 (R1) prescribes the accounting, as well as the effects that occurred or that will occur in the entities that sponsor employee benefits plans. However, the sponsored entities

themselves must comply with the rules issued by the Ministério da Previdência Social, through the Conselho Nacional de Previdência Complementar (CNPC) and the

Superintendência Nacional de Previdência Complementar (Previc). The most significant differences are in the definition of the assumptions used in Plano 1 – Previ.


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) Differences in assumptions of the Plano 1 - Previ d.8

Bank Previ

Real discount rate (p.a.) 6.20% 5.00%

Evaluation of assets - exclusive funds Market value or discounted cash flow Discounted cash flow

Capitalization method Projected credit unit Aggregate method

) Reconciliation of amounts calculated in Plan 1 - Previ/Bank d.9

Plan assets Actuarial liabilities Effect in surplus/(deficit)

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015 Jun 30, 2016 Dec 31, 2015 Jun 30, 2015 Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Value determined - Previ 124,456,775 119,301,485 138,383,752 (142,474,276) (135,862,751) (130,269,710) (18,017,501) (16,561,266) 8,114,042

Incorporation of values from agreement 97

14,531,967 14,314,157 14,164,540 (14,531,967) (14,314,157) (14,164,540) -- -- --

Incorporation of values from Grupo Especial

1,162,458 1,135,082 1,117,743 (1,162,458) (1,135,082) (1,117,743) -- -- --

Adjustment in the value of plan assets

(1) (10,263,084) (16,371,977) (17,560,880) -- -- -- (10,263,084) (16,371,977) (17,560,880)

Adjustment in the liabilities - discount rate/capitalization method

-- -- -- 18,461,508 29,982,075 15,510,165 18,461,508 29,982,075 15,510,165

Value determined - Bank 129,888,116 118,378,747 136,105,155 (139,707,193) (121,329,915) (130,041,828) (9,819,077) (2,951,168) 6,063,327

(1) Refers mainly to adjustments made by the Bank in determining the fair value of the investments in Litel, Neoenergia and in securities held to maturity.

) Sensitivity analysis d.10

The sensitivity analysis is performed for changes in a single assumption while maintaining all others constant. This is

unlikely in reality, since some of the assumptions are correlated.


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The same methodology was used to perform the sensitivity analysis in each of the periods presented. However, the

discount rate was updated to reflect market conditions.

Jun 30, 2016 Life table Salary increase Interest rate

+1 age -1 age +0.25% -0.25% +0.25% -0.25%

Plano 1 (Previ)

Present value of defined benefit actuarial obligations

139,707,193 136,765,498 142,606,482 139,978,673 139,435,711 136,767,573 142,766,700

Surplus/(deficit) in the plan (9,819,077) (6,877,382) (12,718,366) (10,090,557) (9,547,595) (6,879,457) (12,878,584)

Plano Informal (Previ)


986,855 950,609 1,023,898 -- -- 974,715 999,325

Surplus/(deficit) in the plan (986,855) (950,609) (1,023,898) -- -- (974,715) (999,325)

Plano de Associados (Cassi)


7,518,888 7,356,140 7,678,991 7,521,129 7,516,630 7,349,803 7,695,423

Surplus/(deficit) in the plan (7,518,888) (7,356,140) (7,678,991) (7,521,129) (7,516,630) (7,349,803) (7,695,423)

Regulamento Geral (Economus)


5,338,566 5,253,122 5,421,114 -- -- 5,213,767 5,468,625

Surplus/(deficit) in the plan (1,054,898) (969,445) (1,137,436) -- -- (930,090) (1,184,948)



44,865 46,513 43,250 -- -- 43,599 46,187

Surplus/(deficit) in the plan (7,488) (9,135) (5,872) -- -- (6,221) (8,809)

Plus I e II (Economus)


399,431 384,910 414,066 -- -- 393,494 405,554


Grupo B' (Economus)


167,330 163,770 170,780 -- -- 163,968 170,815


Prevmais (Economus)


253,309 252,799 253,870 255,373 251,291 246,388 260,590

Surplus/(deficit) in the plan 82,969 83,479 82,409 80,905 84,988 89,891 75,689

Multifuturo I (Fusesc)


77,039 76,168 77,880 -- -- 75,213 78,947

Surplus/(deficit) in the plan 105,792 106,663 104,951 -- -- 107,618 103,884

Plano I (Fusesc)


516,064 508,843 523,108 -- -- 507,405 525,057

Surplus/(deficit) in the plan 137,909 145,130 130,865 -- -- 146,568 128,916

Plano BEP (Prevbep)


55,511 54,771 56,222 55,686 55,338 54,053 57,036

Surplus/(deficit) in the plan 46,124 46,864 45,412 45,949 46,297 47,581 44,598

) Overview of actuarial asset/(liability) recorded by the Bank e

Actuarial assets Actuarial liabilities


Plano 1 (Previ) -- -- 3,031,664 (4,909,538) (1,475,583) --

Plano Informal (Previ) -- -- -- (986,855) (909,280) (962,637)

Plano de Associados (Cassi) -- -- -- (7,518,888) (6,248,098) (6,318,736)

Regulamento Geral (Economus) -- -- -- (561,393) (406,498) (421,377)


-- 753 -- (2,656) -- (1,599)

Plus I e II (Economus) -- -- -- (399,431) (349,859) (347,113)

Grupo B' (Economus) -- -- -- (167,330) (124,157) (136,158)

Prevmais (Economus) 41,485 59,638 39,947 -- -- --

Multifuturo I (Fusesc) 52,896 50,615 37,372 -- -- --

Plano I (Fusesc) 68,955 35,046 27,246 -- -- --

Plano BEP (Prevbep) 23,062 23,422 21,310 -- -- --

Total 186,398 169,474 3,157,539 (14,546,091) (9,513,475) (8,187,620)


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) Allocations of the Surplus - Plano 1 f

1st half/2016 2015 1st half/2015

Fundo Paridade

Opening balance 120,378 118,889 118,889

Restatement 9,163 18,413 10,763

Contributions to Plano 1 - Agreement 97 (4,543) (11,829) (11,829)

Early contribution to amortize - Grupo Especial (1)

-- (5,095) (4,603)

Closing balance 124,998 120,378 113,220

Fundo de Utilização

Opening balance 8,959,543 8,155,243 8,155,243

Contributions to Plano 1 (263,198) (532,351) (248,252)

Restatement 680,339 1,336,651 759,920

Closing balance 9,376,684 8,959,543 8,666,911

Total funds allocated surplus 9,501,682 9,079,921 8,780,131

(1) Refers to the payment of 100% of the mathematical reserves for guarantees of additional supplemental retirement for the Grupo Especial.

) Fundo Paridade f.1

In 2000, the cost of switching to equal contributions was based on the Plano de Benefícios 1’s surplus at the time.

The agreement (between Banco do Brasil and participants) allowed the Bank to recognize an asset of

R$ 2.227.254 million in Allocation funds surplus. The asset is recalculated each month based on the actuarial goal:

INPC (the National Consumer Price Index published by the Brazilian Institute of Geography and Statistics – IBGE) +

5% p.a..

Since January 2007, the asset has been used to offset financial liabilities related to the agreement signed with Previ

in 1997. This agreement granted additional benefits to participants in Plano 1 (Previ) who joined the plan prior to April

14, 1967, and had not yet retired.

) Fundo de Utilização f.2

This fund contains resources transferred from the Allocation Fund (because of the plan’s surplus), which the Bank

can use for repayments or to reduce future contributions (after first meeting all applicable legal requirements). The

Fundo de Utilização is recalculated based on the actuarial target (INPC + 5% p.a.).


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27 - PROVISIONS, CONTINGENT ASSETS AND LIABILITIES, LEGAL LIABILITIES - TAXES AND SOCIAL SECURITY

a) Contingent assets

According to CPC 25 – Provisions, Contingent Liabilities and Contingent Assets contingent assets are not recognized

in the financial statements.

b) Labor lawsuits

The Bank is defendant to labor lawsuits mainly filed by former employees or trade unions of the banking industry. The

allowance for probable losses represents various claims, such as: compensation, overtime, distortion of the working

day, additional function and representation amongst others.

c) Tax lawsuits

The Bank, in spite of its conservative profile, is subject to tax inquiries (inspections conducted by the tax authorities),

which may eventually lead to tax assessments, such as: the composition of the calculation of the taxable profit for

income tax/social contribution (deductibility) and discussion regarding the incidence of taxes, when certain taxable

event occur. Most assessments are related to tax on services of any kind – ISSQN, income tax, social contribution,

social integration program/contribution to social security financing – PIS/COFINS, IOF tax and employer social

security contributions. As a guarantee for some of them, the Bank has pledged cash, bonds, real estate or made

judicial deposits when necessary, preventing the Bank to be included in restrictive registration, as well as not to

obstruct the semiannual renewal of its tax regularity certificate.

d) Civil lawsuits

Civil lawsuits consist mainly of: lawsuits of customers and users of our network asking for material and moral

damages indemnity related to banking products and services and Economic Plans.

The indemnities for material and moral damages are based on consumer protection laws and are generally settled in

Special Civil Courts, whose value is limited to forty times the minimum wage.

The Bank is a defendant in proceedings seeking the payment of the difference between the actual inflation rate and

the inflation rate used for the adjustment of financial investments when economic plans were implemented in the late

1980’s and early 1990’s, known as the Bresser Plan, the Verão Plan and the Collor Plans I and II (or Economic

Plans).

Although the Bank complied with the laws and regulations in place at the time, these lawsuits have been recorded in

provisions, taking into consideration the claims where the Bank is the defendant and the outcome of loss is judged to

be probable, which is determined after the analysis of each demand, based on the current decision of the Superior

Court of Justice (STJ).

Regarding disputes relating to economic plans, the Federal Supreme Court (STF) suspended the prosecution of all

cases on appeal, until the Court issues a definitive pronouncement on the right under litigation.


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e) Provisions for labor, tax and civil claims - probable loss

The Bank recorded a provision for labor, civil and tax demands with risk of loss "likely", quantified using individual or

mass methodology (includes processes with the author's probability of success equal to remote, possible or

probable), according to the nature and / or process value.

The estimates of outcome and financial effect are determined by the nature of the actions , the management's

judgment , by the opinion of legal counsel on the basis of process elements , complemented by the complexity and

the experience of similar demands.

The Management considers to be sufficient the allowance for losses of labor, tax and civil claims.

e.1) Changes in the provisions for civil, tax and labor claims classified as probable


Labor lawsuits


Addition 844,790 389,245

Reversal of the provision (23,703) (132,319)

Paid out (515,150) (635,254)

Inflation correction 123,258 132,267


Tax lawsuits

Opening balance 245,695 206,515

Addition 96,955 40,530

Reversal of the provision (74,390) (56,615)

Paid out (7,993) (4,522)


Closing balance 267,932 194,151

Civil lawsuits


Addition 1,758,017 2,104,332

Reversal of the provision (1,515,478) (1,298,977)

Paid out (774,173) (578,815)



Total labor, tax and civil 9,677,383 8,158,227

e.2) Expected outflows of economic benefits

Labor Tax Civil

Up to 5 years 2,531,986 142,752 5,552,087

From 5 to 10 years 66,222 96,013 1,229,666

Over 10 years 93 29,167 29,397

Total 2,598,301 267,932 6,811,150

The scenario of unpredictability of the duration of proceedings, and the possibility of changes in the case law of the

courts, make values and the expected outflows of economic benefits uncertain.

f) Contingent liabilities – possible loss

The lawsuits, tax and civil risks classified as possible loss do not require provisions when the final outcome of the

process is unclear and when the probability of losing is less than more-likely-than-not and higher than the remote.


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f.1) The balances of contingent liabilities classified as possible loss

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Labor lawsuits 196,858 215,042 191,180

Tax lawsuits (1)

9,767,803 12,777,102 12,653,406

Civil lawsuits 2,385,644 3,270,906 3,058,464

Total 12,350,305 16,263,050 15,903,050

(1) The main contingencies originate from (i) assessment for the payment of social security - INSS contributions on: salary bonus paid under the collective agreements in the period from 1995 to 2006, in the amount of R$ 2,932,711 thousand; public transport benefits and the use of private car by employees of Banco do Brasil, in the amount of R$ 255,038 thousand; and employee profit share payments corresponding to the period from April 2001 to October 2003, in the amount of R$ 81,724 thousand and (ii) notices of tax assessment made by the Treasuries of the Municipalities, claiming ISSQN totaling R$ 1,520,997 thousand.

g) Deposits in guarantee

g.1) Deposits given in guarantee of contingencies

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Labor lawsuits 4,842,040 4,532,105 4,170,403

Tax lawsuits 7,138,443 6,836,107 6,527,612

Civil lawsuits 18,329,300 15,991,552 13,465,651

Total 30,309,783 27,359,764 24,163,666

h) Legal obligations

The Bank has a record in Other liabilities - tax and social security the amount of R$ 14,633,941 thousand

(R$ 14,076,071 thousand on December 31,2015 and R$ 13,574,449 thousand on June 30,2015) relating to the

following action:

On January 29, 1998, the Bank filed for a writ of mandamus, distributed to the 16th Federal Court of Federal District

(16º Vara da Justiça Federal do Distrito Federal) claiming full compensation of accumulated losses for income tax

purposes and negative basis for the calculation of Social contribution on net income (CSLL). Since then, the Bank

has been fully offsetting the tax loss and the negative basis of social contribution against income tax and social

contribution, and has made judicial deposits for the full amount due (70% of the amount offset). These deposits

prompted the 16º Vara da Justiça Federal do Distrito Federal to issue an order recognizing the suspension of

chargeability of these taxes based on article 151, item II, of the National tax code (Código Tributário Nacional - CTN).

The case was dismissed in the first instance and an appeal brought by the Bank was denied by the Federal Regional

Court (Tribunal Regional Federal – TRF) of the First Region. The decision was challenged by extraordinary appeal

filed by the Bank on October 1, 2002. Today, the appeal is pending in the TRF of the First Region awaiting the

judgment by the STF of another Extraordinary Feature (RE No. 591,340), which was recognized by the Supreme

Court as setting a relevant judicial precedent.

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 interest /

inflation restatements of judicial deposits are being offset with the tax credits resulting from the provision related to

that judicial deposit, in conformity with article 1, item II, paragraph 2 of CMN Resolution 3,059/2002, with no impact

on income.

Based on the hypothesis of a successful outcome to this lawsuit, in September 2005 and January 2009, the Bank

would have consumed the entire stock of tax loss carry forward and recoverable social contribution. Therefore, since

October 2005 and February 2009, the amounts of IRPJ and CSLL are being paid in full. Moreover, there would be a

reclassification of resources from the account used to record judicial deposits to that of cash and cash equivalents.

Tax credits for the escrow deposits (main value) 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 amounts to

R$ 8,062,269 thousand.


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If the Bank were unsuccessful in its lawsuit (situation in which the amounts deposited judicially would be converted

into income in favor of the Fazenda Nacional (Federal Tax Authority)), 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, that could be used since the accrual period starting October 2005 and February 2009, observing the

limitation of 30%. The taxes recoverable, which would result from the adjustments to prior year Statements of

economic-fiscal information of businesses, corresponds to R$ 5,942,441 thousand as of June 30, 2016 and updating

by the Selic rate results in a further recoverable amount of R$ 3,235,873 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 loss.

h.1) The amounts related to this matter

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Judicial deposits 16,911,249 16,399,235 15,873,150

Amount realized (70%) 7,817,011 7,817,011 7,817,011

Inflation correction 9,094,238 8,582,224 8,056,139

Legal obligations - provision for lawsuit 14,633,941 14,076,071 13,574,449

Tax losses of IRPJ 3,002,033 3,002,033 3,002,033

CSLL negative bases/CSLL recoverable 3,569,640 3,569,640 3,569,640

Provision for restatement of judicial deposit 8,062,268 7,504,398 7,002,776

- RISK AND CAPITAL MANAGEMENT 28

) Risk management process a

For Banco do Brasil, risk management is one of the most important elements of the decision-making process.

The Institution has a process of identification of risks that will be part of the Institution's risks inventory, performed by

analysing the business segments that are explored, direct and indirectly, considering the Entities Related to Banco do

Brasil. The risks below are part of Banco do Brasil's Financial Conglomerate Relevant Risks Corporate Range:

a) Credit Risk; b) Counterparty Credit Risk; c) Concentration Risk; d) Liquidity Risk; e) Operational Risk; f) Market Risk; g) Banking Book Interest Rate Risk; h) Strategic Risk; i) Reputational Risk; j) Environmental Risk; k) Legal Risk; l) Participations Risk; m) Complementary Pension Fund Entities and Private Health Insurance Plan Operators for Employees Risk;

and n) Model Risk.

In the Bank, the collegiate risk management is performed completely segregated from the business units. Risk

management policies are approved by the Board of Directors. The Global Risk Superior Committee (CSRG), a forum

composed of the President and Vice-Presidents, is responsible for implementation and monitoring of these policies.

The guidelines issued by the CSRG are conducted by specific executive committees (credit, market, liquidity and

operational), which are groups formed by Directors.

To learn more about the risk management process in Banco do Brasil, visit the information available in the Risk

Management Report at the website bb.com.br/ri.


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Financial instruments - fair value

Financial instruments recorded in balance sheet accounts, compared to fair value:

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015 Unrealized gain/loss, net of tax effects

Book value Fair value Book value Fair value Book value Fair value On income On shareholders’ equity


Assets

Short-term interbank investments 414,470,966 414,494,598 352,741,787 352,737,420 351,175,268 351,058,127 23,632 (4,367) (117,141) 23,632 (4,367) (117,141)

Securities 117,493,986 117,204,954 113,923,018 113,683,766 109,990,465 109,831,168 (3,662,800) (5,349,992) (2,103,856) (289,032) (239,252) (159,297)

Adjustment of securities available for sale (Note 8.a)

-- -- -- -- -- -- (3,373,768) (5,110,740) (1,944,559) -- -- --

Adjustment of securities held to maturity (Note 8.a) -- -- -- -- -- -- (289,032) (239,252) (159,297) (289,032) (239,252) (159,297)

Derivative financial instruments 3,256,272 3,256,272 3,362,032 3,362,032 1,822,874 1,822,874 -- -- -- -- -- --

Loan operations 597,578,161 586,642,639 627,877,787 614,463,025 607,771,753 595,625,244 (10,935,522) (13,414,762) (12,146,509) (10,935,522) (13,414,762) (12,146,509)

Liabilities

Interbank deposits 27,472,505 28,005,024 41,482,547 42,491,031 33,337,348 34,135,589 (532,519) (1,008,484) (798,241) (532,519) (1,008,484) (798,241)

Time deposits 202,458,585 202,259,403 204,542,130 204,319,982 198,931,164 198,756,125 199,182 222,148 175,039 199,182 222,148 175,039

Liabilities related to repurchase agreement 411,968,635 410,326,239 333,521,648 331,363,071 341,229,150 339,689,087 1,642,396 2,158,577 1,540,063 1,642,396 2,158,577 1,540,063

Borrowings and onlendings 109,366,094 109,667,224 119,731,066 119,978,533 113,106,192 113,516,029 (301,130) (247,467) (409,837) (301,130) (247,467) (409,837)

Derivative financial instruments 3,018,900 3,018,900 3,289,172 3,289,172 2,813,967 2,813,967 -- -- -- -- -- --

Other liabilities 215,134,937 215,788,300 204,140,873 201,344,954 191,434,148 189,170,557 (653,363) 2,795,919 2,263,591 (653,363) 2,795,919 2,263,591

Unrealized gain/(loss), net of tax effects (14,220,124) (14,848,428) (11,596,891) (10,846,356) (9,737,688) (9,652,332)

Determination of fair value of financial instruments

Short-term interbank investments: The fair value was obtained by discounting future cash flows, using interest rates traded by the market in similar operations on the balance sheet

date.

Securities: Securities are accounted for by market value, as allowed for in Bacen Circular No. 3,068/2001, except for securities held to maturity. The fair value of the securities,

including those held to maturity, is obtained from rates practised in the market.

Loan operations: The fair value of fixed rate operations has been estimated through the future cash flow discount method, considering the interest rates utilized by the Bank when

originating similar operations at the balance sheet date. For operations that are remunerated by floating rates, the fair value was equivalent to the book value itself.


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Interbank deposits: The fair value has been calculated by the discount of the future cash flows using rates currently

applicable in the market for fixed rate deposits. In case of floating operations the maturities of which are less than 30

days, the book value was deemed approximately equivalent to the fair value.

Time deposits: The same criteria adopted for interbank deposits are utilized in the determination of the fair value.

Liabilities related to repurchase agreement: 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 applied in contracting similar

operations on the last trading day. For floating operations, book values have been deemed approximately equivalent

to market value.

Borrowing and onlendings: Such operations are exclusive to the Bank with no similar operations in the market. Given

their specific characteristics, the exclusive rates for each fund, the inexistence of an active market or similar traded

instruments, the fair values of such operations are considered equivalent to the book value.

Other liabilities: Fair values have been determined by the discounted cash flow method, which takes into account

interest rates offered in the market for obligations with similar maturities, risks and terms.

Derivatives financial instruments: According to Bacen Circular No. 3,082/2002, derivatives are recorded at market

value. The market value of derivatives was estimated in accordance with internal pricing models, with the use of the

rates disclosed for transactions with similar terms and indices on the last business day of the period.

Other financial instruments: Included or not in the balance sheet, fair value is approximately equivalent to the

corresponding book value.

Source of information regarding assets and liabilities measured at fair value in the balance sheet

The Bank’s fair value measurements consider the following input levels:

Level 1 – Price quotations are derived from active markets for identical financial instruments. Financial instruments

are considered to be quoted in an active market if prices are readily available and are based on regularly occurring

arm’s length transactions.

Level 2 – Requires the use of information obtained from the market that is not Level 1. This includes prices quoted in

non-active markets for similar assets and liabilities and information that can be corroborated in the market.

Level 3 – Requires the use of information not obtained from the market to measure fair value. When there is not an

active market for an instrument, the Bank uses valuation techniques that incorporate internal data. The Bank’s

methodologies are consistent with commonly used techniques for pricing financial instruments.

Assets and liabilities measured at fair value in the balance sheet

Balance at Jun 30,

2016 Level 1 Level 2 Level 3

Assets 119,909,696 72,134,443 47,775,253 --

Trading securities, measured by market value 6,224,897 4,949,084 1,275,813 --

Derivative financial instruments 3,256,272 -- 3,256,272 --

Available-for-sale securities, measured by market value 110,428,527 67,185,359 43,243,168 --

Liabilities (3,373,980) -- (3,373,980) --

Hedge funding (355,080) -- (355,080) --

Derivative financial instruments (3,018,900) -- (3,018,900) --


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Balance at Dec 31,


Assets 113,420,484 62,764,151 50,656,333 --

Trading securities, measured by market value 7,860,341 6,546,397 1,313,944 --



Liabilities (3,627,472) -- (3,627,472) --

Hedge funding (338,300) -- (338,300) --


Balance at Jun 30,


Assets 107,987,341 61,397,775 46,589,566 --

Trading securities, measured by market value 8,435,247 8,011,910 423,337 --



Liabilities (3,158,258) -- (3,158,258) --

Hedge funding (344,291) -- (344,291) --


Sensitivity analysis (CVM Instruction No. 475/2008)

Banco do Brasil manages its risks in a dynamic process, identifying, assessing, monitoring, and controlling market

risk exposure arising on its positions. In this context, the Bank takes into account the risk limits defined by the

Strategic Committees and possible scenarios, to act in a timely manner to reverse any 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 of own positions 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 of transactions not classified in the Trading Book whose feature is held to maturity.

The sensitivity analysis for all the operations with assets and liabilities of the Balance Sheet, in compliance with

CVM Instruction No. 475/2008 does not adequately reflect the market risk management process or the accounting

practices adopted by the Bank.

In order to determine the sensitivity of the Bank's capital to the impacts of market volatility, simulations were

performed with three likely scenarios, two of which assume adverse movements for the Bank. The scenarios used

are set out below:

Scenario I: Likely situation, which reflects the perception of the Bank’s senior management, the scenario most likely

to occur for a 3-month horizon, considering macroeconomic factors and market information (BM&FBovespa, Anbima,

etc.). Assumptions: exchange rate real/dollar of R$ 3.24 and maintaining the Selic rate in 14.25% per annum based

on market conditions observed at June 30, 2016.

Scenario II: Possible situation. Assumptions adopted: parallel shock of 25.00% in the risk variables, based on market

conditions observed on June 30, 2016 considering the worst losses by risk factor and, therefore, ignoring the

dynamics of correlation between macroeconomic factors.

Scenario III: Possible situation. Assumptions adopted: parallel shock of 50.00% in the risk variables, based on market

conditions observed on June 30, 2016 considering the worst losses by risk factor and thus ignoring the dynamics of

correlation between macroeconomic factors.


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The tables below summarize the results for the Trading Portfolio (Trading), composed of public and private securities,

derivative financial instruments and funds obtained through repurchase agreements:

Risk factor Concept

Scenario I

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Prefixed rate Risk of variation of prefixed

interest rates Maintenance -- Increase 131 Increase (8,186)

TMS and CDI indices Risk of variation of interest

rate indices Increase -- Increase (3) Increase (5)

IPCA index Risk of variation of inflation

indices Maintenance -- Increase 678 Increase (544)

Exchange rates variation Risk of variation of foreign

exchange rates Increase 2,657 Increase 13,706 Increase 4,084

Risk factor Concept

Scenario II

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense

Variation of rates

Income/ (expense


interest rates Decrease (7,529) Decrease (959) Increase (33,731)


rate indices Increase -- Decrease (1) Increase --


indices Increase (837) Increase (1,140) Increase (1,168)


exchange rates Decrease (81,115) Decrease (92,657) Decrease (66,836)

Risk factor Concept

Scenario III

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Variation of rates

Income/ (expense

Variation of rates

Income/ (expense

Variation of rates

Income/ (expense


interest rates Decrease (17,978) Decrease (2,866) Increase (65,221)


rate indices Increase -- Decrease (2) Increase (1)


indices Increase (1,642) Increase (2,225) Increase (2,275)


exchange rates Decrease (162,231) Decrease (185,314) Decrease (133,672)

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 or accounting impact on the Bank's income as a

result of the portfolio composition which is principally: loan operations (consumer credit, agribusiness, working capital,

etc.); retail funding (demand, time, and savings deposits), and securities, which are recorded in the books using the

contracted interest rates. In addition, it should be pointed out that these portfolios, except the securities available for

sale, have as their principal characteristic the intention to hold the respective operations 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 impacts of a stress scenario.


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The tables below show a summary of the Trading Portfolio (Trading) and Non Trading (Banking) for the financial and

non-financial entities controlled by the bank:

Risk factor Concept

Scenario I

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Variation of rates

Income/ (expense

Variation of rates

Income/ (expense

Variation of rates

Income/ (expense


interest rates Maintenance -- Increase (3,478,743) Increase (2,926,188)

TR

Risk of variation of interest rate indices

Decrease (170,950) Increase 1,361,365 Increase 1,363,519

TBF Decrease (851) Decrease (42) Decrease (7,386)

TJLP Maintenance -- Increase (5,022) Increase (6,211)

TMS and CDI Increase 9,152 Increase 32,171 Increase (39,735)

IGP-M

Risk of variation of inflation indices

Maintenance -- Increase (142,841) Increase (13,792)

IGP-DI Maintenance -- Increase (144) Increase (158)

INPC Maintenance -- Increase (111,745) Increase (82,581)

IPCA Maintenance -- Increase (601,591) Increase (495,172)

Foreign currency rates Risk of variation of foreign

currency indices Increase 712,241 Decrease (1,113,147) Increase 1,097,178

Exchange rate Risk of variation of foreign

exchange rates Increase 26,237 Increase (60,592) Increase 31,958

Risk factor Concept

Scenario II

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Variation of rates

Income/ (expense

Variation of rates

Income/ (expense

Variation of rates

Income/ (expense


interest rates Increase (11,111,628) Increase (12,538,082) Increase (11,729,487)

TR


Decrease (6,853,809) Decrease (5,590,381) Decrease (5,214,975)

TBF Decrease (2,809) Decrease (3,991) Decrease (3,223)

TJLP Decrease (11,212) Increase (23,159) Increase (54,374)

TMS and CDI Increase (3,463) Increase (13,651) Increase (20,591)

IGP-M


Increase (4,760) Increase (230,618) Increase (36,143)

IGP-DI Increase (150) Increase (236) Increase (393)

INPC Increase (190,502) Increase (177,195) Increase (170,936)

IPCA index Increase (1,152,899) Increase (1,069,492) Increase (1,020,110)


currency indices Decrease (856,285) Decrease (1,383,209) Decrease (1,364,999)


exchange rates Decrease (801,123) Increase (409,627) Decrease (522,964)

Risk factor Concept

Scenario III

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Variation of rates

Income/ (expense

Variation of rates

Income/ (expense

Variation of rates

Income/ (expense


interest rates Increase (21,091,958) Increase (23,646,296) Increase (22,368,082)

TR


Decrease (14,004,507) Decrease (11,394,648) Decrease (10,520,441)

TBF Decrease (5,644) Decrease (8,035) Decrease (6,477)

TJLP Decrease (23,628) Increase (47,175) Increase (106,233)

TMS and CDI Increase (6,924) Increase (27,300) Increase (41,162)

IGP-M


Increase (28,291) Increase (439,872) Increase (84,407)

IGP-DI Increase (299) Increase (472) Increase (783)

INPC Increase (373,327) Increase (346,949) Increase (334,652)

IPCA index Increase (2,173,384) Increase (2,008,991) Increase (1,918,258)


currency indices Decrease (1,768,895) Decrease (2,857,467) Decrease (2,813,841)


exchange rates Decrease (1,602,247) Increase (819,254) Decrease (1,045,929)


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The scenarios used for preparing the framework for sensitivity analysis must use situations of deterioration of at least

25% and 50% of the variable risks, on an individualized basis, as determined by CVM Instruction No. 475/2008.

Thus, the combined analysis of the results does not reflect real expectations, for example, simultaneous shocks of

increase in the prefixed interest rate and reduction of the TR rate are not consistent from the macroeconomic

perspective.

The derivative transactions classified in the Banking Book, do not represent a relevant market risk to Banco do Brasil,

as these positions are usually originated with the following objectives:

Swapping the index of funding and lending transactions performed to meet customer needs;

Hedging market risk, the purpose and effectiveness of which are described in Note 8.d. Also in this transaction, the interest and exchange rate variations have no effects on the Bank's income.

On June 30, 2016, the Banco do Brasil did not enter into any transaction classified as an exotic derivative, as

described in CVM Instruction No. 475/2008 - Attachment II.

) Capital management b

On June 30, 2011, Bacen issued a resolution requiring financial institutions to implement a capital management

structure in accordance with Pillar II of Basel. In the Bank, such structure includes the Accounting, Risk Management,

Controllership and Finance areas. In addition, the Board of Directors indicated the Controller as having overall

responsibility for capital management.

The Bank’s organizational structure allows it to identify and evaluate significant risks incurred, including Pillar I risks

not covered by MRER. The Bank’s policies, strategies and capital plan enable it to maintain capital at a level that is

consistent with the risks it faces. Stress tests are performed on a monthly basis, with the impacts evaluated from a

capital perspective. The corporate units and strategic committees receive capital adequacy management reports.

These reports support the decision-making process of the Bank’s senior management team.

The above mentioned resolution also required implementation of an Internal Capital Adequacy Assessment Process

(ICAAP), which was formally established by the Bank on June 30, 2013. The Risk Management area is responsible

for coordinating ICAAP, and the Internal Controls unit, which is independent from capital management, is responsible

for validating ICAAP. Finally, Internal Audit is responsible for performing an annual evaluation of the overall capital

management process.

To learn more about the capital management at Banco do Brasil, visit the website bb.com.br/ri.

Capital adequacy ratio

The Bank calculated the Capital Adequacy Ratio in accordance with criteria established by Bacen. This criteria

requires the calculation of Referential Equity (RE) and MRER as a percentage of Risk Weighted Assets (RWA).

Basel III became effective on October 01, 2013 in Brazil. Recommend by the Basel Committee on Banking

Supervision, Basel III represents a new set of regulations governing the capital structure of financial institutions. The

new rules establish the following:

a new methodology for calculating regulatory capital, which continues to be divided into Tier I and Tier II.

Tier I consists of Common Equity Tier I Capital – CET1 (net of regulatory adjustments) and Additional Tier I

Capital;

a new methodology for calculating capital requirements, establishing minimum requirements for Referential

Equity, Tier I and CET1, and introducing the Additional CET1.

From January 1, 2016, the percentage of deduction of prudential adjustments listed below increased to 60%:

goodwill;

intangible assets recognized after October 01, 2013;

actuarial assets related to defined benefit pension plans, net of deferred tax liabilities;

non-controlling interests;


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direct or indirect investments of greater than 10% in non-consolidated entities similar to financial institutions, insurance companies, reinsurance companies, capitalization companies and open-ended pension funds;

deferred tax assets on temporary differences that rely on the generation of future taxable profits or income to be realized;

deferred tax assets resulting from tax losses on excess depreciation; and

deferred tax assets resulting from tax losses and negative social contribution base on net income.

In accordance with CMN Resolution No. 4,192/2013, these deductions will be implemented gradually between 2014

and 2018 at the rate of 20% per year. However, deferred tax assets on debt issued by financial institutions are an

exception, since they have been fully deducted since October 2013.

On August 28, 2014, Bacen authorized the R$ 8,100,000 thousand perpetual bond included in Additional Tier I

Capital to be considered Common Equity Tier I Capital.

According to Bacen Resolution No. 4,192/2013 and No. 4,193/2013, from January 2015, the calculation of the

Regulatory Equity (RE) and the amount of Risk-Weighted Assets (RWA) should be elaborated based on Prudential

Conglomerate.

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

RE - Referential equity 125,073,657 135,551,196 127,991,067

Tier I 86,188,277 95,713,963 89,853,356

Common Equity Tier 1 Capital (CET1) 63,964,567 68,677,378 68,935,770

Shareholders' equity 73,098,924 71,314,421 72,534,473

Instrument qualifying as CET1 8,100,000 8,100,000 8,100,000

Regulatory adjustments (17,234,357) (10,737,043) (11,698,703)

Additional Tier 1 Capital (AT1) 22,223,710 27,036,585 20,917,586

Hybrid instruments authorized in accordance with CMN Resolution No. 4,192/2013

17,570,370 21,375,495 18,844,042

Hybrid instruments authorized in accordance with regulations preceding the CMN Resolution No. 4,192/2013

(1)

4,653,340 5,661,090 2,073,544

Tier II 38,885,380 39,837,233 38,137,711

Subordinated debt qualifying as capital 38,904,584 39,839,840 38,144,335

Subordinated debt authorized in accordance with CMN Resolution No. 4,192/2013 - Financial bills

5,584,450 5,786,606 5,458,898

Subordinated Debt authorized in accordance with regulations preceding the CMN Resolution No. 4,192/2013

33,320,134 34,053,234 32,685,437

Funds obtained from the FCO (2)

23,841,572 22,994,912 21,627,115

Funds raised in financial bills and CD (3)

9,478,562 11,058,322 11,058,322

Deduction from tier II (19,204) (2,607) (6,624)

Funding instruments issued by financial institution (19,204) (2,607) (6,624)

Risk Weighted Assets (RWA) 760,102,037 840,508,940 791,056,934

Credit risk (RWACPAD) 702,885,694 785,773,084 749,291,148

Market risk (RWAMPAD) 25,507,869 18,346,766 11,648,889

Operational risk (RWAOPAD) 31,708,474 36,389,090 30,116,897

Minimum referential equity requirements (4)

75,060,076 92,455,983 87,016,263

Margin on the minimum referential equity required 50,013,581 43,095,213 40,974,804

Tier I Ratio (Tier I/RWA) 11.34% 11.39% 11.36%

Common Equity Tier 1 Capital Ratio (CET1/RWA) 8.42% 8.17% 8.71%

Capital Adequacy Ratio (RE/RWA) 16.45% 16.13% 16.18%

(1) On June 30, 2016, based on the orientation of Bacen, it was considered the balance of the hybrid capital and debt instrument authorized by Bacen to compose the Tier 1 Capital of the Referential Equity according CMN Resolution 3,444/2007 and do not meet the relevant entry criteria, also related with the orientation established on article 28, sections I to X of CMN Resolution 4,192/2013.

(2) According to CMN Resolution No. 4,192/2013, balances of the FCO are eligible to compose the RE.

(3) On June 30, 2016, it was considered the balance of subordinated debt instruments that composed the RE in December 31, 2012, applying on it the limit of 60%, as determined by CMN Resolution No. 4,192/2013.

(4) According to CMN Resolution No. 4,193/2013, corresponds to the application of the "F" factor to the amount of RWA, where "F" equals: 11%, from October 1, 2013 to December 31, 2015; 9.875% from January 1, 2016 to December 31, 2016; 9.25%, from January 1, 2017 to December 31, 2017; 8.625% from January 1, 2018 to December 31, 2018 and 8%, from January 1, 2019.


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Regulatory adjustments deducted from CET1:

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Tax credits resulting from temporary differences that rely on the generation of future taxable profits or revenues for its realization (amount above 10% threshold)

(1)

(6,886,540) (3,425,235) (1,990,274)

Significant investments and tax credits resulting from temporary differences that rely on the generation of future taxable profits or revenues for their realization (amount exceeding the 15% threshold)

(1) (2)

(4,588,770) (2,846,808) (290,712)

Intangible assets constituted after October 2013 (1)

(3,245,920) (2,346,233) (2,095,283)

Goodwill (1) (3)

(1,393,609) (1,075,845) (1,245,653)

Non-controlling interests (1)

(511,093) (402,531) (378,534)

Tax credits resulting from tax losses and negative base for social contribution on net income

(1)

(440,004) (561,777) (463,682)

Tax credits resulting from tax loss of excess depreciation (1)

(81,375) (62,040) (68,743)

Actuarial assets related to defined benefit pension funds net of deferred tax liabilities

(1)

(74,342) -- (1,243,180)

Deferred assets (4)

(12,704) (16,574) (22,639)

Funding instruments issued by financial institutions (2) (4)

-- -- (3,900,003)

Total (17,234,357) (10,737,043) (11,698,703)

(1) Regulatory Adjustments subject to phase-in, according to the CMN Resolution No. 4,192/2013.

(2) According to Resolution CMN No. 4,442/2015, from november/2015, the methodology of deduction of the investment in Banco Votorantim S.A. was modified. This way, on 06.30.2016, R$ 1,676,352 thousand were integrally deductec from the Referential Equity and R$ 2,462,959 thousand were risk-weighted at 250%.

(3) The base value for calculating the goodwill is composed of: R$ 865,144 thousand in the investment line and R$ 1,457,537 thousand in the intangible assets line. The value in Intangible assets refers to the goodwill paid for the acquisition of Banco Nossa Caixa, merged in November/2009.

(4) Regulatory adjustments that are being fully computed since October, 2013, in accordance with CMN Resolution No. 4,192/2013.

) Fixed asset ratio c

On June 30, 2016, the Fixed Asset Ratio for the Prudential Conglomerate, totalized 15.59% (16.70% on December

31, 2015 and 16.06% on June 30, 2015), and it was calculated in compliance with CMN Resolutions No. 4,192/2013

and No. 2,669/1999.

- STATEMENT OF COMPREHENSIVE INCOME 29


Net income presented in the statement of income 4,824,099 8,825,908

Other comprehensive income

Accumulated other comprehensive income (Note 23.i) (2,735,600) (4,537,832)

Banco do Brasil (3,159,992) (4,566,455)

Subsidiaries abroad 52,021 (4,633)

Associates and joint ventures 372,371 33,256

Income and social contribution taxes related to unrealized (gains)/losses (Note 23.i) 1,459,586 1,568,640

Other comprehensive income, net of income and social contribution taxes (1,276,014) (2,969,192)

Comprehensive income 3,548,085 5,856,716

Comprehensive income - non-controlling interests 827,086 882,732


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- OTHER INFORMATION 30

) Distribution of dividends and interest on own capital a

During a meeting held on February 23, 2016, the Board of Directors approved the setting of the payout rate

equivalent to the minimum of 25% of net income for the year 2016, fulfilling the policy for payment of dividends yield

and/or interest on own capital on a quarterly basis, pursuant to article 45 of the Bank's By-Laws.

) Investiment funds management b

Funds managed by BB Gestão de Recursos - Distribuidora de Títulos e Valores Mobiliários S.A.:

Numbers of funds/portfolios (in Units) Balance

Jun 30, 2016 (1)

Dec 31, 2015 Jun 30, 2015 Jun 30, 2016 (1)

Dec 31, 2015 Jun 30, 2015

Managed funds 639 611 613 660,474,425 603,232,935 604,791,747

Investment funds 628 603 605 646,055,633 587,725,096 592,204,518

Managed portfolios 11 8 8 14,418,792 15,507,839 12,587,229

(1) Refers to the position recorded by Ranking Global ANBIMA on May 31, 2016.

) Details in relation to overseas branches, subsidiaries and associates c

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Assets

BB Group 75,063,782 90,325,257 72,711,094

Third parties 97,036,060 133,050,500 120,146,414

TOTAL ASSETS 172,099,842 223,375,757 192,857,508

Liabilities

BB Group 25,992,326 25,795,399 20,678,070

Third parties 136,155,458 185,321,366 160,985,457

Shareholders' equity 9,952,058 12,258,992 11,193,981

Attributable to parent company 9,100,264 11,252,692 10,247,674

Non-controlling interests 851,794 1,006,300 946,307

TOTAL LIABILITIES 172,099,842 223,375,757 192,857,508

1st half/2016 2015 1st half/2015

Net income (585,029) 869,432 382,565

Attributable to parent company (724,996) 546,848 230,081

Non-controlling interest 139,967 322,584 152,484

) Consortium funds d

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Monthly forecast of Purchase Pool Members receivable funds 201,944 202,928 203,880

Obligations of the groups due to contributions 8,534,729 8,321,348 8,484,178

Purchase pool members - assets to be delivered 7,568,252 7,440,232 7,643,403

(In units)

Quantity of groups managed 540 564 559

Quantity of active purchase pool members 623,503 644,779 614,781

Quantity of assets deliverable to members (drawn or winning offer) 59,204 61,990 57,492


Quantity of assets (in units) delivered in the period 52,874 45,976


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) Assignment of employees to outside agencies e

Federal government assignments are regulated by Law 10,470/2002 and Decree No. 4,050/2001.


Quantiy of employees

Ceded(1)

Cost in the period

Quantiy of employees

Ceded (1)

Cost in the period

With costs for the Bank

Labor unions 220 18,629 226 18,054

Other organizations/entities 2 413 2 392

Subsidiaries and associates 2 660 2 618

Without cost to the Bank

Federal, state and municipal governments 265 -- 284 --

External organizations (Cassi, Previ, Economus, Fusesc and PrevBep) 580 -- 605 --

Employee entities 82 -- 89 --

Subsidiaries and associates 592 -- 573 --

Total 1,743 19,702 1,781 19,064

(1) Balance on the last day of the period.

) Remuneration of employees and managers f

Monthly wages paid to employees and Directors of the Banco do Brasil (in Reais):

Jun 30, 2016 Dec 31, 2015 Jun 30, 2015

Lowest salary 2,449.98 2,449.98 2,227.26

Highest salary 40,992.27 40,992.27 37,265.70

Average salary 6,908.61 6,869.98 6,349.59

Management

President 68,781.86 65,196.08 65,196.08

Vice-president 61,564.83 58,355.29 58,355.29

Director 52,177.45 49,457.30 49,457.30

Council members

Fiscal council 5,948.54 5,638.43 5,638.43

Board of Directors 5,948.54 5,638.43 5,638.43

Audit Committee - member 46,959.71 44,511.57 44,511.57

) Insurance policy of assets g

Despite the reduced level of risk to which its assets are subject, the Bank contracts insurance cover for its assets in

amounts considered to be sufficient to cover any losses.

Insurance contracted by the Bank in force on June 30, 2016

Covered risks Amounts covered Value of the premium

Property insurance for the relevant fixed assets 1,123,599 6,341

Life insurance and collective personal accident insurance for the Executive Board (1)

885 3

Other 378,100 4,118

Total 1,502,584 10,462

(1) Refers to individual coverage for members of the Executive Board.


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) Credit intelligence bureau h

According Information to the Market of January 21. 2016, the Bank has entered, collectively, into a non-binding

Memorandum of Understanding with Banco Bradesco S.A., Banco Santander (Brasil) S.A., Caixa Econômica Federal

and Itaú Unibanco S.A., the parties, in order to create a credit intelligence bureau (CIB).

CIB will develop a data base aiming to aggregate, reconcile and treat registration data and credit information of

individuals and companies that expressly authorize their inclusion in such data base as required by applicable law.

This action will increase the exchange of information of such individuals and companies, enabling higher levels of

efficiency and improvement on credit management activities. This initiative shall facilitate, for participants of the

Brazilian Banking Industry and other companies on the credit market, the granting of credit lines at long and medium

terms.

CIB will be structured as a corporation and the parties, each of them holding a 20% equity ownership, will share its

control.

CIB’s incorporation is subject to the execution of definitive documents among the parties, as well as the compliance

with certain conditions precedent, including the approval by applicable regulatory authorities.

) Retirement Incentive Plan - PAI i

In accordance with the 4th paragraph of article 157 from Law 6,404/1976, the Incentive Retirement Plan - PAI was

released in June 2015 for employees with the necessary conditions to retire by the Instituto Nacional de Seguridade

Social – INSS or apply for early retirement to the Caixa de Previdência dos Funcionários do Banco do Brasil (Previ).

The plan was closed on August 14, 2015 and it had 4,992 members.

KPMG Auditores Independentes Agosto de 2016 KPDS

Banco do Brasil S.A. Consolidated financial statements as at 30.06.2016

2

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 8587 - CEP 70312-970 - Brasília/DF - Brasil

Telefone 55 (61) 2104-2400, Fax 55 (61) 2104-2406

www.kpmg.com.br

Independent Auditors’ Report on the Consolidated Financial Statements To The Board of Directors, Shareholders and Management of Banco do Brasil S.A. Brasília - DF We have audited the accompanying consolidated financial statements of Banco do Brasil S.A. (“Bank”), which comprise the balance sheet as at June 30, 2016, the related consolidated statements of income for the quarter and the semester then ended, and the statements of changes in stockholders' equity and cash flows for the semester then ended, as well as the summary of significant accounting policies and and other explanatory information.

Management’s Responsibility for the Financial Statements Banco do Brasil´s 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 and for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Independent 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 Brazilian 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 auditors’ 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, we consider internal controls relevant to Banco do Brasil’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 Banco do Brasil’s internal control. An audit also

3

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 taken as a whole. 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 consolidated financial statements above mentioned present fairly, in all material respects, the consolidated financial position of Banco do Brasil S.A., as at June 30, 2016, and of its consolidated financial performance and its consolidated cash flows for the semester then ended in accordance with accounting practices adopted in Brazil applicable to institutions authorized to operate by the Brazilian Central Bank.

Other matter Consolidated statement of value added We have also audited the consolidated statement of value added (DVA), for the semester ended as at June 30, 2016, preparation of which is the responsibility of Banco do Brasil S.A Management, that is being presented as supplemental information. The aforementioned statement was subject to the same auditing procedures described above and, in our opinion, is fairly presented, in all material respects, in relation to the financial statements taken as a whole.

Brasília, August 08, 2016 KPMG Auditores Independentes CRC SP-014428/O-6 F-DF Original report in Portuguese signed by Marcelo Faria Pereira Contador CRC RJ-077911/O-2


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SUMMARY OF THE AUDIT COMMITTEE REPORT

Introduction

Banco do Brasil’s Audit Committee is a statutory advisory body of the Board of Directors, and has the following main responsabilities: to review the set of financial statements prior to its release and to evaluate the effectiveness of the internal control system and of the internal audit department and independent auditors.

The Committee’s activities cover Banco do Brasil and its following subsidiaries: BB DTVM Gestão de Recursos - Distribuidora de Títulos e Valores Mobiliários S.A., BB Banco de Investimento S.A., BB Leasing S.A. – Arrendamento Mercantil; BB Administradora de Cartões de Crédito S.A., BB Administradora de Consórcios S.A. and Besc Distribuidora de Títulos e Valores Mobiliários S.A.

Officers of Banco do Brasil and its subsidiaries are responsible for preparing and assuring the integrity of the financial statements, managing risks, maintaining effective internal control system and for ensuring compliance to applicable legal and regulatory requirements.

Internal Audit is responsible for periodic works, focused on the main risks to which the Conglomerate is exposed, evaluating, with independence, actions to manage these risks and to adequate governance and internal controls, through the verification of its quality, sufficiency, compliance and effectiveness.

KPMG Auditores Independentes is responsible for auditing Banco do Brasil’s and its subsidiaries financial statements covered by the Audit Committee, in addition to other companies that integrate Banco do Brasil Conglomerate. The independent auditors also evaluate, in the context of the audit services on the financial statements, the quality and adequacy of the internal control system and compliance to legal and regulatory requirements.

Audit Committee Internal regulations and a channel of communication for receiving information

about violation of internal regulations, codes, legal and regulatory devices applicable to the

institution are available on the website www.bb.com.br/ir. Main Activities In compliance to its work plan, the Audit Committee held regular meetings with the Board of

Directors, representatives of the Board of Officers and executives of the main business areas, internal controls, risk management, accounting, security, legal, governance, credit, finance, besides internal works.

At these meetings, the attention was focused on subjects related to the internal control system, accounting issues, loan portfolio, provisions, operational losses, risk and capital management processes, ombudsman, branches abroad, related entities, and recommendations issued by the internal audit, independent auditors and by external inspection bodies. Where suggestions for improvement were observed, recommendations were made.

The Committee maintained dialogue with the internal audit and independent audit teams, verified the accomplishment of their planning, got acquainted about the results of their main works and examined their conclusions and recommendations.

The Committee revised the management report, financial statements and notes to the financial statements and discussed with independent auditor his report dated August, 08 2016, issued without reserve.



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Conclusions

Based on the activities developed in the period and considering the duties and limitations inherent to the scope of its activities, the Audit Committee concluded that:

a. The internal control system is appropriate to the size and complexity of the Conglomerate’s business and it is subject to permanent attention from the management;

b. Internal Audit is effective and performs its functions with independence, objectivity and quality;

c. Independent audit is effective and there was no occurrences that could compromise its independence;

d. The semester financial statements, ended on June 30, 2016 were prepared in compliance to legal requirements and accounting practices adopted in Brazil, applicable to the institutions authorized to operate by the Brazilian Central Bank, and reflect, in all material aspects, the patrimonial and financial situation in that period.

Brasília-DF, August 08, 2016.

Egidio Otmar Ames Coordinator

Antônio Carlos Correia Elvio Lima Gaspar Luiz Serafim Spínola Santos


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MEMBERS OF MANAGEMENT PRESIDENT Paulo Rogério Caffarelli VICE-PRESIDENTS Antonio Mauricio Maurano Geraldo Afonso Dezena da Silva João da Silva Maia José Mauricio Pereira Coelho Julio Cezar Alves de Oliveira Paulo Roberto Lopes Ricci Raul Francisco Moreira Walter Malieni Junior DIRECTORS Adriano Meira Ricci Antonio Pedro da Silva Machado Carlos Alberto Araujo Netto Carlos Célio de Andrade Santos Carlos Renato Bonetti Edmar José Casalatina Edson Rogério da Costa Eduardo Cesar Pasa Gustavo de Faria Barros Hamilton Rodrigues da Silva Ilton Luís Schwaab João Pinto Rabelo Júnior José Caetano de Andrade Minchillo Leonardo Silva de Loyola Reis Luís Aniceto Silva Cavicchioli Luiz Cláudio Ligabue Márcio Luiz Moral Marco Antonio Ascoli Mastroeni Nilson Martiniano Moreira Otaviano Amantéa de Souza Campos Rogério Magno Panca Simão Luiz Kovalski Tarcísio Hübner Wilsa Figueiredo

BOARD OF DIRECTORS Beny Parnes Eduardo Refinetti Guardia Fabrício da Soller Daniel Sigelmann Juliana Públio Donato de Oliveira Luiz Serafim Spinola Santos Miguel Ragone de Mattos Paulo Rogério Caffarelli FISCAL COUNCIL Aldo César Martins Braido Felipe Palmeira Bardella Giorgio Bampi Marcos Machado Guimarães Mauricio Graccho de Severiano Cardoso AUDIT COMMITEE Antonio Carlos Correia Egidio Otmar Ames Elvio Lima Gaspar Luiz Serafim Spinola Santos 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

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