Annual Report 2009

AnnuAlRepoRtto see beyond, one must be Able to view

2009

About this AnnuAl RepoRt to see beyond, one must be Able to view

The Arrastão Project students have once more been our source of inspiration to prepare this report. The young participants in the photography workshops of Arrastão have been gradually developing a keener perception of the world and their work has been teaching us to see beyond. Our own perception is also sharpened with each project that they undertake. They show us new possibilities and teach us not to feel satisfied with just looking. They prompt us to step back, look again, reconsider and view from different angles, so that we can glimpse through a new perspective and see it as a unique scene. They entice us to see the manifold possibilities in a new image, from a new angle...

In 2009, we faced challenges that led us to the same reflection on our business. The economic situation also prompted us to step back, challenged us to enhance our processes and controls and is enabling us to see the various possibilities to improve the scene and to assure the progress of BIM’s business in the long term.

Those considerations led us to propose a new task to the youths of the Arrastão Project. Sponsored by the Indusval Multistock Sustainability Institute, during their summer vacation, those students and their teachers were invited to attend creativity workshops. The purpose was to take pictures of São Paulo City − its nature, architecture and people − to be printed in black and white receiving a colored interference by utilizing drawing, painting, recycling, graffiti and DIY techniques, they currently use in Arrastão Project’s Fashion and Design, Communication and Youth Education groups. In addition to promoting greater involvement of all Project groups, this challenge was intended to show that creativity and intelligence allow us to see beyond. We just have to be able to view from new angles, to identify opportunities, and to transform the reality shown in the pictures.

This project, involving 33 young students and seven teachers, was made possible by the designers from TheMediaGroup, our partner in the development of this report. These professionals volunteered their time and expertise to develop the idea and to structure and lead the creativity workshops, with a view to sharpening their perception more and more and making those youths to see the opportunities that life offers us.

We thank all youths, educators and volunteers that took part in this project for their effort and inspiration. They confirmed our belief that one must be able to view to move beyond.

To see beyond, it is not enough to look. One must be able to view.To see beyond the next step, one must often retreat and attentively look around to view the right opportunity to move on. To see beyond, it is not enough to look. One must have keen eyesight and eagerness to discover, and boldness to explore all possibilities.

CoRpoRAte pRoFile

Banco Indusval Multistock (BIM) is a commercial bank based in São Paulo, with 42 years’ experience in the financial market. It focuses on credit products both in Brazilian and foreign currencies, oriented to medium-sized companies with annual revenues chiefly between R$20 million and R$500 million.

BIM has 333 employees who provide prompt and quality services. The Bank holds a credit portfolio composed of over 660 companies and offers a wide range of products designed to meet the specific needs of this market niche. Among other distinct features, the Bank develops financing structures suitable for medium-sized companies, including the involvement of international bodies such as the IFC (International Finance Corporation) and IDB (InterAmerican Development Bank).

In order to offer competitive services and customized products, BIM has 11 branches strategically located in areas with a larger number of medium-sized companies in Brazil, plus one branch located abroad and the subsidiary Indusval Corretora de Valores, which acts as an intermediary in operations on the Securities, Commodities and Futures Exchange (BM&FBOVESPA).

BIM closed 2009 with R$2.7 billion total assets, a R$1.7 billion credit portfolio, R$432.7 million shareholders’ equity and a 22.53% Basel Index. A publicly-traded financial institution, the Bank has been listed on Level 1 of Corporate Governance at the São Paulo Stock Exchange since July 2007, and has voluntarily adhered to the additional practices included in the rules for companies listed on the Novo Mercado segment.

mAin indiCAtoRs

Consolidated – R$ million 2005 2006 2007c 2008 2009

Results

Financial Intermediation Result 57.7 69.2 129.2 200.1 94.3 Operating Result 23.0 30.5 61.0 110.9 1.1 Net Profit 19.5 23.6 45.4 71.8 12.8

balance sheet Credit Portfolio 384.6 644.0 1,255.2 1,723.0 1,635.9

Credit Portfolio incl. Guarantees and Letters of Credit 417.0 691.0 1,329.0 1,793.7 1,698.7 Cash and short-term interbank Investments 105.1 161.1 264.0 110.9 357.2 Marketable Securities and Derivatives 234.2 261.2 649.1 331.5 725.0 Total Assets 772.4 1,120.6 2,211.2 2,225.4 2,730.5 Total Deposits 331.9 526.4 810.4 824.9 1.273.2

Foreign Currency Borrowings 72.4 164.1 229.7 487.4 377.4 Local Currency Borrowings 0.0 0.0 0.0 128.2 0.0 Local Onlending 0.0 0.0 0.0 159.6 142.6 Shareholders’ Equity 136.3 149.7 406.7 448.5 432.7

performance Return on Average Equity 14.9% 16.5% 16.3% 16.8% 2.9%Return on Average Assets 2.6% 2.5% 2.7% 3.2% 0.5%Net Interest Margin (NIM) (a) 11.1% 9.8% 9.3% 9.5% 7.9%NPL / Total Credit Portfolio(b) 2.5% 1.2% 1.4% 2.7% 5.9%Basel Index 30.4% 22.5% 33.2% 24.0% 22.5%Efficiency Ratio(d) 59.0% 56.3% 63.0% 46.4% 52.3%

operating indicators Number of Employees 198 255 331 329 333Number of Branches 1 5 11 11 12

Capital market Total Number of Shares 31,296,247 31,296,247 43,000,001 43,000,001 42,475,101 Common Shares (IDVL3) 16,948,594 16,948,594 27,000,000 27,000,000 27,000,000Preferred Shares (IDVL4) 14,347,653 14,347,653 16,000,001 16,000,001 15,475,101Treasury Shares 1,591,879 1,591,779 0 510,500 427,000 Outstanding Shares (e) 29,704,368 29,704,468 43,000,001 42,489,501 42,048,101Shares in Free Float (f) - - 22,620,381 21,753,273 21,145,842Free Float (%) (g) - - 52.6% 50.6% 49.8%Net Earnings per share (R$) 0.63 0.76 1.05 1.71 0.30Book Value per Share (R$) 4.59 5.04 9.46 10.56 10.29Shareholder Remuneration (R$ `000) (h) 11.446 10.167 15.858 25.470 27.009Remuneration per Share (R$) 0.36573 0.32486 0.36879 0.59943 0.64234Market Value (R$ `000) n/a n/a 838.500 169.533 348.579

(a) NIM = Net Interest Margin = (Gross Result from Financial Intermediation – Prov. for Doubt. Debtors)/average interest earning assets.(b) NPL (Non-Performing Loans) – Total outstanding of contracts with one of the installments overdue for more than 60 days.(c) Excluding the non-recurring IPO expenses of R$9.7 million (net of taxes) net profit in the period would total R$55.1 million, leading to a 19.8%

ROAE, 3.3% ROAA, 9.3% NIM and 54.6% Efficiency Ratio.(d) Ratio between Operating Expenses and Operating Income. A fall in this index shows improved performance.(e) All the shares in the Company’s capital stock minus treasury shares.(f) Outstanding Shares minus those held by Controlling Group and Management.(g) Free Float over total shares.(h) Interest on Equity + dividends, when applicable.

CRedits

Content, text and translation:Investor Relations DepartmentGlobal RI Consultoria de Relações com Investidores

Graphic design:TheMediaGroup

Pictures:Cover and Inner Pictures: all the pictures came from the “Ver Além” project, developed by the Projeto Arrastão young participants, as described on the back cover of this Annual Report.

Management (page 5): Daniel Rosa, professional photographer

Printing: Gráfica Braspor

Publication Date: April 15, 2010.

annual report to see beyond, one must be able to view

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Message from the President Adjustment to the new economic reality, with focus on enhancement of internal controls and risk management

Corporate GovernanceAgility, transparency and ethics permeate the decision-making process

Strategic ManagementAn ongoing search for efficiency, quality and safety

Economic EnvironmentRecovery of economic activity in 2010

MarketsPredominance of medium-sized companies in regions with greater economic activity Products and ServicesCloseness to customers brings a better understanding of their needs

Economic and Financial PerformanceResults in line with the situation and aiming at business perpetuity

Capital MarketsA commitment to the highest Governance standards and respect for shareholders

People ManagementCommitment and competence reflected in its main asset

Intangible AssetsExperience and knowledge under a powerful brand

SustainabilityCommitment to improvement in each of the pillars of sustainability

Annual Social ReportFinancial StatementsCorporate Information

message from the president adjustment to the new economic reality, with focus on enhancement of internal controls and risk management

manoel felix cintra netoPresident of the Executive Board

In 2009, we faced great challenges but that helped us to learn many lessons, to become stronger and more resilient. The economic crisis that was triggered in the USA, in late 2008 spread worldwide and quickly deteriorated both the international and the domestic economic situation. As a result, we had to forgo short-term profitability to ensure the sustainability of our operations in the long run. Our 16-years’ experience in middle market and in particular our Executive Officers’ and Board of Directors’ vision of the future were both essential for this process. This learning experience and the maintenance of the decision to privilege longetivity in detriment of immediate return was only possible due to the Bank’s corporate governance structure.

Aware of the need to adapt to the new situation, we decided to introduce conservative measures to preserve our assets and liquidity from further deterioration. We strengthened our operation guarantee system, diversified our customer base and funding sources and adopted stricter lending and risk management policies.

The adverse economic situation impacted in particular our target business segment of medium-sized companies, more directly affected by flagging economic activity and lower credit supply. Consequently, delinquency rates rose, and we decided to increase our provisions for loan losses above the usual requirements. We were fully aware that this decision would impact our 2009 results; nevertheless, this measure is entirely consistent with the economic situation, our conservative management and, above all, our goal to ensure business perpetuity. Thus, credit operations stood at about R$1.7 billion throughout the year. There was an ensuing drop in income from financial intermediation, which fell to R$407.5 million and, as a consequence, our net profit amounted to R$12.8 million.

While we slowed down business growth, we started focusing on strengthening the Bank. As an athlete crouching to concentrate his strength before a leap, we stepped back and prepared for the economic recovery. In spite of the challenging environment, we invested in new technological platforms which will provide greater security and more efficient controls, enhanced our risk management system and automated internal controls to make our operations swifter, safer and more efficient. We also increased our cash liquidity and extended the maturity profile of our liabilities through funding operations with longer maturities, thus ensuring soundness and stability. Furthermore, we established a strategic partnership at Indusval Corretora, which will allow that subsidiary to increase its operations consistently.

With those measures, we are prepared to seize new market opportunities based on the ethics, responsibility and transparency principles which have always served as guidelines for our business. We believe that the economic recovery and lower delinquency/default rates will naturally lead to a growth in our credit portfolio composed of medium-sized companies and to improving operating results.

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01Manoel Felix Cintra Neto President of the Executive Board02Luiz Masagão Ribeiro Superintendent Officer03Carlos Ciampolini Executive Officer04Ziro Murata JuniorCFO and Investor Relations Officer05Gilberto L. dos Santos Lima Filho Treasury Officer – SPB06Roberto Carlos de C. Almeida Commercial Officer07Gilmar Melo de Azevedo Commercial Officer08Katia Aparecida Rocha Moroni International Department Officer09Eliezer Lizardo Ribeiro da Silva Credit Officer

That is the reason why we chose “To see beyond, one must be able to view” as the theme for our 2009 Annual Report. In a year marked by instability, we seek to “see beyond” the short-term results and draft the outline of a new BIM − with a better structure and a quicker decision-making process, as well as more modern and stricter in terms of credit extension and risk control. We challenge our readers to sharpen their perception and not focus on the 2009 financial results only, but to view the possibilities going forward.

We were only able to overcome the difficulties and challenges experienced in 2009 and maintain business sustainability with the support of our shareholders, customers, partners and especially our employees, who proved resilience, commitment and competence throughout the year and whom we sincerely thank.

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“the best use of capital is not to make money, but to make money in order to improve life.”

Henry Ford

Seen by (photo) Gisele Eduardo dos Santos, 17 years old and Vamires Santana dos Santos, 16 years oldViewed by (colored interference) Paula Gonzalez, 26 years old

corporate governanceagility, transparency and ethics permeate the decision-making process

BIM believes that an appropriate corporate governance model helps make its business sustainable, increases its credibility and adds value to the Bank and all its stakeholders. The Bank greatly values the disclosure of transparent information, business ethics, responsible corporate management, as well as fair and open communication. Moreover, the Bank constantly seeks to improve its decision-making process and risk management, as well as its operational strategies and internal controls.

Banco Indusval Multistock has a Code of Ethics aligned with its internal culture and beliefs. It includes guidelines and practices to be followed by all employees while performing their duties. The ethical issues in the Code include professional confidentiality, personal responsibility, and conflicts of interest, among other aspects. This Code was revised in 2009 to ensure even stricter ethical principles in conducting the Bank’s activities. Throughout the year, all employees were trained so that they would incorporate into their day-to-day routine the principles in Indusval Multistock companies’ Code of Ethics and be fully committed to its guidelines.

Even though BIM shares are listed on BM&FBOVESPA’s Level 1 of Corporate Governance, the Bank adopts additional practices, such as the use of the Arbitrage Chamber for issues related to the capital markets; 100% tag along rights, which is a guarantee that minority shareholders may choose to sell their shares at the same price per share as the controlling shareholder if the Bank’s control is sold; over 20% of independent members in its Board of Directors; and over 25% of free float. Moreover, BIM offers the same remuneration for common and preferred shares. The only reason why Indusval Multistock is not listed on BM&FBOVESPA’s highest corporate governance segment – the Novo Mercado – is that its capital stock does not consist of common shares in its entirety.

BIM’s corporate management is based on the synergy among its Board of Directors, Executive Board and the Committees assisting them.

GoVERNANCE StRuCtuRE

Board of Directors

The Board of Directors is the top governing body. It is responsible for outlining strategic guidelines and general policies, besides guiding and supervising the Executive Board’s activities. It also ensures that all financial information posted is accurate, chooses independent auditors and oversees internal audit. The Board is composed of renowned executives with vast professional experience in different strategic fields for the Bank’s management, so that decisions are based on different points of view.

At year-end 2009, the Board of Directors consisted of nine members, two of whom − over 20% − were independent. Board members meet four times a year as a rule. Special meetings are held whenever required. Each Director has joint two-year term, and re-election is permitted.

Members of the Board of Directors Term running until the 2011 Annual General Meeting

Luiz Masagão Ribeiro – ChairmanManoel Felix Cintra Neto – Vice ChairmanAntonio Geraldo da Rocha – DirectorCarlos Ciampolini – DirectorMaria Cecília C. Ciampolini – DirectorJúlio dos Santos Oliveira Júnior – External DirectorMário Fukumitsu – External DirectorAdroaldo Moura da Silva – Independent DirectorWladimir Antônio Puggina – Independent Director

Fiscal Board

The Fiscal Board was not established in 2009. The Bank’s Bylaws provide for the establishment of the Fiscal Board by decision of the Annual General Meeting or upon shareholders’ request. When established, it must be composed of a minimum of three and a maximum of five members who are elected by the Annual General Meeting and can be ousted by the same body.

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Executive Board

At the close of 2009, BIM’s Executive Board consisted of nine members with a joint two-year term. Re-election by the Board of Directors is permitted. All officers of the Executive Board are highly experienced in the financial market, so as to ensure efficient management of operations.

The Executive Board is responsible for managing the Bank, enforcing the guidelines and policies outlined by the Board of Directors, and overseeing all business activities and overall operations.

Committees

Banco Indusval Multistock’s management includes six committees:

Remuneration and Benefit CommitteeThe Remuneration and Benefit Committee consists of at least three members, independent or not, elected annually by the Board of Directors. It meets twice a year, at the end of each semester. Special meetings are held whenever needed. It exists to support the Board of Directors in issues related to officer remuneration.

Among other duties, it regularly revises the remuneration and benefits offered to the Executive Board to attract, retain, motivate and remunerate those executives appropriately. It also recommends changes in remuneration and benefit amounts to the Board of Directors and manages incentive plans, such as the Stock Options Programs and Pension Plans.

Cash CommitteeThe Cash Committee controls the Bank’s liquidity and meets on a weekly basis. It also analyzes cash flow projections for Treasury activities, and discusses new funding alternatives, transactions and operating limits. It is composed of five members: the Bank’s President, the Chief Executive Officer, the Treasury Officers (Proprietary Position and Cash Management) and the Officer in charge of the activities of the brokerage house and the international area.

Credit CommitteeVital for the Bank’s everyday activities, the Credit Committee outlines credit risk management policies and approves credit limits extended to customers. It is composed of seven members as follows: President, CEO, Commercial (2), Treasury, International and Credit Officers. The Credit Committee meets regularly on a weekly basis, but it can meet at any time − also electronically − to assess changes or exceptions related to formal details and guarantee coverage in pre-approved credit limits.

Compliance and Internal Audit CommitteeThis Committee meets on a monthly basis and consists of six members: Chief Executive Officer; the Brokerage House Officer; the Risk, Compliance and Information Safety Superintendent; the Accounting and Control Superintendent; and the coordinators for the internal control and audit areas. This Committee’s duties include, among others, establishing operating policies and rules; outlining strategies to promote the practice of internal controls, risk mitigation and compliance with legal requirements; systematically monitoring the Bank’s activities to assess the effectiveness of the internal control systems in fulfilling legal requirements; and analyzing any suspected cases of money laundering. It also helps the Board of Directors monitor the accounting practices adopted in preparing the financial statements.

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Information technology and Safety CommitteeIt is responsible for the information technology and information safety policies. It is also responsible for discussing and planning activities and investments to ensure sustainable and safe operation development and establishing rules for information use to ensure its protection and guaranteeing managers’, employees’, and service providers’ compliance with policies and procedures, among other duties. This Committee also outlines the procedures for the Business Continuity Plan (BCP). It meets on a monthly basis and consists of nine members: the Chief Executive Officer; the Brokerage House Officer; the Risk, Compliance and Information Safety Superintendent; the IT Superintendent; the Administrative Superintendent; the IT Systems Development Manager, the IT Project Manager, the IT Infrastructure Manager and the Controlling Department Manager.

Legal CommitteeThis Committee consists of the Chief Executive Officer, the Legal Superintendent, the Loan Recovery Manager and the external Legal Advisor, and meets on a monthly basis to analyze and discuss legal and regulatory rules for the Bank’s operations and any legal issues related to its institutional aspects. It is responsible for analyzing and recommending legal structures that ensure products and operations are formally perfect. In addition, it sets collection and loan recovery policies and strategies.

ombudsman

Responding directly to the Board of Directors, the Ombudsman serves as a direct communication channel between the Bank and its customers and ensures strict compliance with legal and regulatory requirements concerning consumer rights. It can be accessed by Internet at www.indusval.com.br > “Ombudsman”, or by phone at 0800-704-0418 (option 2).

the internal committees support and assist corporate management, aiming at enhancing internal controls, risk management and strategies

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“the sustainable leader must be connected to changes, sensitive to the environment, able to interpret the market signals and anticipate them, thus finding opportunities and outlining his own business strategy.”

Cledorvino Belini

Seen by (photo) Roseane Rodrigues Carvalho, 17 years old and thamella Ferreira dos Santos, 16 years oldViewed by (colored interference) thais Crisitina Bispo de Lima, 16 years old

strategic management an ongoing search for efficiency, quality and safety

Above all, Banco Indusval Multistock’s management seeks to ensure the sustainability of the Bank’s operations. Consequently, BIM, in view of the 2009 turbulence, introduced measures to preserve its liquidity and risk management and continued developing the areas that will serve as the basis for the expansion of activities going forward. During the year, financial, material and human resources were used with a view to improving risk control models and internal processes, as well as expanding and upgrading our technological infrastructure. Thus, the Bank reviewed its internal processes and controls and invested in IT systems and infrastructure whereas it maintained its credit operations at stable levels.

The decision to maintain credit portfolio volumes stable may seem a regression at first sight. Nevertheless, the Bank’s Management considered it a strategic retreat in order to adapt to the macroeconomic scene and the industry situation and prepare for renewed growth later, based on the belief that Brazilian economic activity would recover at some point.

Banco Indusval Multistock also sought for other financing sources, extended its funding operation terms and worked in the management of the maturity matching of its assets and liabilities to allow Management to plan the next steps and reassure investors about the Bank’s solid condition.

After a period of uncertainty, medium-sized companies, those which were most severely affected by the credit crunch, clearly show that they will play a prominent role in the economic rebound, with lower delinquency/default ratios. Business, however, is expected to recover slowly, mainly for exporting companies, which had to change their focus to the Brazilian market or seek new untapped markets.

Since BIM focuses on the middle market, its strategy is to diversify its credit portfolio in industries with great potential for expansion and low current exposure. However, it pursues a conservative approach toward new operations. As a result, professionals with solid relationships with customers from the industries in which the Bank plans to have a stronger presence have been hired to implement this strategy. The Bank is also considering increasing its product portfolio to enhance its customer service and seek new market niches.

ADMINIStRAtIVE MANAGEMENt

The administrative management initiatives in 2009 focused on improving internal processes and controls as a result of a review of work flows that had started in the previous year. Several stages in administrative routines were redesigned, duties were reassigned and methods were reorganized to enhance internal controls. In addition, training was given to speed up the adoption of new methods.

This improvement was based on the expansion of the workflow system, considered the pillar of administrative management since it aligns administrative routines and processes with control systems. This program allows mapping these processes, automating tasks and optimizing the organization of work stages. As a result, security is improved, and the leaner, nimbler structure brings efficiency, productivity and quality gains. This tool allowed for the development of specific “intelligent processes” for the credit area, thus helping improve internal controls and speeding up credit analysis.

Based on this idea of intelligent processes, there was a major improvement in 2009 in the access to information, systems and processes to make business management − including credit risk, market and operating management − nimbler and more accurate. Our Intranet became, therefore, a real Business Portal with organized applications to be used by managers.

Throughout the year, a new and innovative Operations and Payments System (OPS) was also designed and introduced for the treasury and financial departments. It reduces failure risk and provides more information about operations and financial flows, thus bringing efficiency to the decision-making process. All those enhanced processes provide better structured and more strategic business management. Thus, the Bank became nimbler and safer since the business departments now work in greater harmony with the support and control teams.

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Another major improvement was that the Supplies department now manages material resources. In addition to being in charge of purchases and maintenance, it now manages all the changes in the Bank’s physical structure. During the course of the year, it focused mainly on sustainability, both in economic terms, resulting in cost reduction, and environmental terms, with lower consumption and recycling. In 2009, BIM also built the new facilities for Indusval Corretora and consolidated its ten branches, located in areas with a larger number of medium-sized businesses, in addition to its headquarters and a branch outside Brazil.

Besides its ombudsman, the Bank has two other areas to support external relationships: commercial customer service, responsible for solving problems with contracts, money orders and collection, among others, and providing support for the commercial operations in the São Paulo headquarters and the whole branch network; and Customer Service, whose teams are trained to respond to customers’ requests and contribute to improving BIM’s processes and services. Customer service can be accessed by Internet at www.indusval.com.br > “Contact us”, or by phone at 0800-704-0418 (option 1).

It Infrastructure and Management In order to lay the groundwork for growth in coming years and continuously improve its safety and management systems, the Bank made significant investments in its IT structure. After a thorough evaluation of suppliers and products, the Bank established new partnerships in very favorable terms, which allowed for upgrading, expanding and standardizing the IT infrastructure, including information and telecommunication systems.

The new technological solutions, which required investments of about R$1.7 million in the year, resulted in greater voice and data transmission capacity at lower costs and substantially better quality, safety and performance. Consequently, the Bank was able to offer new services, highlighting Indusval Corretora, which is now able to operate 24 hours, seven days a week. In the first quarter of 2010, it will be able to transmit operation orders automatically with new high-frequency resources.

Technological restructuring will allow Indusval Corretora to increase its operations, tap into new markets and receive the Execution Broker Qualification Seal, which attests to the qualification of its professionals, processes and systems. In addition, these upgraded systems are compatible with the new communications network being introduced by BM&FBOVESPA to supplement the existing technology.

IT management is essential for the Bank to find new systems which can enhance its management quality and make it possible to implement these new methods in different strategic areas. Jointly with other departments, the IT department introduced and consolidated important systems in 2009, which provided stricter control over operations, speedier processes and a safer information flow. The highlights of these systems include the Operations and Payments System (OPS), the Guarantee Management System (GMS) and the Verisign Identity Protection (VIP) project.

The Operations and Payments System records and processes operations from the issue to the settlement of an order. In turn, the Guarantee Management System was developed internally so that the Bank can verify the formal details, availability and valuation of the assets given as guarantee in credit operations more efficiently. In addition to these major advances, the IT and Information Safety departments worked hard on the VIP project, which increased our computer network safety and reduced operating risks with better random individual passwords. The Bank also invested in state-of-the-art email and information recording safety systems that make information access and data transmission faster.

The technological advance included data virtualization. All the systems are based on cutting-edge remote connectivity platforms; therefore, it is possible to access information from different hardware installed in different places in a safer manner. A global trend, virtualization offers total flexibility and perfectly safe connections since users (employees) can access all data from any terminal with virtual authentication. As a result, no data are transferred to the computer in use so that no one else can have access to confidential information. The system also allows for the reduction in costs and consumption, in addition to preventing data loss in case of a failure.

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Accounting and Control

The Accounting and Control Department made great progress in 2009. The investments in professional training and development of new methods and processes resulted in major improvements regarding the preparation of financial statements, as well as maintenance and organization of the Bank’s managerial data.

As a result, Accounting and Controls now produces even more reliable historical data and can collect the information made available for BIM’s departments, the market, shareholders, business partners and rating agencies more quickly.

New accounting rules – Throughout the year, the professionals from Accounting and Controls also worked hard to put into practice the accounting principles required for the Bank to start introducing the IFRS (International Financial Reporting Standard), pursuant to Law No. 11,638. The IFRS principles include a number of international accounting concepts published and reviewed by the IASB (International Accounting Standards Board). They have been followed in the European Union since 2005 and will be introduced in Brazil as of 2010. To that end, the Bank has certified professionals and trained managers to adopt these principles in preparing its financial statements.

RISK MANAGEMENt

Efficient risk management is essential for the sustainable growth of any financial institution and even more relevant after the global financial crisis. Banco Indusval Multistock considers risk management a strategic matter, since it involves issues such as business continuity even under adverse operational conditions, compliance, money laundering prevention, information safety and financial system safety, all essential for business continuity.

The Bank has tools to identify and map all the risks to which it is exposed, assess them accurately, adopt mitigating measures and manage any changes and situations that may affect its business and results. It pursues conservative policies in terms of risk exposure, in compliance with the guidelines and limits established by Senior Management. Risk management is a concern involving all activities and is not only restricted to one department or process. It is based on a holistic view aiming at the Bank’s perpetuity. As a result, all employees are trained, attend lectures and have all the means to identify any possible risks. Both training programs and systems are continuously monitored for flaws, in a constant search for perfection.

Accordingly, the Bank in 2009 improved risk controls, hired experienced professionals, reviewed training programs, developed new tools to make information safer and adopted specialized systems that make its structure increasingly nimbler and safer.

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operational Risk

Operational risks are the probability of losses resulting from internal processes; inadequate or faulty people or systems, problems with contracts or due to external events. BIM has policies and control mechanisms to promote accurate operating risk assessment and monitors those risks continuously, which ensures that they are mitigated on a permanent basis and in emergency situations.

BIM adopts an Operational Risk Management System (ORMS), which follows the main current standards, such as the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and Control Objectives of Information and Related Technology (COBIT), which include business and technology aspects. Since BIM considers operating risk management a key factor in the value-adding process, it fosters a risk prevention culture among its staff by providing tools, disseminating policies and introducing corporate methods.

In an ongoing effort to employ the best practices in the market, BIM follows the guidelines of the New Basel Capital Accord, known as Basel II, in compliance with the schedule set by the Central Bank of Brazil (BACEN). In 2010, a more sophisticated operating risk management tool will be introduced, the Alternative Standardized Approach (ASA), which improves the Allocation of Capital for Operating Risk.

To ensure information integrity and business continuity, BIM’s Business Continuity Plan (BCP) includes fully-equipped facilities based in a different address, with workstations, as well as telephone and other systems, so that operations can continue in spite of any type of contingencies in the Bank’s headquarters. In addition, all servers are hosted at a telephone company, and data are replicated by other servers hosted at BIM’s headquarters. The Bank also has redundant links (double connections), an additional resource to ensure business continuity in the event of contingencies.

Throughout the year, BIM’s Compliance Agents remained alert to prevent and minimize likely losses due to flawed, defective or inadequate internal processes and systems, as well as inappropriate people or external events, pursuant to Resolution No. 3,380 of the National Monetary Council. In addition, BCP was also tested to ensure that operations would continue in cases of minimal or total contingency.

Moreover, an innovative technology in Latin America, the VIP (Verisign Identity Protection) project, was introduced in 2009 to improve passwords to access the Bank’s computer network, which is significantly safer. Employees must now type, in addition to the usual network password, a random code shown in display cards or smartphones to access their computers. In 2010, the VIP technology will be extended to Internet Banking and Home Broker customers.

Credit Risk

Managing this risk, connected to the possibility of customer insolvency, requires different assessment and control tools. BIM uses methods, systems and processes to rate each borrower and evaluate the structure of the guarantees involved in each operation in a thorough manner. Customer risk ratings, based on Resolution No. 2,682 of the National Monetary Council, are based on a mathematical model. The Credit Committee can only make them more restrictive.

Customer economic and financial performance, as well as guarantees, is regularly monitored. Special systems track volumes, liquidity and potential shortages on a daily basis, in the case of guarantees in the form of receivables. These systems have been reviewed since 2009 to improve and accelerate the process of pricing, valuation and availability mainly of guarantees other than receivables so that they can be formally accepted of refused.

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The approved credit lines are revised every six months. As a result, customer performance is continuously monitored, also by the Credit Committee.

The international crisis affected the global economic activity and especially medium-sized companies. However, the Bank gained considerable knowledge from it, mainly in terms of credit analysis methods, stricter controls and formal details of operations. In 2010, a new credit risk calculation model will be introduced. It will be an additional tool to determine appropriate capital allocation, in compliance with the Basel II Capital Accord.

Liquidity Risk

The Liquidity Risk results from mismatches in the cash flows of a financial institution, which, as a result, may not be able to settle its obligations with its cash and cash equivalents, albeit temporarily. To avoid this risk, BIM continuously monitors and analyzes its liquidity, in accordance with the established guidelines and adequate reserve requirement levels. This procedure is based on statistical, economic and financial projection models for the assets and liabilities that have an impact on cash flow and on both local and foreign currency reserves.

The Bank adopts a conservative liquidity risk management policy and seeks to maintain a minimum cash reserve − monitored on a daily basis − corresponding to 20% of its total deposits. Throughout 2009, cash reserves remained over 50% of total deposits due to the turbulence in the economy. Our liquidity risk management practices improved considerably, which proved particularly important during the crisis.

Market Risk

Market Risk is related to the possibility of losses due to fluctuations in economic and financial variables, such as interest, forex rates, and stock and commodity prices.

The aspects connected to the market and liquidity are managed with the use of software, and risks are carefully monitored and assessed in compliance with the regulatory bodies’ rules and recommendations. The main model adopted by the Bank is the calculation of VaR (Value at Risk), a statistical measure for the probability of a maximum loss of the value of the Bank’s portfolio in normal market conditions, within a given time frame. BIM also uses other tools, such as: 1) VaR Stress, which calculates the risk of potential losses under worst-case market scenarios; 2) Gap Analysis, a graphic representation by risk factor of cash flows shown in market values recorded on maturity dates, and used to determine risk exposure at a certain point in time; 3) Results Analysis, monitoring of the Bank’s results compared to a benchmark; and 4) Capital Allocation, to ensure that the Bank is able to withstand the impact of unexpected losses, which allows business continuity in adverse situations and serves as a basis to measure operation yields vis-a-vis risks.

Our Market Risk monitoring system is able to perform calculations for Basel II, as well as the portion of currency exchange, interest, commodity and stock portfolios and the risk involved in them. At the close of 2009, the Bank’s overall VaR stood at R$1.06 million, as calculated by the parameter model, with a confidence interval of 95.0%.

19

“out of confusion, find simplicity. from discord, find harmony. in the middle of difficulty lies opportunity.”

Albert Einstein

Seen by (photo) Lílian Rosa dos Santos, 17 years old and André Guilherme, 16 years oldViewed by (colored interference) Paula Gonzalez, 26 years old

economic environment recovery in economic activity in 2010

Expectations for the economy in 2009 were impacted by the unfolding of the economic crisis that had been triggered in 2008. The year began with great uncertainty, which eventually made the economic downturn even more severe. Even though a recovery started in the last two quarters of 2009, economic activity did not return to the pre-crisis levels. Thus, Brazil’s Gross Domestic Product (GDP) fell by 0.2% in 2009, the sharpest drop since 1992, when it had decreased by 0.5%. That poor performance was mainly impacted by a 5.5% decline in industrial activity and of 5.2% in agriculture. That impact would have been even worse had it not been for higher public spending, which rose by 3.7%, and higher employment rates as of the second quarter of the year, which led to a 4.1% increase in family consumption.

economic indicators

2008 2009 change

GDP variation – measured by IBGE 5.1% (0.2%) (5.3) p.p.

IPCA – inflation rate measured by IBGE 5.90% 4.26% (1.64) p.p.

Exchange Rate (US$/R$) 33.1% (25.3) (58.4) p.p.

Selic – interest basic rate 12.5% 9.9% (2.6) p.p.

It was a bad year for the economy; however, the Brazilian economy proved stronger and more resilient. On a quarterly basis, a downturn was observed in the first three quarters of 2009. In the fourth quarter, however, that trend reversed, in which economic activity rose by a surprising 4.3%. Those data heighten the expectation of a rebound in economic activity throughout 2010, mainly in the services and industry sectors, which increased by 4.6% and 4.0% respectively in the last quarter of 2009. On the other hand, agriculture has not yet recovered, and a 4.6% drop was recorded in the period.

gdp evolution – quarter on quarter percentage change

3Q06 3Q074Q06 1Q082Q07 3Q084Q07 1Q092Q08 3Q094Q08 4Q092Q09

7.0%

8.0%

5.0%

3.0%

1.0%

-1.0%

-2.0%

6.0%

4.0%

2.0%

0.0%

-3.0%2Q061Q06 1Q07

The 25.3% appreciation of the real over the US dollar made Brazilian exports less competitive, which, coupled with the credit crunch and the downturn in the major economies worldwide, affected the Brazilian trade balance. For the first time since 2002, the trade flow was lower in relation to the previous year. Nevertheless, the trade balance was positive by

US$ 24.6 billion at the close of 2009, 1.4% less than in 2008. According to the Ministry of Development, Industry and Foreign Trade, Brazilian exports totaled US$153.0 billion, down 22.7% year-over-year. That was the sharpest drop since those data started being recorded in 1950.

Source: Brazilian Institute for Geography and Statistics (IBGE)

23

Up to R$ 100,000

From R$ 100,000 to R$ 10 million

Over R$ 10 million

Although the appreciation of the real benefits imports, the decrease in economic activity and investments led to a drop in Brazilian imports which, in line with the trend observed in many countries, fell by 25.3% in relation to 2008 and totaled US$127.6 billion.

Throughout the year, the Brazilian Federal Government introduced tax incentives and increased liquidity aimed at expanding credit supply and boosting consumption and production. The basic interest rate was repeatedly reduced and closed 2009 at 8.75%, the lowest historic level ever. White goods, construction materials and vehicles were granted an excise tax (IPI) exemption or reduction. Even though these measures had a positive effect on the economy as a whole, they focused on domestic consumption. With the unfavorable exchange rate, exporters and agricultural producers received no incentives to counteract the impact of the crisis.

As a result, companies manufacturing goods for exports, mainly agricultural and mineral commodities, experienced some of their most difficult challenges in the last few years. In addition to declining prices and an unfavorable exchange rate, the demand and credit supply fell, which severely affected the ability of companies in these two industries to settle their obligations.

CREDIt IN BRAZIL

The demand for credit from individuals was distinct from that of corporations in Brazil in 2009. That is largely explained by the Brazilian Federal Government’s measures to boost consumption, such as tax incentives, which led to a stable demand for credit from individuals, mainly for mortgages and car financing.

corporate loans by contract amount . R$ billion

05 06 07 08 09Dec

339

591

Jul

608

Aug

517

Feb

699

Mar

697

Apr

508

Dec

686

Nov

696

Dec

552

Apr

726

Jul

737

Aug

402

Dec

639

Sep

665

Oct

539

Mar

696

May

706

Jun

508

Jan

693

Jan

694

Feb

567

May

582

Jun

748

Sep

757

Oct

770

Nov

788

Dec

Source: Central Bank of Brazil (BACEN)

44.1%46.2%

39.6% 37.7%

16.3% 16.1%

24

Lower industrial production led to a decrease in corporate credit, which fell by 4.4% in 2009, according to the Serasa Experian Indicator, which measures this type of demand in Brazil. That drop came to 6.7% in the first half of 2009 alone, since that was when the impact of the crisis was most strongly felt in Brazil. The same survey also shows that the sharpest drop was recorded in the industrial sector, with a 5.4% decline in relation to 2008.

The negative effect of the appreciation of the real against the US dollar was particularly strong in the Brazilian regions where exports-oriented agribusiness accounts for a large share of economic activity. In the South Region, economic activity decreased by 6.9% in 2009 whereas it dropped by 4.8% in the Center-West Region.

When corporation size is considered, the survey shows that demand for credit decreased by 4.5% among very small and small businesses and by 4.8% among medium-sized companies, BIM’s target market. On the other hand, demand for bank credit from large corporations rose by 5.2% in 2009.

The Central Bank of Brazil (BACEN)’s data shows a similar situation. BACEN does not disclose credit volumes by borrower size, but only by single contract amounts. Large companies usually borrow higher amounts per contract and, in contrast, small businesses borrow lower volumes. As a consequence, contracts between R$100 thousand and R$10 million, which is the medium range disclosed by BACEN, are correlated to middle market operations. Thus, BACEN’s data are in line with those contained in the Serasa Experian report, showing that the demand for credit increased among large corporations and decreased among medium-sized companies.

The increased difficulty for large companies to raise funds abroad and in the stock market during economic crises explains such move. They, as a result, resort to Brazilian banks, mainly development banks, and have an edge over other companies due to their lower credit risk. Consequently, medium-sized companies were faced with a flagging demand, less liquid receivables and tighter credit standards; therefore, many of them had problems settling their obligations in 2009.

Delinquency/Default

Middle-market companies have fewer funding options and depend on credit to finance their activities. They are, consequently, quite vulnerable to fluctuations in economic activity and credit crunches because their paying capacity is quickly affected during economic downturn periods, leading to higher default rates.

BACEN’s data shows that corporate default rates leveled off in October and started falling, albeit slightly, as of November. The industries that recovered more quickly were trade, services and manufacturing of goods for the domestic market. Domestic consumption was mainly driven by stable wages, consumer credit supply and the anti-crisis measures introduced by the Brazilian Federal Government, which increased the share of state-run banks in the granting of credit, also in special terms, and created tax incentives for certain industries, mainly durable goods manufacturing.

25

“one must wish to move forward, but, to that end, he must view new horizons, remain true to his principles and be full of energy, confidence, daring and creativity.”

Viviane Duarte

Seen by (photo) Erick Henrique Angelo, 16 years old and Felipe trindade, 16 years oldViewed by (colored interference) Roberta Silva de Souza, 17 years old

markets predominance of medium-sized companies in regions with greater economic activity

Banco Indusval Multistock focuses its activities on granting credit to medium-sized companies (middle market), mainly those which post annual sales chiefly between R$20 million and R$500 million, employ over 200 people on average, and require bank financing to fund their activities. About 60% of the Brazilian middle market companies are located in the Southeastern Region, 20% in the Southern Region and the remainder in the Northern, Northeastern and Mid-Western Regions.

These companies typically resort to several banks for the funds that they need for their activities since they only have access to lower credit lines and shorter maturities than large corporations. Although comparatively less heavily leveraged than their counterparts in other countries, Brazilian medium-

sized companies depend on bank loans mainly to meet their cash flow requirements. As they have more pressing needs, middle market companies have a high demand for products such as working capital, discount of trade notes and receivables, as well as services for payment and receipts.

A large number of these companies have been exporting part of their production over the last few years in view of the economic stability, falling interest rates and exports incentives. As a result, there has been a growing demand for foreign exchange products, especially for trade finance, among them.

Banco Indusval Multistock has a wide range of products and services especially designed for this market niche. It offers, in addition, products for larger companies that can also meet their growing businesses’ needs. Of the customers in its loan portfolio, 55.6% are in the manufacturing industry, 22.8% in the service segment, 11.6% in commerce and only 9.8% are individuals. 93.5% of BIM’s credit operations were oriented to the middle market in 2009, and 67.0% of its funds were allocated to loan operations and discounts of receivables.

With an agile structure and prompt customer service provided by skilled professionals, the Bank is able to offer customized products and services adapted to each company’s particular features and catering to its specific needs. Consequently, BIM stands out for its efficient and quick credit approval process. The largest share of operations (39.0%) is currently geared to customers’ very short term needs (up to 90 days) and 73.8% of all contracts mature in no more than 360 days.

business focus on medium-sized companies, which have specific needs and require credit products mainly geared to their business turnover

29

BIM’s credit portfolio includes mainly loans and financing in local currency − basically, financing for routine operational activities of medium-sized companies in the domestic market − and in foreign currency for trade finance. Guarantees or Letters of Credit, both

credit operations . in R$ million

Guarantees and Letters of Credit

Trade Finance

Loans and Financing in Local Currency

2007

1,329.0

2009

1,698.7

2008

1,793.7

2006

691.0

2005

417.0

CAGR42.1%

in local and foreign currency, also comprise the Bank’s credit risk exposure although to a lesser extent. Banco Indusval Multistock’s credit portfolio totaled approximately R$1.7 billion at the close of 2009, having remained stable throughout the year in spite of the deductions, write-offs and renegotiations carried out during that period. It consists of about 660 customers.

The Bank adopts conservative policies for credit granting and the risks posed by these operations. At year-end 2009, 86.5% of the credit portfolio was among the highest ratings (AA-C) and 83.0% of the operations involving medium-sized companies were supported by real guarantees.

The global economic downturn and the severe credit crunch led to higher default rates, mainly among medium-sized companies. According to BACEN data, the corporate default rate started falling slightly only as of November and closed 2009 at 2.0 percentage points above that recorded at year-end 2008. The following chart shows the 60 and 90-day default rate curves for Banco Indusval Multistock’s credit portfolio versus the default rates estimated for small and medium-sized companies (SMEs) in loans overdue over 90 days. Those estimates were based on BACEN’s data for corporate default rates, weighted by the volume of credit granted to large companies and the historical default rates of small and medium-sized companies.

products and services closeness to customers brings a better understanding of their needs

CREDIt oPERAtIoNS

In compliance with its policy to revise all credit lines every 180 days, the Bank reviewed its whole customer base during the year and re-rated each customer’s risk in view of the new macroeconomic situation. That procedure had an impact on Allowance for Loan Losses and resulted in the creation of

supplementary provisions, in addition to those determined by the regulatory body. Provisions increased from R$70.3 million as at December 31, 2008 to R$133.4 million at the close of 2009, an 89.8% rise. That amount corresponds to 8.2% of the total credit portfolio, above the 4.1% recorded in the previous year.

delinquency rate . %

NPL 60 days – BIM

NPL 90 days – BIM

Delinquency Rate SME – 90 days

0%1%2%3%4%5%6%7%8%

Dec2006 2008 20092007

Dec Mar Jun Sep Dec Mar Jun Sep Dec

Source: BIM

31

Individuals 10%

93.5% Middle Market

4.4% Other

credit portfolio breakdown at the end of 2009

by segment

by economic activity

by industry

56% IndustryServices 22%

Retail 2.1%

Commerce 12%

Mid-West 13.1% 2.6% North2.9% Northeast

62.3% Southeast

19.2% South

by region

20.8% Food, beverage and tobacco

13.9% Agribusiness

16.7% Other

9.7% Civil Construction

5.1% Metallurgy

5.0% AutomotiveTransport and Logistics 4.9%

Financial Institutions 4.4%Individuals 3.8%

Textile and Leather 3.6%

Education 3.4%

Chemical and Pharmaceutical 3.0%

Oil Byproducts and Biofuels 2.8%

2.8% Financial Services

32

5% OtherGuarantees 4%

BNDES Onleding 7%

Trade Finance 17% 67% Loans and

Discounts

39.1% Up to 90 days

19.8% From 91 to 180 days

Over 360 days 26.1%

From 181 to 360 days 15%

17% Aval on Promissory Notes

51% Receivables

Vehicles 2% Property 9%

Securities and Times Deposits

4%

Monitored Pledge 12% 6% Pledge

30% A

29% B

D – H 11%

C 30%

credit portfolio breakdown at the end of 2009

by type of operation

by maturity

by collateral

by risk rating

Other 26.8%

61to160 23.8%

18.9% 10 largest

30.6% 11to 60

by customer concentration

33

Loans and Financing in Local Currency

As at December 31, 2009, loans and financing in local currency amounted to R$1.3 billion, equivalent to 82.1% of the credit portfolio, a 7.6% drop compared with the previous year. Considering the credit recovery process, which includes renegotiations, discounts and write-offs, the slight change in the portfolio reflects our teams’ effort, which generated enough operations to maintain volumes practically stable, mainly in the second half. The Credit Portfolio in local currency recorded a Compound Annual Growth Rate (CAGR) of about 43.6% between 2005 and 2009, with a sharp rise since 2007.

Main Products:

Working Capital: Loans – Loan Agreements, with funds available for use by corporate customers in their operational activities.

Discount of receivables − Funds released quickly through discounts of trade notes, credit instruments and receivables. Overdraft accounts − Funds promptly made available through lines and contracts previously approved and signed. Compror – For inventory purchases.

Credit to Production Chains: these credit operations are designed to benefit our customers’ production chains through agreements with large companies maintaining sustainable relationships with their suppliers and to offer funding support by confirming our customers’ receivables. Besides providing access to a type of credit on which these companies would individually be subject to volume and maturity restrictions, these operations offer great potential to develop prospective relationship with new small and medium-sized customers.

Guarantees: the Bank rapidly grants Letters of Guarantee for its customers to support them in their operations.

BNDES (Brazilian Social and Economic Development Bank) onlending financing lines: FiNamE – Financing for the production and sale of new equipment and machinery. BNDES Exim – Financing for the production and exports of goods and services, as well as for selling them abroad.

Special Credit Program (PEC) – This working capital financing program was designed to boost companies’ competitiveness in the segments of manufacturing, trading and services, except those related to civil construction.

Other services: Checking Accounts, Collection and Internet Banking.

34

Foreign trade Financing operations

BIM’s Trade Finance Portfolio, according to its accounting records in reais, amounted to R$293.3 million at the close of 2009 and recorded a CAGR of 43.5% p.a. between 2005 and 2009. The CAGR in US Dollar terms is 44.8%, with a US$174 million portfolio in 2009, which exceeded the amount of US$30 million at the close of 2005.

Despite weak international markets, export financing accounted for the largest share of the Trade Finance portfolio in 2009 and accounted for 90% of overall operations. The Bank has a highly skilled, experienced team able to provide prompt and customized advisory services and monitor all international operations.

Main Products and Services:

aCC/aCE – Pre- (ACC) and Post-shipment (ACE) Exports Financing.

import Financing − These financing lines for raw materials, products and equipment purchased abroad allow access to alternatives, in terms of variety, quality and prices, to those found in the domestic market. international Guarantees − In the form of Import or Stand-by Letters of Credit.

Spot Fx − Purchase and sale of different foreign currencies. international Collection Operations − Both in imports and exports.

Fund remittance abroad − Investments or cash reserves for individuals and legal entities.

Funding for Foreign trade Financing

The Bank has partnerships with multilateral bodies and Correspondent Banks to expand its credit lines and loan portfolio. The first partnership, established with the International Finance Corporation (IFC) in 2006, has allowed the Bank to offer foreign trade finance to small and medium-sized companies within the Global Trade Finance Program (GTFP), and greatly benefited the relationship with correspondent banks.

The Bank’s responsible and transparent operations with IFC led BIM to form a new partnership with the Interamerican Development Bank (IDB) in 2007, within the Trade Finance Facilitation Program (TFFP). Geared to Latin American and Caribbean companies, TFFP promotes their growth as a means to boost foreign trade. This partnership proved particularly important during the period of turbulence in international markets, when IFC and IDB maintained their credit lines.

The Bank expanded its international relations and established partnerships with over 40 correspondent banks in Europe; Asia, and North, Central and South Americas, all crucial for foreign trade finance. Credit lines granted by international correspondent banks are currently the main funding source for BIM’s exports and imports financing portfolio.

Structured operations

The Bank has been developing structured operations since 2004, based on the combination of two factors. First, new market opportunities were identified. Besides, the Bank’s customer base included companies with high enough credit rating and the right profile to attract investors. Tapping into its market expertise, the Bank started structuring financing operations for medium-sized customers, both in local and foreign currency, thus allowing them to raise larger amounts of funds at lower rates.

35

Before the crisis worsened in late 2008, there was a steady demand for operations backed by corporate debts, an alternative that lost its appeal for investors when they began resorting to safer government bonds for capital protection. In view of the liquidity crunch late in the year, investors started showing interest mainly in assets backed by exports receivables. Although still incipient, this is a promising activity that can start growing in 2010, mainly among banks with BIM’s profile: structured, nimble and able to find good business opportunities.

BIM’s branch on the Cayman Islands was opened in 2009. It will conduct the structured operations in foreign currency, thus providing a direct channel between the Bank and foreign investors. Another distinct feature that attracts prospective investors is that BIM takes a share of the risk involved in all its structured operations. This shows that it firmly believes that the business is safely structured. As it is responsible for structuring operations and controlling credit guarantees, BIM continuously monitors the liquidity of the guarantees and the economic and financial performance of the borrowers. It regularly produces and distributes monitoring reports to deal holders.

The Bank is presently prepared to structure the following financial operations among others:

Bank Credit Note (BCN): credit securities issued to a financial institution and easily traded on the secondary market. They can be backed by different types of guarantees, such as: pledge of goods, sale of property and assignment of receivables among others.

agribusiness Credit Rights Certificates (aCRC): securities issued to finance agribusiness. Issuers are exempt from the Tax on Financial Transactions (IOF). In view of that specific purpose, guarantees must be based on agribusiness receivables.

Export Prepayment Operations (EPO): foreign currency funding instruments for longer-term export financing, with more significant guarantees, including pledge of goods and export receivables among others.

Export Credit Note (ECN): local currency funding instruments to finance exports. Issuers are IOF-exempt, but must prove that the export operation was duly performed.

BIM also structures operations in specific niches, such as advisory services for customers seeking strategic or financial investors for their companies through operations of shareholding nature; and debt instrument issues structured with receivables from the real estate industry (Real Estate Credit Note – RECN), which has been expanding significantly in Brazil.

an agile bank structured to understand and meet the customers’ needs

36

treasury and Funding operations

The Treasury’s main role is to control the Bank’s liquidity and execute its funding and fund allocation strategy, devised by the Cash Committee, which sets the guidelines for funding, performance and operating limits, always in compliance with the market risk and liquidity management policies. As a result, it is also responsible for mitigating the risks of mismatching interest rates, currencies and maturities. It also offers appropriate solutions to meet customers’ needs for hedging operations to protect against fluctuations in forex and interest rates, among other financial assets.

In accordance with its liquidity management policy, the Bank maintains at least 20% of total deposits as free cash to ensure greater safety for itself and its investors. That percentage remained above 50% throughout 2009 and stood at about 55% at year-end, in line with BIM’s conservative policy and in view of the economic turbulence.

At the close of 2009, total funding recorded a 12.1% increase in comparison to the close of the previous year and amounted to R$1.8 billion, 79.0% of which in local currency.

Funding in local currency corresponds mainly to Deposits, accounting for 71.0% of the Bank’s total funding. Worth of note are Time Deposits, involving the issue of Bank Certificates of Deposits (CDBs), which accounted for 37.1% of total funding as at December 31, 2009. On the same date, Time Deposits with Special Guarantee (DPGEs) comprised 28.2% of total funding. Introduced in April 2009 by the National Monetary Council, DPGEs were essential to maintain medium-sized banks’ liquidity since an increased risk perception among investors due the international crisis led to a “fly to quality” migration of funds, mainly to government bonds and larger financial groups. Since DPGEs are guaranteed by the Credit Guarantor Fund up to

loan volume . in R$ million

Foreign currency

Local currency

2007 2009200820062005

funding . in %

37.1% Time deposits

28.2% Time Deposits with Special Guarantee (DPGE)

8.0% Local Onlending

Interbank Deposits 2.8%

0.6% Agribusiness Credit Bills

Demand deposits 2.2%

Foreign Currency Borrowings 21.1%

404,3

690,5

1.040,1

1.600,0

1.793,2

37

R$20 million, they allowed small and medium-sized banks to raise funds, especially from institutional investors, at a cost compatible with their operations, for terms of two, three or even five years, with pre-determined maturities. In addition to ensuring stable liquidity levels, this alternative allowed the Bank to extend funding maturities − as yet only possible in external funding − and better plan its cash liquidity due to the need to maintain financial investments until their final maturities.

Foreign sources accounted for 21.0% of total funding in 2009. Trade Finance comprised 14.9% of this amount. The remaining 6.1% corresponds to the balance of the October 2008 syndicated loan, jointly with IFC (International Finance Corporation), and is allocated directly to financing working capital in local currency. The exposure of this loan to forex and interest rate fluctuations is covered through hedging operations.

Another funding source that complements BIM’s product portfolio is onlending of BNDES funds to corporate customers. It accounted for 8% of total funding at the close of 2009.

BRoKERAGE HouSE

In 2009, Banco Indusval Multistock started restructuring and modernizing its subsidiary, the brokerage firm Indusval S.A. Corretora de Títulos e Valores Mobiliários (Indusval Corretora), which operates in all markets of the Securities, Commodities and Futures Exchange (BM&FBOVESPA). The mark in this process was the strategic partnership established on June 1st, 2009 between BIM and Serendipity Holding Financeira Ltda., which now holds 48.84% of Indusval Corretora’s total capital stock. Serendipity is controlled by Luis Fernando Monteiro de Gouvêa, the majority shareholder of Comercial Asset Management, and by Alexandre Atherino, a former partner and, up to 2008, the Planning and Strategy Officer of Fator Corretora.

The Bank’s goal with this partnership is to increase the profitability of Indusval Corretora’s activity in a sustainable manner in the long term, based on the new partner’s sound, business-oriented management. The ongoing restructuring process has already produced its first results, such as a wider range of products and services and a higher BM&FBOVESPA ranking. The Brokerage Firm ranked 52nd on BM&F’s general ranking at the close of 2008 and moved up to 44th at the close of 2009.

The new strategic management is seeking to increase Indusval Corretora’s customer base among institutional and qualified individual investors, and target the small investor market. With that in mind, the Firm is hiring new teams with market expertise; in addition, it is introducing business management tools and operating platforms for trading in the Stock and Derivatives markets geared to institutional and qualified individual investors, as well as a new homebroker system, which will be accessed through the Brokerage House’s new website. The new site, still in the design phase, will offer resources that allow performing transactions through the Internet, and bring more information and tools to help users make investment decisions.

38

Based on the Bank’s tradition and the power of the Indusval brand, Indusval Corretora’s goal is to become a source of liquidity for institutional customers. In this regard, it introduced fixed income investments with government bonds, targeted mainly at Financial Institutions’ Treasuries, in 2009. This type of investment grew sharply due to higher risk aversion during the economic crisis, which shows the new strategic management’s remarkable skills and great sense of opportunity. By the end of 2010, the Brokerage Firm, with a reorganized and upgraded infrastructure, will be dealing mainly with:

Bm&F market products: focused on market intelligence, it will offer structured operations that add value to institutional clients and deal with large volumes in an agile and safe manner.

BOVESPa market products: Strategic reports – Its strategic research team will produce reports, including an economic and flow overview, with analyses by the Brokerage Firm’s experts, to be sent to Indusval Corretora’s customers. asset management – Equity investment funds. arbitrage operations – Applying the Firm’s expertise to seize opportunities for gains in the arbitrage between stock markets and the ADR market. Qualified investors – Operators and a self-service platform are available for both individual and institutional customers. individuals – A structure is being developed to provide top-quality services for individual customers, dealing with lower volumes and operating by themselves through the homebroker. Information and courses specially designed for non-professional investors will be offered.

Fixed income Products – Indusval Corretora is prepared to deal with large volumes of government bonds and was one of the largest intermediaries in transactions with National Treasury bonds pegged to inflation indices during the second half of 2009.

Indusval Multistock Corretora de Valores’ competitive advantages include its experience and focus on business, unique customer service and, above all, prompt operations and strict risk controls, in accordance with the standards established by BM&FBOVESPA’s Operating Qualification Program (PQO). As a result, Indusval Corretora was awarded in early 2010 the Execution Broker Seal, which attests to its ability to operate promptly and efficiently with large volumes in the BM&F market.

The challenges that the capital and derivatives market was faced with due to the economic crisis led to a drop in income from financial intermediation during the first months of the year, but Indusval Corretora’s restructuring and upgrading process resulted in an increase in business that reversed this situation. At the close of 2009, the Brokerage House’s operations brought in income from financial intermediation of R$9.4 million and income from services fees of R$11.8 million. Excluding the investments and expenses to conduct Indusval Corretora’s operations and including the income from the sale of financial assets (BM&FBOVESPA’s shares), those amounts would have produced net income of R$5.3 million in 2009. Total volumes traded on the stock exchange amounted to R$4.3 billion in BOVESPA shares and derivatives and to R$47.8 billion involving 686,000 derivative and commodity contracts on BM&F. Information about Indusval Corretora can be found on its website: www.indusvaltrade.com.br.

39

“once in a while you have to take a break and visit yourself.”

Audrey Giorgi

Seen by (photo) Jeniffer Soares Paes, 15 years old and Felipe trindade, 16 years oldViewed by (colored interference) Rodrigo de Souza, 24 years old

economic and financial performanceresults in line with the situation and aiming at business perpetuity

2009 was a challenging year in terms of strategic management, and the 2009 results, even though below expected levels, are compatible with the difficult situation for the banking industry. Credit supply was limited due to decreased economic activity. In view of greater uncertainty arising from the adverse situation and higher delinquency/default levels, the Bank stuck to its traditional conservative policy and focused on the perpetuity of its activities to the detriment of short-term results.

Consequently, BIM increased provisions, made credit analysis more stringent, tightened credit standards and reviewed its guarantee system. Like an athlete who steps back to gather way before jumping, the Bank focused on internal controls, risk mitigation and investments in infrastructure throughout the year. The Bank emerging from this period of turbulence is stronger and better prepared to seize market opportunities, based on the principles of ethics, responsibility and safety which have always served as guidelines for its business.

As a result of the dramatic change in the economic environment, the appreciation of the real and higher risk aversion, all described in the economic situation section, the credit portfolio remained stable at approximately R$1.7 billion throughout 2009.

Income from Financial Intermediation

Income from Financial Intermediation fell from R$641.0 million in 2008 to R$407.5 million in 2009, as a result of the different economic situation in each year.

Medium-sized companies are the most vulnerable to an economic downturn and a credit crunch, which affects their ability to settle their obligations and increases the default risk. These conditions had a negative impact on BIM’s income from financial intermediation in 2009, mainly because operations overdue over 60 days yield no additional income and the operations renegotiated with customers that the Bank believes are able to recover following increased economic activities present lower spreads.

income from financial intermediation . R$ million

2005 2006 2007 2008 2009change

2008 / 2009

Credit Operations 94.3 110.7 181.2 350.2 264.4 -24.5%

Exchange/Trade Finance 9.0 25 33.1 166.9 41.7 -75.0%

Securities 52.2 52.1 74.6 108.2 101.4 -6.2%

Derivative Financial Instruments Result (4.0) (3.2) 0 15.7 0.0 -100.0%

Total 151.5 184.6 288.9 641.0 407.5 -36.4%

Income from Credit operations

Credit operations in local currency are BIM’s main line of business. In 2009, income from credit operations fell by 24.5% in relation to 2008 and totaled R$264.4 million.

The average monthly balance of credit operations in reais stood at R$1.4 billion over the last two years, despite the distinct situations in terms of interest rates, spreads and delinquency/default rates, as described above. In addition, the repurchase of assigned receivables led to a reversal of income totaling about R$3.5 million in 2009.

Income from Foreign Exchange operations

The sources of that income are mainly export operations and spot FX contracts, both impacted by decreased competitiveness of Brazilian exports due to the appreciation of the real, besides the drop in global demand owing to the recessive situation. The trade balance data in the economic environment section confirms that performance. The income from foreign exchange operations in 2008 reflects the positive situation up to September and a 33% exchange variation. In contrast, forex rates depreciated by 25.3% in 2009 and had an impact on financial intermediation income and expenses. As a result, BIM’s Income from Foreign Exchange Operations was directly affected and fell from R$166.9 million in 2008 to R$41.7 million in 2009.

43

A slight recovery was observed in late 2009, with new advances on foreign exchange contracts (ACC) which have not yet impacted income.

Income from operations with Marketable Securities

Income from Operations with Marketable Securities came to R$101.4 million in 2009, a 6.2% drop in relation to the R$108.2 million recorded in 2008. The slight decrease was due to the basic interest rate (SELIC) since the average investment balance remained virtually stable: R$989.2 million in 2008 versus R$1.0 billion in 2009. The balance of those investments was reduced in the last quarter of 2008 owing to the liquidity crunch and in order to decrease risk exposure. Liquidity levels started recovering gradually in the second quarter of 2009. With funding from DPGEs, the Bank began operating with excess funds from June 2009, onward and increased its average balance of investments in federal government securities and in the open market.

Expenses on Financial Intermediation

Financial Intermediation Expenses dropped by 29.0% in 2009 to R$313.2 million. Nonetheless, total expenses corresponded to 76.8% of the Income from Financial Intermediation in 2009, versus 68.6% in 2008. Higher Expenses in percentage terms were due to both lower income from financial intermediation, as described above, and to the larger share of open market funding costs, allowances for loan losses and expenses on derivative financial instruments. Market funding costs accounted for 45.5% of total financial intermediation expenses, whereas expenses on allowances for loan losses accounted for 35.5% due to higher delinquency/default rates. Expenses on derivative financial instruments corresponded to 11.6% of expenses on financial intermediation, and loans, assignments and onlending to 7.3%. It is worth noting that the foreign exchange variation had different impacts on the 2008 and on the 2009 figures.

Expenses on Money Market Funding operations

Those expenses are connected to time deposits, repurchase operations and interbank deposits. Even though they fell by 26.0% in comparison to the previous year, their share of total Expenses on Intermediation declined from 45.9% to 45.5%, as mentioned above, year-over-year. This change was due to the higher average balance of funding for the credit portfolio and the increase in liquid temporary cash investments in the periods under comparison.

besides the economic and financial situation, the impact of the forex variation on income and expenses from financial intermediation must be considered in the comparison between 2008 and 2009

44

financial intermediation expenses . R$ million

2005 2006 2007 2008 2009change

2008 / 2009

Money Market Funding 76.3 82.9 115.9 202.2 142.6 -26.0%

Loans, Assigments and Onlending 7.4 19.4 23.3 185.5 23.0 -87.6%

Derivative Financial Instruments Result 4.0 3.2 2.8 0 36.3 -

Allowance for Loan Losses 10.1 13.1 17.7 53.2 111.3 109.2%

Total 97.8 118.6 159.7 440.9 313.2 -29.0%

Expenses on Loans, Assignments and onlending

The sharp drop in expenses on Loans, Assignments and Onlending in relation to 2008 was mainly observed in the loans in foreign currency account (IFC A/B Loan and trade finance lines) due to the appreciation of the real throughout 2009 (25.3%). Worth of note is that the foreign exchange variation had the opposite effect on both the lower income from foreign exchange operations, as shown above, and the Result from Derivative Financial Instruments since, among others, the risks of interest and exchange rate variations in the IFC loans are covered by hedging operations.

Result From Derivative Financial Instruments

Those instruments are used for protection against currency, index and arbitration mismatches, with a balancing item in the commercial portfolio, funding or to meet a specific demand for a product. The result from Derivative Financial Instruments was a net expense of R$36.3 million in 2009 versus a net income of R$15.7 million in 2008, basically due to forex rate hedging operations.

Expenses on Allowance for Loan Losses

Higher delinquency/default rates throughout 2009, coupled with a situation that led to a drop in production and sales in general, considerably affected allowances for loan losses. Such expenses were increased by 109.2% in 2009 to R$111.3 million from R$53.2 million in 2008.

Lower delinquency/default rates from November 2009 onward and the recovery/renegotiation of some loans made it possible to reduce provisions in the last quarter of the year. However, BIM decided to make supplementary provisions once more − despite a decrease in nonperforming loans − since there may be further turbulence along the recovery process.

45

Gross Result from Financial Intermediation

The Gross Result from Financial Intermediation totaled R$94.3 million in 2009, a 53.1% fall in relation to 2008. The Net Interest Margin (NIM) stood at 7.9%, a 1.7 percentage point decrease versus the 9.6% recorded in 2008. That drop is explained by both lower income from credit and trade finance operations and higher expenses on allowances for loan losses. The maintenance of higher cash reserves also impacted this Result although to a lesser extent.

operating income (expenses) . R$ million

2005 2006 2007 2008 2009change

2008 / 2009

Income from Services and Tariffs 9.3 11.6 18.9 24.4 12.2 (50.2%)

Personnel Expenses (25.0) (27.3) (40.6) (57.1) (51.2) (10.3%)

Other Administrative Expenses (16.5) (18.9) (41.0) (40.9) (41.9) 2.4%

Tax Expenses (4.6) (5.7) (9.9) (15.3) (11.2) (27.0%)

Other Operating Income (Expenses) 2.1 1.6 4.3 (0.3) (1.1) 266.7%

Total (34.7) (38.7) (68.3) (89.2) (93.2) 4.5%

gross result from financial intermediation . R$ million

57.7

69.2

129.2

200.1

94.3

operating Income (Expenses)

Net Operating Expenses totaled R$93.2 million, a 4.5% rise in comparison to the R$89.2 million recorded in 2008.

The main changes were observed in:

income from Services Rendered and Bank Fees – this income fell by 50.2% year-over-year due to a lower volume of collection operations. Besides, the Bank has been consolidating just 51.1% of the income from brokerage operations on the stock market since the sale of 48.9% of the Brokerage House’s capital on June 1st, 2009. That income will rise again as the brokerage firm’s business increases with the new investments and products.

Personnel Expenses – these include Remuneration, Benefits, Social Charges and Employee and Intern Training and totaled R$51.2 million in 2009, 10.3% less than the R$57.1 million recorded in 2008. The number of employees in the three operational companies changed slightly and stood at 333 employees at the close of 2009, versus 329 in December 2008.

Other administrative Expenses – these totaled R$41.9 million in the year, a 2.4% rise in relation to 2008, when they totaled R$40.9 million. These expenses correspond to third-party services, specialized technical services connected to legal matters, auditing, consulting, financial system services, IT system acquisition, utilities and costs related to everyday

2005

2006

2007

2008

2009

46

efficiency ratio . R$ million

2005 2006 2007 2008 2009

Personnel Expenses 25.0 27.3 40.6 57.1 51.2

Contributions and Profit Sharing 0 0.9 14.2 14.4 5.7

Other Administrative Expenses 16.5 18.9 41.0 40.9 41.9

Tax Expenses 4.6 5.7 9.9 15.3 11.2

Other Operating Expenses 1.1 2.1 4.1 2.7 7.0

a – Total Operating Expenses 47.2 54.9 109.8 130.5 117.0

Gross Income from Financial Intermediation (not incl. Allowance for Loan Losses) 67.8 82.3 147.0 253.4 205.6

Income from Services and Tariffs 9.3 11.6 18.9 24.4 12.2

Other Operating Income 3.2 3.7 8.4 2.4 5.9

B – Total Operating income 80.3 97.6 174.3 280.2 223.7

Efficiency Ratio (a/B) 58.8% 56.3% 63.0% 46.6% 52.3%

activities, such as rents and supplies, among others. Despite the adverse situation, the Bank invested more in IT and infrastructure to increase internal controls and traffic capacity, in line with the strategy to improve the structure and prepare for renewed growth following the economic upturn.

Tax Expenses – mainly PIS and COFINS, which fell by 27.0% year-over-year to 2008 and totaled R$11.2 million, as a result of the decline in the Bank’s operations.

Efficiency Ratio

In spite of strict control over Operating Expenses, which fell by 10.3% in 2009 in consolidated terms, the Efficiency Ratio reflects the drop in the Gross Result from Financial Intermediation and Income from Fees and Services, discussed above.

Non-operating income (expenses)

The R$8.0 million non-operating income in 2009 basically corresponds to the sale of BM&FBOVESPA and CETIP shares remaining from the IPO of these companies. The sale of those shares, net of tax, contributed R$4.5 million to 2009 earnings.

Income tax and Social Contribution

The 136.7% drop in income tax and social contribution results from the decrease in results in 2009 and the increase in the deferred tax asset related to the allowances for loan losses, whose balance rose by 89.8% due to higher default rates that resulted from the deteriorating corporate economic and financial situation stemming from the global crisis.

47

Contributions and Profit Sharing

Contributions and profit sharing are an integral part of Banco Indusval S.A.’s collective labor agreement, approved by the Banking Employees’ Union. They include variable remuneration for which the whole staff and officers are eligible within the Profit Sharing Program. The amounts paid and provisioned in 2009 benefited the Bank’s employees basically and amounted to R$5.7 million, 60.4% less than in 2008, R$14.4 million, whereas officers only received stock options in February 2010.

Net Profit

In 2009, BIM’s net profit totaled R$12.8 million versus R$72.7 million in 2008, which represents an 82.4% decrease. This drop resulted from the macroeconomic conditions throughout 2009, which led to higher delinquency/default rates with a negative impact on both income from credit operations and expenses on allowances for loan losses. Additionally, the Bank decided to maintain higher liquidity levels in spite of the costs of this strategy, in addition to coping with a lower volume of other operating income with the sale of 48.9% of the Brokerage House’s capital stock.

Cash Flow Statement

Banco Indusval S.A. and the group companies, pursuant to Law No. 11,638/07 and BACEN’s Resolution No. 3,604/08, prepare their Cash Flow Statements in compliance with Technical Note CPC No. 03. The Cash Flow Statement can be found on page 78 of this Report.

Value Added Statement

Banco Indusval Multistock’s operations in 2009 generated a net value added of R$72.5 million to the Brazilian economy. This amount added to the R$14.2 million portion of retained earnings distributed in the period came to R$86.7 million broken down as follows: 56.4% for employees to maintain their financial ability and motivation to do their challenging job, especially in a difficult situation; 31.1% for shareholders, paid in the form of interest on equity, in advance of the mandatory minimum dividend in the year; 11.1% for taxes and contributions for the federal, state and local governments; and the remaining 1.4% for third parties.

48

ratings

agency rating observations latest report

B+ / Stable / BB+ / Stable / B

brBBB+/ Stable /brA-3

Foreign CurrencyLocal Currency

Brazil National ScaleOctober/2009

BBB+/ Stable / F2 Brazil National Scale November/2009

10.43Ranking: 43

Riskbank IndexSeptember/2009

January/2010

Fitch Ratings – the national short and long-term ratings, respectively ‘BBB+(bra)’ and ‘F2(bra)’, assigned in October 2007, were reaffirmed in November 2009. Fitch also maintained the stable outlook in spite of the change in the economic situation.

Riskbank – maintained the ‘low short-term risk’ rating in January 2010, based on the stability of BIM’s indicators and middle market expertise.

Ratings

Banco Indusval Multistock is currently rated by three ratings agencies: Standard & Poor’s and Fitch – two of the most important international agencies – and the Brazilian agency Riskbank.

Standard & Poor’s – the Brazil national scale and global scale long and short-term ratings, brBBB+/br-A-3 and B+/B respectively, were reaffirmed in October, and the outlook was changed to positive owing to high liquidity and market capitalization and the expectation of renewed economic growth.

49

“the people and circumstances around me do not make me what i am, they reveal who i am.”

Dr. Laura Schlessinger

Seen by (photo) Sergia Ferreira de Moraes, 17 years old and Fabricio Silva Brito, 16 years oldViewed by (colored interference) thaís Cristina Bispo de Lima, 17 years old

capital marketsa commitment to the highest governance standards and respect for shareholders

Since 2007, Banco Indusval Multistock’s shares have been traded on BM&FBOVESPA under the ticker symbols IDVL3 (common shares) and IDVL4 (preferred shares). The Bank’s shares are listed on Level 1 of Special Corporate Governance practices, a special BM&FBOVESPA segment. BIM voluntarily adhered to additional practices required from companies listed on the Novo Mercado segment, such as: (i) a minimum of 25% of outstanding shares; (ii) a minimum of 20% of independent members on the Board of Directors; (iii) 100% tag along; and (iv) adoption of the Market Arbitration Chamber.

capital stock breakdown

number of shares issued total

control group and management % class treasury % class outstanding % class

Common 27,000,000 63.6% 19,690,542 72.9% - 0% 7,309,458* 27.1%

Preferred 15,475,101 36.4% 1,211,717 7.8% 427,000 2.8% 13,836,384 89.4%

Total 42,475,101 100% 20,902,259 49.2% 427,000 1.0% 21,145,842 50.5%

*These common shares belong to the members of the families not included in the Shareholders’ Agreement.

Capital Breakdown

Banco Indusval Multistock’s Capital Stock consisted of 42,475,101 shares as at December 31, 2009, 27,000,000 of which were common shares (IDVL3) and 15,475,101 preferred shares (IDVL4). At the close of the year, outstanding shares, not including shares belonging to controllers and other management members, and treasury shares, totaled 21.1 million, or 49.8% of the Company’s total capital stock.

7.3 million of those outstanding shares are common shares belonging to members of Masagão Ribeiro and Ciampolini families, not participating in the controlling group. If the common shares belonging to families’ members not in the controlling group are deducted, the number of shares routinely traded on BM&FBOVESPA was 13.8 million, which corresponds to 32.6% of the total capital and 89.4% of preferred shares.

treasury Shares and Cancellation of Shares

The Board of Directors approved on September 17, 2009 the cancellation of the 2nd Share Buyback Program, which started on October 3, 2008 and in which 362,900 preferred shares were acquired. On the same date, the Board approved the cancellation of 524,900 preferred shares held in Treasury acquired during the 1st and 2nd programs, and the implementation

of the 3rd buyback program. This program will be effective until September 16, 2010 and involves the acquisition of up to 1,458,925 shares. As a result, treasury shares totaled 427,000 as at December 31, 2009.

53

stock options

program periodgranting

dategrace

period1

expiration date

strike price – r$

# options granted

# not exercised

1st 1st semester 2008 07.22.2008 Three years Five years 10.07 161,869 161,869

2nd 2nd semester 2008 02.10.2009 Three years Five years 5.06 229,067 229,067

3nd 20092 02.22.2010 Three years Five years 8.56 525,585 525,585

1 The grantee may exercise 1/3 of his/her options as of the date of each option granting anniversary and may exercise 100% between the third and fifth year after the option granting date.

2 The 3rd Stock Options Program corresponds to the whole of 2009 and includes, in addition to officers, superintendents, who did not use to be eligible in previous programs.

Stock options Plan

The March 26, 2008 Special Shareholders’ Meeting approved the Stock Options Plan for executives of Banco Indusval S.A. and its controlled companies in order to show recognition for their services while fostering motivation and commitment in the long term. The distribution of call options is made each semester based on the Bank’s consolidated results and on the individual performance of these executives.

No call options related to the first half of 2009 results were distributed to Banco Indusval Multistock’s executives. Consequently, the 3rd Stock Options Plan corresponds to the results achieved in the whole of the fiscal of year 2009. In addition to the Officers of the Executive Board, it will benefit the Superintendents from Administrative areas. It is worth noting that the Executive Board received no bonuses in the form of cash for the 2009 results.

54

Stock Performance

In 2009, the stock market in Brazil − and in most of the world − showed the first signs of recovery from the 2008 losses. BIM’s shares followed that trend and appreciated by 107.8% in 2009, versus an 82.7% rise in Ibovespa. The average daily trading volume came to R$605,900 versus R$416,300 in 2008, totaling R$152.4 million in the year, versus R$87.0 million in 2008. There were 15,645 transactions involving 20.2 million shares in 2009, with a daily average of 60 transactions and 81,300 shares.

share performance . (Basis 100 = 12/31/2008)

Volume R$

IDVL4

Ibovespa

8,000.00

9,000.00

250.00

300.00

Shar

e P

rice

Evo

luti

on (

basi

s 10

0)

Aver

age

Trad

ing

Volu

me

(R$)

200.00

150.00

100.00

50.00

-

7,000.00

6,000.00

5,000.00

4,000.00

3,000.00

2,000.00

1,000.00

-Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

value added for shareholders: shares appreciated by 107.8% in 2009, surpassing ibovespa, plus a 7.7% dividend yield

55

Shareholding Base

The breakdown of BIM’s shares as at December 31, 2009 was as follows:

shareholder position, 12/31/2009

# type of shareholder common % preferred % total %

4 CONTROLLING GROUP 17,116,173 63.39% 1,052,147 6.80% 18,168,320 42.77%

10 MANAGEMENT 2,574,369 9.53% 159,570 1.03% 2,733,939 6.44%

5 Board of Directors 2,320,609 8.59% 135,892 0.88% 2,456,501 5.78%

5 Executive Board 253,760 0.94% 23,678 0.15% 277,438 0.65%

12 FAMILIES 7,309,458 27.07% 747,131 4.83% 8,056,589 18.97%

70 INSTITUTIONAL INVESTORS 0 0.00% 10,536,364 68.09% 10,536,364 68.09%

56 Brazilian 0 0.00% 5,985,639 38.68% 5,985,639 14.09%

14 Foreign 0 0.00% 4,550,725 29.41% 4,550,725 10.71%

16 LEGAL ENTITIES 0 0.00% 115,509 0.75% 115,509 0.27%

971 INDIVIDUALS 0 0.00% 2,437,380 15.75% 2,437,380 5.74%

0 TREASURy 0 0.00% 427,000 2.76% 427,000 1.01%

1.083 TOTAL 27,000,000 100.00% 15,475,101 100.00% 42,475,101 100.00%

closing price

idvl4 ibovespa (points)

12/30/2008 price R$3.99 37,550

12/30/2009 price R$8.29 68,588

Change in the period 107.8% 82.7%

Highest price R$9.67 69,349

Lowest price R$3.99 36,624

56

Shareholder Remuneration

Pursuant to current legislation, Banco Indusval S.A.’s Bylaws entails a minimum distribution of 25% of the adjusted net income each year. Nevertheless, the Bank pays Interest on Equity in advance at each quarter-end.

In 2009, BIM paid to its shareholders a gross amount of R$27.0 million, or R$23.0 million net of Income Tax, which corresponded to a 7.7% dividend yield. Earnings per share stood at R$0.64234, or R$0.54599 net of Income Tax.

interest on equity paid . R$ 000’s

1Q

2Q

3Q

4Q

2004

7,181

2005

11,446

2006

10,167

2007

15,858

2008

25,470

2009

27,008

Investor Relations

The Investor Relations team acts in the effective execution of the information disclosure transparency policy, a major commitment of the Bank’s management. Its main duty is to ensure an effective and quick communication process with shareholders and capital market professionals by releasing data and information about the Bank’s business performance and disclosing its main strategic guidelines.

In the Investor Relations area on Banco Indusval Multistock’s website (www.indusval.com.br/ir), investors and market participants in general can find up-to-date information conveniently accessible to all the Bank’s stakeholders. This is an important tool that complements the wide dissemination of information to the public through CVM, BM&FBOVESPA, newspapers and email messages, among others.

Besides facing great challenges due to the adverse economic situation, Banco Indusval Multistock’s Investor Relations professionals started providing services to a larger number of individuals in 2009, due to the diversification of the Bank’s shareholding base. The BIM Investor Relations professionals assisted over 100 Brazilian and foreign analysts and managers at private meetings, and attended public meetings and Brazilian and foreign events at which they presented the Bank and its performance to about 190 analysts and investors in 2009. Shareholders and security analysts were also assisted by phone and email.

57

“management means to substitute muscle by thought, folkways and superstition by knowledge, and force by cooperation.”

Peter Drucker

Seen by (photo) Rafael Ambrósio, 20 years old and Lilian Rosa dos Santos, 17 years oldViewed by (colored interference) Karoline de oliveira, 15 years old

people managementcommitment and competence reflected in its main asset

Banco Indusval Multistock believes that its people give it a competitive edge and all its achievements are directly connected to the commitment, dedication and competence of its team. Therefore, the Bank maintains with its staff a relationship based on respect for differences and individual features, transparent initiatives, ethics and fairness as a matter of principle. It is, in addition, fully aware of the need to value its professionals and invest in them in return for their effort.

In its people management policy, BIM seeks to offer all its employees opportunities for personal and professional growth, and promote a better quality of life. To that end, all activities have been mapped, work flows have been reorganized and people have been trained as part of a far-reaching project. Improved people management was crucial to consolidate an internal culture and keep the team united, even at times of economic turbulence, such as late 2008 and 2009, which require everyone’s effort.

All these initiatives allowed for the Bank to have a lean, agile and highly-skilled team now, in line with its strategic goals and focusing on excellent customer service. At the close of 2009, the Indusval Multistock companies had 333 employees distributed among Indusval Multistock Corretora de Valores, the Bank’s headquarters and the ten branches in Brazil.

indusval multistock Employees’ Profile Creating a harmonious and pleasant work environment is an integral part of BIM’s culture. The Bank encourages team work, commitment, flexibility and cooperation in its relationship with employees and seeks to promote a sense of initiative, integration and respect for the fellow people.

by educational background

Grade School CertificateHigh School CertificateCollege DegreeMBA or Graduate Studies

2007 2009200820062005

2% 4% 6% 6% 6%

44% 46%59% 59% 60%

28% 29%

26% 30% 31%27% 21%

9% 5% 4%

by age

Up to 25 yearsFrom 26 to 35 yearsFrom 36 to 45 yearsFrom 46 to 55 yearsOver 55 years

2007 2009200820062005

7%6%7%7%10%

26%26%26%27%26%

20%21%25%22%22%

28%26%27%25%25%

19%20%15%19%17%

by time with the company

Up to 1 yearFrom 1 to 5 yearsFrom 5 to 10 yearsFrom 10 to 20 yearsOver 20 years

2007 2009200820062005

1% 1% 1% 1% 1%

22% 15% 14% 11% 11%

16%13% 10% 10% 10%

32%32%

25%52% 56%

30% 40% 52% 26% 24%

by gender

FemaleMale

2007 2009200820062005

79% 74% 66% 69% 67%

21% 26% 34% 31% 33%

by area of activity

BusinessSupport and Control

2007 2009200820062005

62% 51% 54% 50% 51%

38% 49% 46% 50% 49%

61

training

BIM has an incentive and education policy that offers its employees real opportunities for professional growth, especially through training programs. In 2009, training programs focusing on skills building and staff integration were geared mainly to internal employees, both to reduce costs and to minimize the impact of employees’ being away from their routine activities. As a result, the total investment fell to R$284,200. Investments in undergraduate and graduate courses amounted to R$123,100 and rose by 12.3% in the same period. Investments in language courses remained flat at R$76,000. Professional training, integration for new employees and trainee and internship programs tapped more deeply into internal resources and expertise, since there was a sharp decrease in short duration courses. In 2009, these training and integration courses totaled 1,402 training hours attended by 1,580 employees, corresponding to a total of 12,514 training hours coordinated by the Human Resources Department throughout the year.

BIM promotes continued education for its employees through its Education and Development policies, which cover up to 50% of monthly tuitions for undergraduate, graduate and MBA programs and up to 80% of language courses. Employees with good professional performance are eligible to take courses related to their professional activities. 97 employees, 51% of whom enrolled in undergraduate and graduate courses and 49% in language courses, were benefited in the year.

In line with its policy to provide opportunities for low-income young people wanting to enter the job market, the Indusval Multistock companies continued their Apprentice Program, introduced in 2008 with a group of six. Three of the apprentices were hired for the administrative area through an outsourcing company after the two-year program was concluded at the end of the year. In 2010, the Bank selected another five young apprentices to start its two-year training program. The Bank also offered its Internship Program in 2009. It now has 14 college students from different fields.

Within the second Trainee Program started in August 2008, eight recent college graduates started developing projects in their specific fields in January 2009, after six months of job rotation training in different Bank areas. At the end of the year, these professionals were evaluated and hired in the Bank’s and in the Brokerage Firm’s administrative and commercial areas.

62

BIM hired four hearing-impaired and physically-disabled people in 2009, within the Professional Training for People with Disabilities Program, a partnership with the Brazilian Federation of Banks (FEBRABAN). This Program is designed to promote the inclusion of these professionals in the banking industry by offering them specific education for this market. After being hired, these employees attend external training for up to six months, with special courses to enable them to perform different duties in financial institutions. As a result, the Bank gives opportunities for people with disabilities and trains them, in addition to fulfilling the quota of employees with disabilities required by law.

bim recognizes its employees’ commitment and competence by offering them opportunities for personal and professional development, investing in training and having a competitive remuneration and benefit plan

Remuneration and Benefits

Both BIM and Indusval Multistock Corretora de Valores have a Career and Remuneration Plan determining that employees receive a fixed salary, compatible with the market, and a variable portion corresponding to the Profit Sharing Program. Profit sharing, based on the companies’ results and each employee’s team and individual performance, is paid on a semi-annual basis.

All employees have qualitative and quantitative targets for their performance. They are assessed individually and in teams every six months, with the use of widely recognized processes and tools. In addition, these assessments allow identifying and recognizing talents, finding competency development needs and priorities for education and training investments, and developing incentive projects for underperforming employees.

The Bank offers several high-quality benefits to attract and retain its employees, including health and dental plan, discounts for medicine purchase, education assistance and credit lines at lower interest rates. In 2008, BIM also introduced the Private Pension Fund for all employees. The Bank provides 50% of the basic monthly payments.

63

intangible assetsexperience and knowledge under a powerful brand

Banco Indusval Multistock has amassed assets in over four decades of operations in the financial market, which cannot be easily measured in financial or economic terms. Expertise in the market and its peculiarities, respect among its peers, regulatory bodies and society, and the experience of its professionals are important assets for the sustainability of BIM’s business.

Almost all intangible assets are directly connected to the brand, people and their experience, knowledge, commitment, corporate responsibility, sense of ethics and competence. BIM’s human resources became its most valuable intangible asset as a result of the Bank’s horizontal management policy, based on open communication, respect and transparent relationships in all hierarchical levels, in addition to the opportunities for growth offered to top-performing professionals.

The Bank is fully aware of the importance of its employee’s skills and self-fulfillment. Consequently, it has been focusing its efforts on consolidating a modern remuneration and benefit policy and investing in continued education and training, as means to motivate and prepare these professionals for the excellence in service rendering. To that end, BIM has a highly skilled team, with vast knowledge of the Bank, the financial market and its customers’ demands, in addition to the senior management executives’ expertise.

BIM’s great knowledge of its market niche also gives it a competitive edge. Its strategy to be always close to its customers so that it can offer customized solutions, monitor these companies’ performances and provide top-quality credit services has allowed it to acquire vast know-how and, therefore, become a valuable asset.

Banco Indusval Multistock has added technological know-how to its assets with the recent investments in infrastructure, despite the challenges posed by the global economic crisis over the last two years. In order to offer a safe, reliable environment especially designed for its business model, new methods and process have been developed and also become intangible assets.

Likewise, the need to increase funding sources led the Bank to establish international partnerships. BIM’s responsibility toward all its commitments, coupled with its ethical and transparent attitude in business, earned the Bank great recognition and helped it consolidate its relationship with major institutions in the international market, such as correspondent banks based abroad, IFC and IDB. This is undeniably another intangible asset for the Bank.

65

sustainabilitycommitment to improvement in each of the pillars of sustainability

Banco Indusval Multistock believes that, before any external action, sustainability must be incorporated into the Bank’s own principles and guidelines, which should include prioritizing seriousness, ethics, transparency, responsible business practices and respect for all stakeholders.

This belief in 2009 contributed to BIM’s being ranked the 4th Most Sustainable Medium-Sized Bank in Latin America and the second in Brazil, in an independent study by Management and Excellence (M&E), a Spanish consulting firm that is the leader in sustainability studies and ratings. These studies are based on assessments of items such as ethics, social and environmental responsibility, corporate governance and financial performance. The 2009 edition included new criteria emphasizing transparent disclosure of information.

Playing an active role in economic development, the Bank seeks to be fair, balanced and consistent with its values when granting credit so that it can share growth opportunities and constantly increase its contribution to each of the pillars of sustainability:

of Business

The main point of BIM’s Social/Environmental Responsibility Policy is its commitment to ethical business practices and sustainable development, in addition to encouraging suppliers, partners and customers to adopt responsible practices that lead to social development and promote citizenship and respect for the environment. Among other initiatives, in 2009 BIM started mapping its portfolio to identify customers interested in environmental credit. The purpose is to combine its effort to promote economic development with a willingness to adopt measures contributing to environmental issues.

BIM’s Social Environmental Management System (SEMS) for credit granting, which introduced in 2008, was designed to ensure that all loan and financing operations comply with the social/environmental legislation and observe the exclusion list of the World Bank. BIM does not grant loans to companies that use child or slave labor, whose activities directly or indirectly promote gambling or prostitution, and those that produce substances that may threaten the health and safety of people, animals or plants.

of Internal Stakeholders

Banco Indusval Multistock invests in staff training and adopts a fair salary and benefit policy, compatible with the duties performed and the market, to foster motivation and willingness to grow professionally among its employees. The Bank also offers several benefits to improve its employees’ and their dependents’ quality of life, as well as attracts and retains talents. Remuneration and benefits totaled R$49.0 million in 2009, which corresponds to 67% of the total value added by BIM’s business to society.

The Bank believes that its mission includes undertaking inclusion initiatives and providing opportunities for young people who want to enter the job market. As a result, it consolidated its existing Apprentice, Intern, Trainee and Professional Training for People with Disabilities programs.

Meanwhile, BIM promotes awareness of measures such as reducing consumption and avoiding waste to help diminish society’s impact on the environment. Moreover, it encourages its professionals to become spontaneously engaged in social projects. In 2009, the Bank mapped all the communities and NGOs to which it has been contributing to identify needs and assign more assertive initiatives to its employees.

This survey showed that NGOs mainly need expert professionals or technicians to train community members in activities such as funding, human resources management, technological management, and administrative and accounting management. Based on these data, the Social/Environmental Responsibility department is developing a project to be introduced in 2010.

67

of Communities

All Banco Indusval Multistock’s community development initiatives focus on education, culture and basic development. Emphasis is given to comprehensive education of children, youth and adults. The Bank develops these initiatives through organizations that have structured projects or helps organizations needing support in project development. The purpose is to prepare participants for full-fledged citizenship and bring about a long-lasting change in the communities involved.

With this in mind, the Bank invested in 15 projects developed by Non-Governmental Organizations through the Indusval Multistock Sustainability Institute. These projects benefited 5,627 children, youth and adults directly and 23,675 people connected to the projects and communities indirectly. Social investment came to R$ 900,000 in 2009, in initiatives focusing on:

Education: student counseling, reading skills and education improvement for children and youths;

Sports: promoting citizenship and skills building in communities, with an educational and social focus;

Culture: bringing youth and educators in contact with different forms of art and artist’s professional lives, coupled with encouraging artistic expression;

Entrepreneurship: support for the Fashion and Design Group, an income generation project about to become emancipated;

Community Development: development of collective skills and critical thinking through improvements in local communities.

To finance the community development entrepreneurship projects, a partnership was formally established in 2009 between the Indusval Multistock Sustainability Institute, the Inter American Foundation (a US governmental organization for social investment in Latin America) and RedEAmérica (InterAmerican Network for Corporate Foundations and Entrepreneurial Actions in Grassroots Development). Projeto Arrastão, a NGO serving the Parque dos Pinheiros community, which is in Taboão da Serra (Greater São Paulo) and has 1,200 families, will be in charge of implementing the project. The same partnership also made it possible to introduce The Projeto Cor Arrastão, which involves improving housing conditions in the community. The goal early in the year was to improve 100 homes, but BIM negotiated with construction material suppliers, so the project will be extended in 2010.

68

Supported organizations:

Institutional Partners:

Environment: a proposal was designed in 2009 for an environmental education project for children and youths living in the Parque dos Pinheiros community, in Taboão da Serra (Greater São Paulo) and areas in the vicinity of the Pirajuçara Creek, which include damaged land and areas which are constantly flooded. This project will be developed in 2010, jointly with RedEAmérica and Projeto Arrastão, and aims at raising awareness of issues such as flood risks, personal hygiene and waste disposal.

Based on Indusval Multistock’s first Greenhouse Gas Emission Inventory, an environmental initiatives plan was designed in 2009 to offset and reduce those emissions. This initiative involves various departments of the Bank and Brokerage House, chiefly the Supplies Department that introduced a consumption monitoring and substitution program. It was designed to lower the use of energy, paper, fuel and other resources, thus decreasing emissions.

69

annual social report 2009Banco Indusval S.A. – CNPJ nº 61.024.352/0001-71

1 – calculation basis 2009 amount (thousand reais) 2008 amount (thousand reais)

Gross Financial Intermediation Result (GFIR) 94,276 200,140

Operating Income (OI) 1,105 110,926

Net Profit (NP) 12,778 71,773

Gross Payroll (GP) 40,977 54,313

2 – internal social indicators

amount (thousand)

amount (thousand)% gp % gfir % gp % gfir

Food 2,830 6.91% 3.00% 3,177 5.85% 1.59%

Compulsory social charges 17,452 42.59% 18.51% 27,503 50.64% 13.74%

Private pension fund 515 1.26% 0.55% 180 0.33% 0.09%

Health care 3,455 8.43% 3.66% 3,517 6.48% 1.76%

Occupational health and safety 30 0.07% 0.03% 33 0.06% 0.02%

Education 199 0.49% 0.21% 254 0.47% 0.13%

Culture 117 0.29% 0.12% 114 0.21% 0.06%

Professional Training and Development 85 0.21% 0.09% 234 0.43% 0.12%

Day-care or day-care allowance 119 0.29% 0.13% 92 0.17% 0.05%

Profit sharing 5,621 13.72% 5.96% 9,876 18.18% 4.93%

Others 356 0.87% 0.38% 432 0.80% 0.22%

Total – internal social indicators 30,779 75.11% 32.65% 45,412 83.61% 22.69%

3 – external social indicators

amount (thousand)

amount (thousand)% gp % gfir % gp % gfir

Education 255 23.08% 0.27% 355 0.32% 0.18%

Culture 212 19.19% 0.22% 527 0.48% 0.26%

Health and sanitation 0 0.00% 0.00% 20 0.02% 0.01%

Sports 85 7.69% 0.09% 160 0.14% 0.08%

Fight against hunger and food safety 0 0.00% 0.00% 0 0.00% 0.00%

Others 364 32.94% 0.39% 504 0.45% 0.25%

Total contribution to society 916 82.90% 0.97% 1,566 1.41% 0.78%

Taxes (not including social charges) 23,069 2,087.69% 24.47% 37,614 33.91% 18.79%

Total – External social indicators 23,985 2,170.59% 25.44% 39,180 35.32% 19.58%

4 – environmental indicators

amount (thousand)

amount (thousand)% gp % gfir % gp % gfir

Investments in company production/operation

643 58.19% 0.68% 481 0.43% 0.24%

Investments in external programs and/or projects 125 11.31% 0.13% 114 0.10% 0.06%

Total environmental investments 768 69.50% 0.81% 595 0.54% 0.30%

Concerning the establishment of “annual targets” to minimize waste and overall consumption in production/operation, and boost efficiency in the use of natural resource, the Company

( ) has no targets( ) reaches 0 to 50%

( x ) reaches 51 to 75% ( ) reaches 76 to 100%

( ) has no targets( ) reaches 0 to 50%

( x ) reaches 51 to 75% ( ) reaches 76 to 100%

5 – staff indicators 2009 2008

Nbr of employees at the close of the period 333 329

Nbr of hirings in the year 68 175

Nbr of collaborators 57 36

Nbr of interns 14 20

Nbr of employees over age 45 116 117

Nbr of women employees 111 103

% of management positions occupied by women 12.00% 15.87%

Nbr of employees of African descent 11 14

% of management positions occupied by people of African descent

0.00%

0.00%

Nbr of people with disabilities or special needs 9 3

6 – relevant information concerning corporate citizenship

2009 2010 targets

Ratio between the highest and lowest remuneration 38 35

Total number of occupational accidents 0 0

The social and environmental projects developed by the company were conceived by:

( ) officers

(x) officers and managers

( ) all employees

( ) officers

(x) officers and managers

( ) all employees

The occupational health and safety standards were set by:

( ) officers and

managers

( ) all

employees

(x) all + Internal Accident Prevention

Committee

( ) officers and

managers

( ) all

employees

(x) all + Internal Accident Prevention

Committee

Concerning the freedom to join trade unions and right to collective bargaining and employee representation, the Company:

( ) does not become

involved

(x) follows ILO rules

( ) encourages and

follows ILO

( ) will not become

involved

( ) will follow

ILO rules

(x) will encourage

and follow ILO

The private pension fund is extended to:

( ) officers

( ) officers and managers

(x) all employees

( ) officers

( ) officers and managers

(x) all employees

Profit sharing is extended to:

( ) officers

( ) officers and managers

(x) all employees

( ) officers

( ) officers and managers

(x) all employees

In selecting suppliers, the company’s ethical, environmental and social responsibility standards:

( ) are not taken into consideration

(x) are suggested

( ) are required

( ) will not be taken into consideration

(x) will be suggested

( ) will be required

Concerning employee participation in volunteering programs, the Company:

( ) does not become involved

(x) supports

( ) organizes and encourages

( ) will not become involved

( ) will support

(x) will organize and encourage

Total number of consumer complaints and criticisms:

at The

Company 56

at the Consumer Protection Agency

(PROCON) 05

at courts180

at The

Company56

at the Consumer Protection Agency

(PROCON)05

at courts180

% of complaints and criticisms dealt with or solved:

at The

Company100%

at the Consumer Protection Agency

(PROCON)100%

at courts13%

at The

Company100%

no Procon 100%

at courts13%

Added value to distribute (in thousand R$): Em 2009: R$72.686 Em 2008: R$185.010

Added Value Distribution:

13.3% government 67.4% employees 37.2% shareholders 1.6% third parties

-19.5 % retained

26.7% government 34.0% employees 13.8% shareholders 0.5 % third parties

25.0% retained

7 – further information

As a matter of principle and as stated in its social/environmental policy, Banco Indusval S.A. does not grant loans to companies using child or slave labor or the like; whose activity directly or indirectly encourages gambling or sexual exploitation; or are in asbestos extraction or asbestos product manufacturing.

71

financial statements

2009

To the Board of Directors and Stockholders Banco Indusval S.A.

1 We have audited the balance sheets of Banco Indusval S.A. (Indusval Multistock) and the consolidated balance sheets of Banco Indusval S.A. and its subsidiaries (Indusval Multistock Consolidated) as of December 31, 2009 and 2008 and the related statements of operations, of changes in stockholders’ equity, of cash flows and of value added of Banco Indusval S.A. (Indusval Multistock) for the years then ended and for the six-month period ended December 31, 2009, as well as the consolidated statements of operations, of cash flows and of value added for the same years. These financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these financial statements.

2 We conducted our audits in accordance with approved Brazilian auditing standards, which require that we perform the audits to obtain reasonable assurance about whether the financial statements are fairly presented in all material respects. Accordingly, our work included, among other procedures: (a) planning our audits taking into consideration the significance of balances, the volume of transactions and the accounting and internal control systems of the Bank and its subsidiaries; (b) examining, on a test basis, evidence and records supporting the amounts and disclosures in the financial statements and (c) assessing the accounting practices used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

3 In our opinion, the financial statements audited by us present fairly, in all material respects, the financial position of Banco Indusval S.A. (Indusval Multistock) and of Banco Indusval S.A. and its subsidiaries (Indusval Multistock Consolidated) at December 31, 2009 and 2008 and the results of its operations, the changes in stockholders’ equity, the cash flows and value added of Banco Indusval S.A. (Indusval Multistock) for the years then ended and the six-month period ended December 31, 2009, and the consolidated results of their operations, consolidated cash flows and consolidated value added for the same years, in accordance with accounting practices adopted in Brazil.

São Paulo, February 24, 2010.

PricewaterhouseCoopersAuditores IndependentesCRC 2SP000160/O-5

Sérgio Antonio Dias da Silva Accountant CRC 1RJ062926/O-9 “S” SP

Report of Independent Auditors

(A free translation of the original in Portuguese)

73

Indusval MultistockIndusval Multistock

ConsolidatedAssets 2009 2008 2009 2008Current assets 2,231,359 1,721,048 2,243,031 1,734,867

Cash 4,049 40,101 4,051 40,111Short-term interbank investments (Note 4) 353,143 70,763 353,143 70,763

Open market investments 292,897 19,802 292,897 19,802Interbank deposits 60,246 50,961 60,246 50,961

Marketable securities and derivative financial instruments (Note 5) 717,265 337,331 724,906 328,020Own portfolio 553,585 294,251 553,778 273,796Subject to repurchase agreements 108,200 2,743 108,200 2,743Subject to guarantees 35,030 26,760 42,478 37,888Derivative financial instruments 20,450 13,577 20,450 13,593

Interbank accounts 1,818 7,027 1,818 7,027Restricted deposits – Brazilian Central Bank deposits 1,818 7,027 1,818 7,027

Loan operations (Note 6) 809,685 893,401 809,685 907,287Loan operations – Private sector 817,661 903,709 817,661 917,595Loan operations – Public sector 24,559 23,656 24,559 23,656Allowance for loan losses (32,535) (33,964) (32,535) (33,964)

Other receivables 296,440 351,569 300,286 360,803Foreign exchange portfolio (Note 7) 294,273 346,504 294,273 346,504Income receivable 90 18Negotiation and intermediation of securities 946 4,401 8,152Sundry (Note 8) 14,440 14,320 14,741 15,384Allowance for loan losses (Note 6) (13,219) (9,255) (13,219) (9,255)

Other assets 48,959 20,856 49,142 20,856Non-operating assets 49,318 20,066 49,318 20,066Provision for loss (998) (493) (998) (493)Prepaid expenses 639 1,283 822 1,283

Long-term receivables 473,154 382,213 473,952 476,189Marketable securities and derivative financial instruments (Note 5) 35 3,455 69 3,524

Subject to guarantees 34 69Derivative financial instruments 35 3,455 35 3,455

Interbank accounts 11,207 11,207 Restricted deposits – other institutions 11,207 11,207

Loan operations (Note 6) 396,617 335,043 396,617 427,383Loan operations – Private sector 472,449 334,054 472,449 426,394Loan operations – Public sector 7,538 27,975 7,538 27,975Allowance for loan losses (83,370) (26,986) (83,370) (26,986)

Other receivables 64,397 41,069 64,437 42,636Negotiation and intermediation of securities 40 Sundry (Note 8) 68,667 41,182 68,667 42,749Allowance for loan losses (Note 6) (4,270) (113) (4,270) (113)

Other receivables 898 2,646 1,622 2,646Prepaid expenses 898 2,646 1,622 2,646

Permanent assets 23,646 41,476 13,219 14,341Investments (Note 9) 12,761 30,221 1,686 2,946

Subsidiaries Local 11,075 28,513 Other investments 1,686 1,708 1,686 2,946

Property and equipment in use 10,885 11,255 11,533 11,395Properties in use 2,173 1,591 2,173 1,591Revaluation of properties in use 3,538 3,538 3,538 3,538Other fixed assets in use 11,826 11,527 12,290 11,836Accumulated depreciation (6,652) (5,401) (6,768) (5,570)Leasehold improvements 300

Total assets 2,728,159 2,144,737 2,730,202 2,225,397The accompanying notes are an integral part of these financial statements.

74 Balance Sheets at December 31 (In thousands of reais)

Indusval MultistockIndusval Multistock

ConsolidatedLiabilities and Stockholders’ Equity 2009 2008 2009 2008Current liabilities 1,640,017 1,220,980 1,642,127 1,300,920

Deposits (Note 10 (a); (b)) 714,079 557,496 709,240 533,372Demand deposits 39,518 44,707 39,409 44,187Interbank deposits 56,043 183,143 51,101 158,727Time deposits 618,395 329,218 618,395 329,218Other 123 428 335 1,240

Funds obtained in the open market (Note 10 (c)) 365,804 2,742 365,804 2,742Own portfolio 107,885 2,742 107,885 2,742Third-party portfolio 257,919 257,919

Funds from acceptance and issuance of securities (Note 10 (a)) 10,559 19,255 10,559 19,255Agribusiness letters of credit 10,559 19,255 10,559 19,255

Interdepartmental accounts 15,906 3,889 15,906 3,889Third-party funds in transit 15,906 3,889 15,906 3,889

Borrowings (Note 10 (a)) 356,879 397,285 356,879 482,963Local borrowings 42,483 128,161Foreign borrowings 356,879 354,802 356,879 354,802

Local onlendings (Note 10 (a)) 65,248 102,059 65,248 102,059BNDES 43,127 76,960 43,127 76,960Finame 22,121 25,099 22,121 25,099

Other liabilities 111,542 138,254 118,491 156,640Collection and payment of taxes and similar 391 1,004 391 1,004Foreign exchange portfolio (Note 7) 25,671 19,288 25,671 19,288Taxes and social security contributions (Note 12 (c)) 18,593 48,365 19,174 50,957Social and statutory payables 3,048 6,818 3,070 6,854Negotiation and intermediation of securities (Note 12 (a)) 22,975 38,073 29,073 50,338Derivative financial instruments (Note 5 (c)) 34,946 15,822 34,946 19,045Sundry 5,918 8,884 6,166 9,154

Long-term liabilities 655,164 475,076 655,097 475,796Deposits (Note 10 (a); (b)) 553,459 269,316 553,392 269,042

Time deposits 553,459 269,316 553,392 269,042Funds from acceptance and issuance of securities (Note 10 (a)) 3,266 3,266

Agribusiness letters of credit 3,266 3,266Borrowings (Note 10 (a)) 20,546 132,551 20,546 132,551

Foreign borrowings 20,546 132,551 20,546 132,551Local onlendings (Note 10 (a)) 77,328 57,564 77,328 57,564

BNDES 6,911 4,383 6,911 4,383Finame 44,101 53,181 44,101 53,181Other institutions 26,316 26,316

Other liabilities 3,831 12,379 3,831 13,373Taxes and social security contributions (Note 12 (c)) 2,904 11,067 2,904 12,061Derivative financial instruments (Note 5 (c)) 745 1,307 745 1,307Sundry 182 5 182 5

Deferred income 284 157 284 157Stockholders’ equity (Note 13) 432,694 448,524 432,694 448,524

Capital local residents 370,983 370,983 370,983 370,983Capital reserve 779 175 779 175Revaluation reserve 1,995 2,062 1,995 2,062Revenue reserves 62,217 79,870 62,217 79,870Carrying value adjustments 100 (1,163) 100 (1,163)Treasury stock (3,380) (3,403) (3,380) (3,403)

Total liabilities and stockholders’ equity 2,728,159 2,144,737 2,730,202 2,225,397The accompanying notes are an integral part of these financial statements.

75

Income Statement (In thousands of reais, except share data)

Indusval Multistock Indusval Multistock Consolidated

Six-month period ended December 31

Years ended December 31 Years ended December 31

2009 2009 2008 2009 2008

Income from financial intermediation (Note 15 (a)) 185,957 403,118 623,971 407,523 625,292

Loan operations 119,147 264,392 350,249 264,392 350,249

Marketable securities 52,417 97,004 106,846 101,409 108,167

Foreign exchange 14,393 41,722 166,876 41,722 166,876

Expenses for financial intermediation (Note 15 (b)) (154,887) (314,921) (427,719) (313,247) (425,152)

Funds obtained in the market (78,839) (143,548) (205,114) (142,645) (202,186)

Loans, assignments and onlendings (10,888) (23,045) (185,466) (23,045) (185,466)

Results with derivative financial instruments (13,756) (37,051) 16,097 (36,280) 15,736

Provision for loan losses (Note 6 (a)) (51,404) (111,277) (53,236) (111,277) (53,236)

Gross profit from financial intermediation 31,070 88,197 196,252 94,276 200,140

Other operating income (expenses) (43,372) (84,779) (86,850) (93,171) (89,214)

Income from services rendered (Note 15 (c)) 1,733 3,734 7,591 11,503 22,950

Income from bank fees (Note 15 (c)) 417 737 1,489 737 1,489

Equity in the results of investees (Note 9) 583 4,497 4,113

Personnel expenses (Note 15 (d)) (24,465) (47,655) (52,072) (51,245) (57,121)

Other administrative expenses (Note 15 (e)) (15,778) (34,869) (34,099) (41,913) (40,937)

Taxes (Note 15 (f)) (4,239) (10,068) (13,372) (11,171) (15,306)

Other operating income 4,651 5,812 2,092 5,924 2,448

Other operating expenses (6,275) (6,967) (2,592) (7,006) (2,737)

Operating profit (loss) (12,303) 3,418 109,402 1,105 110,926

Non-operating income (expenses) 797 2,577 (425) 8,032 625

Profit before taxation (11,506) 5,995 108,977 9,137 111,551

Income tax and social contribution 11,296 12,407 (22,937) 9,306 (25,366)

Income tax (Note 11(a)) 2,563 (9,911) (28,352) (11,835) (29,949)

Social contribution (Note 11(a)) 1,368 (6,090) (15,054) (7,267) (15,886)

Deferred tax assets 7,365 28,408 20,469 28,408 20,469

Profit sharing and contributions (Note 14 (c)) (3,137) (5,624) (14,267) (5,665) (14,412)

Employees (3,137) (5,550) (9,796) (5,585) (9,876)

Directors (74) (4,471) (80) (4,536)

Net income (loss) for the six-month period/year (3,347) 12,778 71,773 12,778 71,773

Number of outstanding shares 42,048,101 42,048,101 42,489,501

Net income (loss) per share – in reais (0.08) 0.30 1.69

The accompanying notes are an integral part of these financial statements.

76

Statement of Changes in Stockholders’ Equity (In thousands of reais)

CapitalCapital reserve

Revaluation reserve

Revenue reserves Legal Statutory

Retained earnings

Carrying value

adjustmentsTreasury

stock Total

At January 1st, 2008 370,983 2,268 6,176 27,321 406,748

Carrying value adjustments (1,163) (1,163)

Deferred taxes – revaluation (137) (137)

Appropriation of benefits – stock options (Note 17 (b)) 175 175

Purchase of own shares (3,403) (3,403)

Net income for the year 71,773 71,773

Legal reserve 3,589 (3,589)

Statutory reserve 42,784 (42,784)

Realization of revaluation reserve (69) 69

Interest on own capital (R$ 0.59 per share) (25,469) (25,469)

At December 31, 2008 370,983 175 2,062 9,765 70,105 (1,163) (3,403) 448,524

Changes for the year 175 (206) 3,589 42,784 (1,163) (3,403) 41,776

At January 1st, 2009 370,983 175 2,062 9,765 70,105 (1,163) (3,403) 448,524

Carrying value adjustments 1,263 1,263

Appropriation of benefits – stock options (Note 17 (b)) 604 604

Purchase of own shares (3,466) (3,466)

Cancellation of own shares (3,489) 3,489

Net income for the year 12,778 12,778

Legal reserve 638 (638)

Statutory reserve 1,660 (1,660)

Realization of revaluation reserve (67) 67

Realization of reserve for equalization of dividends (16,462) 16,462

Interest on own capital (R$ 0.64 per share) (27,009) (27,009)

At December 31, 2009 370,983 779 1,995 10,403 51,814 100 (3,380) 432,694

Changes for the year 604 (67) 638 (18,291) 1,263 23 (15,830)

At July 1st, 2009 370,983 461 2,029 10,571 71,765 (12) (3,427) 452,370

Reversal of legal reserve (168) 168

Carrying value adjustments 112 112

Appropriation of benefits – stock options (Note 17 (b)) 318 318

Purchase of own shares (3,442) (3,442)

Cancellation of own shares (3,489) 3,489

Loss for the six-month period (3,347) (3,347)

Realization of revaluation reserve (34) 34

Realization of reserve for equalization of dividends (16,462) 16,462

Interest on own capital (R$ 0.32 per share) (13,317) (13,317)

At December 31, 2009 370,983 779 1,995 10,403 51,814 100 (3,380) 432,694

Changes for the six-month period 318 (34) (168) (19,951) 112 47 (19,676)

The accompanying notes are an integral part of these financial statements.

77

Statements of Cash Flows (In thousands of reais)

Indusval MultistockIndusval Multistock

Consolidated

Six-month period ended December 31

Years ended December 31

Years ended December 31

2009 2009 2008 2009 2008

Adjusted net income 43,280 97,219 103,677 99,994 107,519

Net income (loss) (3,347) 12,778 71,773 12,778 71,773

Depreciation and amortization 816 1,645 1,600 1,670 1,651

Equity in the results of investees (583) (4,497) (4,113)

Adjustment of stock options 318 604 175 604 175

Allowance for doubtful accounts 51,404 111,277 53,236 111,277 53,236

Provision for devaluation of assets 150 997 21 997 21

Provision for contingencies 1,269 2,504 2,597 2,504 2,630

Deferred tax assets (7,365) (28,408) (20,469) (28,408) (20,469)

Taxes on revaluation reserve (137) (137)

Results on sale of tangible assets (4) (39) (65) (39) (56)

Results on disposal of investments (851) (2,866) (4,613)

Mark-to-market adjustment – securities and derivatives 1,362 1,962 222 1,962 (142)

Carrying value adjustments 111 1,262 (1,163) 1,262 (1,163)

Variation in assets and liabilities 10,340 (687,168) 111,966 (604,281) 33,814

(Increase) decrease in short-term interbank investments (36,521) (250,050) 202,951 (250,050) 202,951

(Increase) decrease in securities and derivative financial instruments 104,142 (378,475) 231,670 (395,392) 267,689

(Increase) in interbank and interdepartmental accounts (13,725) 6,020 (3,623) 6,020 (3,623)

(Increase) decrease in loan operations (8,415) (80,983) (278,581) 25,243 (384,807)

(Increase) in other receivables and other assets (10,117) 53,957 (115,480) 59,966 (119,124)

Change in deferred income 20 127 (40) 127 (40)

(Increase) decrease in other liabilities (25,044) (37,764) 75,069 (50,195) 70,768

Operating activities – net cash provided (used) 53,620 (589,949) 215,643 (504,287) 141,333

Disposal of tangible assets 3,581 13,149 4,240 13,167 4,275

Disposal of investments 899 27,841 10,633 72

Acquisition of tangible assets (22,106) (43,637) (22,947) (40,476) (23,049)

Acquisition of investments (3,018) (10) (8,474) (10)

Investing activities – net cash provided (used) (17,626) (5,665) (18,717) (25,150) (18,712)

Increase (decrease) in deposits 58,790 440,726 3,392 460,219 (7,980)

Increase (decrease) in funds obtained in the open market (196,018) 363,061 (653,870) 363,061 (653,870)

Increase in funds from acceptance and issuance of securities (2,025) (11,962) 22,521 (11,962) 22,521

Increase (decrease) in borrowings and onlendings (36,311) (169,458) 459,729 (255,136) 545,407

Purchase of own shares (3,442) (3,466) (3,403) (3,466) (3,403)

Interest on own capital paid and/or accrued (13,317) (27,009) (25,469) (27,009) (25,469)

Financing activities – net cash provided (used) (192,323) 591,892 (197,100) 525,707 (122,794)

Decrease in cash and cash equivalents (156,329) (3,722) (174) (3,730) (173)

Cash and cash equivalents at the beginning of the year/period 244,515 91,908 92,082 91,918 92,091

Cash and cash equivalents at the end of the year/period 88,186 88,186 91,908 88,188 91,918

Decrease in cash and cash equivalents (Notes 3 (b) and 19 (d)) (156,329) (3,722) (174) (3,730) (173)

The accompanying notes are an integral part of these financial statements.

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Value Added Statement (In thousands of reais)

Indusval MultistockIndusval Multistock

Consolidated

Six-month period ended December 31

Years ended December 31

Years ended December 31

2009 2009 2008 2009 2008

Revenues 142,184 304,394 597,498 321,992 614,995

Financial intermediation 185,957 403,118 640,068 407,523 641,028

Services rendered and bank fees 2,150 4,471 9,080 12,240 24,439

Provision for loan losses (51,404) (111,277) (53,236) (111,277) (53,236)

Other 5,481 8,082 1,586 13,506 2,764

Expenses for financial intermediation (103,483) (203,644) (390,580) (201,970) (387,652)

Goods and services acquired from third parties (20,693) (38,758) (34,007) (45,806) (41,989)

Materials, electricity and other (7,182) (13,792) (14,267) (15,661) (16,735)

Third-party services (7,258) (18,347) (17,223) (23,436) (21,538)

Other (6,253) (6,619) (2,517) (6,709) (2,716)

Gross value added 18,008 61,992 172,911 74,216 186,354

Depreciation (816) (1,645) (1,600) (1,670) (1,651)

Net value added produced by the Bank 17,192 60,347 171,311 72,546 184,703

Value added transferred from others 657 4,609 4,192 140 307

Equity in the results of investees 583 4,497 4,113

Other 74 112 79 140 307

Total value added to be distributed 17,849 64,956 175,503 72,686 185,010

Distribution of value added 17,849 64,956 175,503 72,686 185,010

Personnel 23,836 45,963 58,336 49,027 62,824

Direct remuneration 18,874 36,407 48,166 38,649 51,405

Benefits 3,844 7,379 7,573 8,050 8,511

Employee Severance Indemnity Fund (FGTS) 1,118 2,177 2,597 2,328 2,908

Taxes, charges and contributions (3,271) 5,021 44,384 9,684 49,400

Federal (3,443) 4,641 43,591 8,943 47,836

State 19 23 17 23 17

Municipal 153 357 776 718 1,547

Remuneration of third-party capital 631 1,194 1,010 1,197 1,013

Rents 631 1,194 1,010 1,197 1,013

Remuneration of own capital (3,347) 12,778 71,773 12,778 71,773

Interest on own capital 13,317 27,009 25,469 27,009 25,469

Retained earnings (16,664) (14,231) 46,304 (14,231) 46,304

The accompanying notes are an integral part of these financial statements.

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Notes to the Financial Statements at December 31, 2009 and 2008 In thousands of reais, unless otherwise stated

1 OperatiOns

Banco Indusval S.A. (commercial bank) and its subsidiaries operate mainly with commercial and foreign exchange portfolios and other transactions related to securities brokers.

2 presentatiOn Of financial statements

The financial statements of Banco Indusval S.A. (Indusval Multistock) and the consolidated financial statements of Banco Indusval S.A. and its subsidiaries (Indusval Multistock Consolidated) were prepared in accordance with Brazilian Corporation Law and the regulations of the Brazilian Central Bank (BACEN) and of the Brazilian Securities Commission (CVM).

The Law No. 11,638, which was enacted on December 28, 2007 and amended by Provisional Measure (MP) No. 449 as of December 4, 2008, changed and introduced new provisions to Brazilian Corporation Law. The main purpose of this law and MP was to adjust Brazilian corporate legislation to facilitate the process of convergence of the accounting practices adopted in Brazil with those issued by the International Accounting Standards Board (IASB). The adoption of the law and MP is mandatory for annual financial statements for years commencing on or after January 1st, 2008.

The changes in Brazilian Corporation Law had no effect on the financial statements.

In preparing the financial statements, estimates and assumptions were used to determine the amounts of certain assets, liabilities, revenues and expenses, in accordance with accounting practices effective in Brazil. These estimates and assumptions were considered in the measurement of provisions for losses on loans and for contingencies, in the determination of the market value of financial instruments and in the selection of the economic useful lives of certain assets. Actual results may differ from the estimates and assumptions adopted.

The consolidated financial statements comprise the financial statements of Banco Indusval S.A. (Banco Indusval Multistock), its branch abroad and its subsidiaries Indusval S.A. Corretora de Títulos e Valores Mobiliários (Indusval Multistock Corretora), BIM Promotora de Vendas Ltda. and Fundo de Investimentos em Direitos Creditórios (FIDC) Multisegmentos (wound up on June 12, 2009).

The Bank’s investments in the subsidiaries, as well as the assets, liabilities, income, expenses and the unrealized results of intercompany transactions, were eliminated upon consolidation.

The Cayman Branch was authorized to operate by BACEN on March 5, 2008, and at December 31, 2009 total assets amounted to R$17,699, stockholders’ equity was R$17,424 and net income was R$289 for the year.

3 summary Of significant accOunting practices

(a) Determination of the results of operations

Income and expenses are recorded on the accrual basis of accounting.

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(b) cash and cash equivalents

Cash and cash equivalents comprise cash in local currency, foreign currency, investments in the open market (except for financed position) and investments in interbank deposits (except for rural Interbank Deposit Certificates (CDI)), with maturities at the original investment date equal to or less than 90 days and which present an immaterial risk of change in fair value. These are used by the Bank to manage its short-term commitments.

Indusval MultistockIndusval Multistock

Consolidated

2009 2008 2009 2008

Cash 4.049 40.101 4.051 40.111

Short-term interbank investments (cash equivalents) 84.137 51.807 84.137 51.807

Cash and cash equivalents 88.186 91.908 88.188 91.918

(c) short-term interbank investments

Short-term interbank investments are recorded at cost plus related earnings up to the balance sheet date, less a provision for losses when applicable.

(d) marketable securities and derivative financial instruments

Marketable securities are classified and valued as follows:

• Trading securities – securities acquired to be traded on a frequent and active basis, adjusted to market value against results for the period;

• Securities available for sale – securities which are neither trading securities nor securities held to maturity, adjusted to market value against a specific stockholders’ equity account, net of tax effects; and

• Securities held to maturity – securities which management acquires with the intention and financial ability to hold up to maturity, recorded at acquisition cost plus related earnings as a contra entry to results for the period.

Derivative financial instruments are classified at the inception of the transaction, considering management’s intention to use them as hedge instruments or not.

The derivative financial instruments used for protection against risk exposure or for modifying the characteristics of financial assets and liabilities, are: (i) highly correlated, as regards the changes in their market value in relation to the market value of the item being protected, at both the inception and over the contract duration; and (ii) considered effective in mitigating the risk associated with the exposure in question, are classified as hedges according to their nature:

• Fair value hedge – the financial assets and liabilities subject to hedge and their respective derivative financial instruments are recorded at market value, with the corresponding valuations or devaluations recognized in results for the period; and

• Cash flow hedge – the financial assets and liabilities subject to hedge and their respective derivative financial instruments are recorded at market value, with the corresponding valuations or devaluations, net of tax effects, recognized in a specific net equity account called Carrying value adjustment – marketable securities and derivatives. The non-effective hedge portion is recognized directly in results for the period.

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Derivative financial instruments, which do not meet the hedging criteria established by BACEN, particularly derivatives used to manage overall risk exposure, are recorded at market value, and valuations or devaluations are recognized directly in results for the period.

(e) loan operations

The loans, in their various modes, are recorded at present value, including income accrued up to the balance sheet date when at floating interest rates, and net of unearned income, calculated based on the terms of the transactions when at fixed interest rates.

The restatement of overdue loans is recorded as income from loans up to the 60th day, and as unearned income as from the 61st day.

Loans in arrears classified as level H are held in this classification for six months, after which they are written off against the existing allowance and controlled for up to five years in memorandum accounts and no longer presented in the balance sheet.

Renegotiated loans are held at the same level at which they were previously classified. Renegotiations of loans that had already been written off against the allowance and which were recorded in memorandum accounts, are classified as level H, and any gains on renegotiation are only recognized when actually received.

The allowance for loan losses is based on management’s analysis of the loans in order to determine the amount necessary, case by case, and takes into consideration the economic environment, past experience and the specific and overall portfolio risks, as well as the rules established by BACEN Resolution No. 2,682 of December 21, 1999 and in accordance with the provisions of BACEN Circular No. 2,974 of March 24, 2000. The customer risk ratings are established based on a credit score model, with no possibility that the credit committee can interfere to improve the rating assigned.

The positive or negative results of the loans are appropriated as an increase in income on loan operations or as a reversal of there, in compliance with the provisions of BACEN Circular No. 3,213.

Pursuant to BACEN Resolution No. 3,533, of January 31, 2008, information on each of the categories used to classify financial asset sales must be disclosed in the notes to the financial statements (Nota 6 (j)). These categories include the following:

• Loans with substantial transfer of risks and benefits;• Loans with no substantial transfer or retention of risks and benefits;• Loans with substantial retention of risks and benefits; and• Loans with no substantial transfer or retention of risks and benefits and for which control was retained.

(f) prepaid expenses

Include the investment of resources, the benefits of which will occur in future periods.

(g) investments

The investments in subsidiaries are evaluated based on the equity method of accounting. The other investments are stated at cost.

(h) property and equipment

Property and equipment are stated at cost plus price-level restatements up to December 31, 1995 plus revaluation of properties for own use (Note 13 (d)). Depreciation is computed on the straight-line method at the annual rates of 4% for buildings, 20% for vehicles and data processing systems and 10% for other items.

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(i) interbank and time deposits, funds obtained in the open market and from agribusiness letters of credit

These deposits and the funds obtained in the open market and from agribusiness letters of credit are stated at their corresponding contractual amounts plus accrued charges, in proportion to the time elapsed from the day on which they were contracted.

(j) Borrowings and onlendings

Borrowings and onlendings are stated at present value, including the charges incurred up to the balance sheet date and restated at the rates in effect on the balance sheet dates.

(k) share loan contract liabilities

Share loan contract liabilities, recorded under Other liabilities – negotiation and intermediation of securities in current liabilities, are stated at their contractual amounts which are adjusted monthly according to the market value of the shares and by the respective adjustments of the related derivatives (hedges).

(l) income tax and social contribution (assets and liabilities)

Deferred income tax and social contribution on net income, calculated on temporary differences, are recorded in Other receivables – sundry. Deferred tax assets on temporary additions are realized upon the use and/or reversal of the corresponding provisions on which they were recorded.

The provision for income tax was calculated at the rate of 15% of taxable income, plus a 10% surcharge. The provision for social contribution was calculated at the rate of 9% up to April 2008 and 15% as from May 2008 of adjusted accounting profit, pursuant to the legislation in force.

In accordance with Provisional Measure (MP) No. 449/08, the changes in the criteria used to recognize revenue, costs and expenses computed in the calculation of net income for the period, as introduced by Law No. 1,1638/07 and by Articles 36 and 37 of this MP, may be ignored for purposes of calculating the taxable income if companies elect to use the Transitional Tax System (RTT). In this case, for tax purposes, the accounting methods and criteria in force at December 31, 2007 will be followed. For accounting purposes, the tax effects of adopting Law No. 1,1638/07 are recorded in the corresponding deferred tax assets and liabilities.

(m) contingent assets and liabilities and legal obligations – taxes and social security contributions

These are measured, recognized and disclosed in accordance with the criteria established by CVM Deliberation No. 489, of October 3, 2005.

(i) contingent assets and liabilities

These comprise potential rights and obligations arising from past events, the occurrence of which depends on future events.

• Contingent assets – are not recorded except when there is evidence which assures a high degree of confidence that they will be realized, normally a final and unappealable court decision, and the confirmation of recoverability through receipt or offset against another liability.

• Contingent liabilities – arise mainly from civil, labor and tax lawsuits, which are inherent to the normal course of business, filed at the judicial and administrative levels by third parties, former employees and public bodies, as well as other risks. The evaluation of these contingencies is carried out by legal advisors on a basis which is consistent with the adopted conservative practices and considers the

83

probability that financial resources will be required to settle the obligations and that their amounts can be reliably estimated. Contingencies are classified as probable, for which provisions are recorded; as possible, which are disclosed but for which no provisions are recorded; and as remote, which do not require provisions or disclosure. The amounts related to these contingencies are measured using adequate models and criteria which permit adequate estimates, despite the inherent uncertainty regarding terms and amounts.

(ii) legal obligations – taxes and social security

These are tax liabilities, the legality or constitutionality of which is being contested in court and which are recorded at the full amount under dispute.

(n) impairment of non-financial assets

The carrying values of non-financial assets, except other assets and tax credits, are tested at least annually to determine whether there is any impairment loss, which is recognized in results for the period if the carrying value of the asset or its cash generating unit exceeds its recoverable amount.

4 shOrt-term interBank investments

Indusval Multistock e Consolidated

2009 2008

Open market investments 292,897 19,802

Own portfolio position 35,079 19,802

Financial Treasury Bills (LFT) 26,999 17,802

National Treasury Bills (LTN) 7,930 2,000

Federal Treasury Notes (NTN) 150

Third-party portfolio position 257,818

Financial Treasury Bills (LFT) 57,011

National Treasury Bills (LTN) 200,807

Interbank deposits 60,246 50,961

Interbank 60,092 48,792

Unrelated CDI 48,904 29,837

Rural CDI 11,188 18,955

Foreign currency investments 154 2,169

353,143 70,763

Short-term interbank investments mature in less than 90 days (except Rural CDI).

5 marketaBle securities anD Derivative financial instruments

(a) valuation, classification and risk management

The valuations of the positions of fixed income securities and derivative financial instruments are obtained from the markets with greatest liquidity or, in their absence, from related markets, including interpolation and extrapolation of the terms. The portfolio of share loan contracts (Note 3 (k)) is sold in the spot market, with simultaneous purchase of call options and sale of put options, resulting in a funding transaction at fixed rates, the results of which are recognized over the term of the transaction.

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(b) marketable securities

(i) indusval multistock

(ii) indusval multistock consolidated

2009 2008

Cost value

Market/ book value

Maturity (days)

Mark-to-market adjustment

Market/ book value

Trading Securities

Financial Treasury Bills (LFT) 36,990 36,990 Up to 360 20,830

Financial Treasury Bills (LFT) 82,436 82,435 More than 360 (1) 96,106

National Treasury Bills (LTN) 315,898 315,998 Up to 360 100 184,086

National Treasury Bills (LTN) 221,799 221,790 More than 360 (9)

Bank Deposit Certificates (CDB) 8,540 8,761 Up to 360 221

Variable income securities 26,644 26,559 Undetermined maturity (85) 1

Quotas in investment funds 4,282 4,282 Undetermined maturity 22,731

696,589 696,815 226 323,754

2009 2008

Cost value

Market/ book value

Maturity (days)

Mark-to-market adjustment

Market/ book value

Trading Securities

Financial Treasury Bills (LFT) 44,434 44,433 Up to 360 (1) 26,804

Financial Treasury Bills (LFT) 82,436 82,435 More than 360 (1) 101,223

National Treasury Bonds (LTN) 315,898 315,998 Up to 360 100 184,086

National Treasury Bonds (LTN) 221,799 221,790 More than 360 (9)

Debentures 165 193 Up to 360 28

Bank Deposit Certificates (CDB) 8,540 8,761 Up to 360 221

Variable income securities 26,644 26,559 Undetermined maturity (85) 1

Quotas in investment funds 4,282 4,282 Undetermined maturity 2,276

Securities held to maturity

Agricultural Debt Securities (TDA) 5 5 Up to 360 37

Agricultural Debt Securities (TDA) 34 34 More than 360 69

704,237 704,490 253 314,496

(c) Derivative financial instruments

Banco Indusval utilizes derivative financial instruments, according to its risk management policy, with the objective of hedging market risks and cash flow risks, mitigating the risks mainly resulting from the fluctuation of interest and foreign exchange rates. The derivative instruments used by the Bank are designed to meet its needs for managing its global exposure and to meet its customers’ needs for hedging their exposure. The Bank’s treasury adopts an essentially passive attitude and generally does not enter into speculative transactions.

The derivatives include interest rate swaps, currency swaps, cash flow swaps, futures, forwards and options.

Derivative financial instruments are presented in the balance sheet at market value, usually based on price quotations or market price quotations for assets or liabilities with similar characteristics.

85

When these are not available, the market values are based on pricing models, discounted cash flow and market operators’ quotations

The contracts of traded derivatives are registered at the São Paulo Stock, Commodities and Futures Exchange (BM&FBovespa) or at the Central System for Custody and Financial Settlement of Securities (Cetip). These transaction amounts are determined based on available information disclosed by BM&FBovespa or by external providers (brokerage firms, banks and other).

The Risk Management Area is responsible for the pricing of all derivative financial instruments, using both the mark-to-market (MtM) parameters and the original (curve value) parameters. The market parameters are updated daily in the process of pricing the instruments to market value, including the forward structures of interest rates for all the Brazilian indices. The mark-to-market models determine the values of the derivative instruments based on the current market conditions for all the indices, as well as for the sovereign debt securities and Eurobonds of Brazilian companies, and the duration (average term) of the portfolio and of the groups of analysis.

(i) position

2009

Indusval Multistock and Consolidated

Long position

Short position

Maturity (days)

Futures market

Interest rate 467,326 Up to 360

Interest rate 33,568 123,775 More than 360

Currencies 521 19,435 Up to 360

Forward market

Shares 11,179 11,701 Up to 360

Currencies 7 Up to 360

Option Market

Shares 8,918 2,074 Up to 360

Swap

Currencies 20,836 Up to 360

Indices 353 328 Up to 360

Indices 35 745 More than 360

2008

Indusval Multistock and Consolidated

Long position

Short position

Maturity (days)

Futures market

Interest rate 1,977 136,058 Up to 360

Interest rate 1,301 47,574 More than 360

Forward market

Shares 11,011 8,832 Up to 360

Option Market

Shares 1,967 9,748 Up to 360

Swap

Currencies 615 465 Up to 360

Currencies 3,455 1,307 More than 360

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(ii) position of contracts

2009

Indusval Multistock and Consolidated

Assets Liabilities Value of contracts

recorded Result

Swap 388 21,909 221,356 (29,202)

DI x US$ 246 1,706

US$ x DI 77 1,706

IPCA x DI 23 745 95,600

IGPM x DI 59 2,000

DI Fixed x DI floating 119 7,891

Euro x DI 2,207 17,631

Cash flow swaps (*) 18,552 73,264

Euribor 269 21,558

Forward 11,179 11,708 11,611 (188)

Shares 11,179 11,701 11,255

Currencies 7 356

Futures 644,625 (4,634)

CDI 624,669

US$ 19,386

Mini-US$ 570

Options 8,918 2,074 70,879 (2,256)

Shares 8,918 2,074 70,879

20,485 35,691 948,471 (36,280)

2008

Indusval Multistock and Consolidated

Assets Liabilities Value of contracts

recorded Result

Swap 4,070 1,772 149,951 5,211

US$ x DI 1,256 3,500

DI x US$ 894 3,636

IPCA x DI 6 1,000

DI Fixed x DI floating 46 10 50,920

Euro x DI 2,762 17,631

Cash flow swap (*) 868 73,264

Forward 11,011 8,832 11,011 2,352

Shares 11,011 8,832 11,011

Futures 186,910 13,245

CDI 186,910

Options 1,967 9,748 66,265 (5,072)

Shares 1,967 9,748 66,265

17,048 20,352 414,137 15,736

(*) US$ (+) LIBOR X DI

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(iii) guarantees

2009

Indusval Multistock and Consolidated

Clearing of derivatives

Clearing of shares Total

Marketable securities 24,620 3,259 27,879

Sureties 8,000 11,500 19,500

32,620 14,759 47,379

(iv) sensitivity analysis

Factors RiskProbable situation

Deterioration of 25%

Deterioration of 50%

Trading portfolio

Fixed rate Fixed interest rates in reais 77 (575) (927)

Foreign currencies Exchange variation 1 (161) (322)

Trading and banking portfolio

Fixed rate Fixed interest rates in reais (16) (11,106) (17,732)

Exchange coupon Price index coupon rates (230) (4,537) (8,954)

Foreign currencies Exchange variation 8 (4,637) (9,281)

Price indices Price index coupon rates 8 (679) (1,478)

Long-term interest rate (TJLP) TJLP coupon rates (1)

Reference rate (TR) TR coupon rates (7) (11)

The sensitivity analysis considered the risk factor stress scenarios in all of the Bank’s transactions as well as the net position of exposure in each type of factor. Scenario I: the variation in the risk scenario informed by BM&FBovespa in relation to the marked-to-market value of the products. Scenario II: a 25% increase in the risk factors related to the fixed, foreign currency, reference (TR) and variable income rates and a 25% decrease in the risk factors related to the exchange coupon rate, price index and Long-term interest rate (TJLP) in relation to their market price. Scenario III: a 50% increase in the risk factors related to the fixed, foreign currency, TR and variable income rates and a 50% decrease in the risk factors related to the exchange coupon rate, price index and TJLP factors in relation to their market price.

The criterion used to determine the increase or decrease in each risk factor was the allocation of the net position of each contract. The risk positions in the fixed, foreign currency, TR and variable income rates represent a higher risk through the increase in the stress curves for these factors. The long position of these contracts is greater than the short position. As a result, the increase in the discount factor decreases the value of these products and constitutes a scenario more susceptible to financial loss, given the considered stress scenario. The positions in the exchange coupon rate, price index and TJLP represent a higher risk through the decrease in the stress curves for these factors. The short position of these contracts is greater than the long position. As a result, the decrease in the discount factor increases the value of these products and constitutes a scenario more susceptible to financial loss given the considered stress scenario.

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6 lOan OperatiOns – inDusval multistOck anD inDusval multistOck cOnsOliDateD

(a) analysis of the loan portfolio by type of operation and allowance for loan losses

2009

Risks Classification

Operations A B C D E F G H Total

Loans and discounted bills 310,675 307,566 378,967 45,955 24,637 17,726 5,072 50,657 1,141,255

Foreign currency financing 16,069 4,423 2,603 23,095

BNDES/Finame 28,869 41,015 44,801 1,472 116,157

Consumer lending (CDC) – vehicles 3,030 1,509 1,703 1,414 1,299 895 998 5,390 16,238

Other financing 25,462 25,462

Total loan operations 384,105 354,513 428,074 48,841 25,936 18,621 6,070 56,047 1,322,207

Advances on foreign exchange contracts 83,228 107,767 54,187 14,414 1,372 9,270 270,238

Other receivables – sundry (Note 8) 17 17

Total credit 467,350 462,280 482,261 63,255 25,936 19,993 6,070 65,317 1,592,462

Assignments with co-obligation 21,406 8,902 12,049 324 314 167 157 83 43,402

Total credit including assignments with co-obligation 488,756 471,182 494,310 63,579 26,250 20,160 6,227 65,400 1,635,864

Guarantees provided (Note 19 (a)) 54,429 7,368 1,075 62,872

Total portfolio 543,185 478,550 495,385 63,579 26,250 20,160 6,227 65,400 1,698,736

Allowance for loan losses 2,337 4,623 14,468 6,325 7,781 9,997 4,249 65,316 115,096

Provision for credits assigned with co-obligation 107 89 361 32 94 83 110 83 959

Additional provision (others) 17,339

Total provision 2,444 4,712 14,829 6,357 7,875 10,080 4,359 65,399 133,394

2008

Risks Classification

Operations AA A B C D E F G H Total

Loans and discounted bills 295,474 298,404 400,890 18,443 19,752 3,885 3,359 11,429 1,051,636

Foreign currency financing 5,100 17,927 201 23,228

BNDES/Finame 42,265 50,640 52,378 14,639 159,922

Consumer lending (CDC) – vehicles 37,629 4,288 5,219 3,024 1,822 1,025 642 220 53,869

Other financing 739 739

Total loan operations 42,265 389,582 372,997 420,949 21,467 21,574 4,910 4,001 11,649 1,289,394

Advances on foreign exchange contracts 88,174 101,888 42,897 3,128 9,098 464 677 246,326

Other receivables – sundry (Note 8) 74 112 186

Total credit 42,265 477,830 474,885 463,846 24,595 30,672 4,910 4,465 12,438 1,535,906

Assignments with co-obligation 12,892 13,118 54,892 80,902

FIDC 84,340 17,224 4,060 602 106,226

Total credit including assignments with co-obligation 42,265 575,062 505,227 522,798 25,197 30,672 4,910 4,465 12,438 1,723,034

Guarantees provided (Note 19 (a)) 53,467 8,065 9,170 4 70,706

Total portfolio 42,265 628,529 513,292 531,968 25,201 30,672 4,910 4,465 12,438 1,793,740

Allowance for loan losses 2,389 4,749 13,915 2,460 9,203 2,455 3,125 12,438 50,734

Provision for credits assigned with co-obligation 485 303 1,769 61 2,618

Additional provision (vehicles) 275

Additional provision (other) 16,691

Total provision 2,874 5,052 15,684 2,521 9,203 2,455 3,125 12,438 70,318

89

During the year, the establishment of the allowance for loan losses amounted to R$111,277 (2008 – R$53,236). The amount of loans written off against the allowance for loan losses was R$48,201 (2008 – R$11,947), and the amount of loans recovered was R$4,221 (2008 – R$2,692).

At December 31, 2009, the portfolio of renegotiated loans amounts to R$165,186 (2008 – R$9,013).

(b) analysis of loan operations by business sector

2009 2008

Manufacturing 913,918 900,161

Commerce 189,436 209,318

Financial intermediaries 12,844 4,908

Other services 359,893 490,918

Individuals (*) 159,773 117,729

1,635,864 1,723,034

(*) Of the total balance of individuals, R$53,598 (2008 – R$36,785) comprises middle market loans and R$106,175 (2008 – R$80,944) retail loans.

(c) analysis of loan operations by index

(d) analysis of loan operations by maturity

2009 2008

Fixed rate 491,186 355,361

Floating rate (Interbank Deposit Certificate (CDI)) 1,058,418 1,213,310

Reference rate (TR)/Basic Financial Rate (TBF) 108 110

Other 86,152 154,253

1,635,864 1,723,034

2009 2008

Overdue

From 15 to 60 days 31,518 81,476

From 61 to 180 days 15,606 19,314

More than 180 days 29,397 4,875

76,521 105,665

Maturing

Up to 90 days 561,655 631,689

From 91 to 180 days 330,117 257,768

From 181 to 360 days 240,296 292,220

More than 360 days 427,275 435,692

1,559,343 1,617,369

1,635,864 1,723,034

90

(e) concentration of loans

2009

Customers Amount %Accumulated

percentage

10 largest customers 308,388 18.85 18.85

11th to 60th largest customers 500,445 30.59 49.44

61st to 160th largest customers 388,883 23.78 73.22

Other 438,148 26.78 100.00

1,635,864

2008

Customers Amount %Accumulated

percentage

10 largest customers 375,575 21.80 21.80

11th to 60th largest customers 529,526 30.73 52.53

61st to 160th largest customers 393,209 22.82 75.35

Other 424,724 24.65 100.00

1,723,034

(f) analysis of loans classified as D até h

Only a portion of the transactions rated D to H in the following table is past due for more than 60 days and is accordingly classified as non-performing. The other transactions are performing normally but remain classified at these levels as a result of the criteria used for credit analysis. These transactions are segregated in the following table:

2009

Level D E F G H Total

Performing 57,042 1,088 13,716 2,617 10,286 84,749

Non-performing 6,537 25,162 6,444 3,610 55,114 96,867

63,579 26,250 20,160 6,227 65,400 181,616

2008

Level D E F G H Total

Performing 16,254 11,687 108 2,472 30,521

Non-performing 8,943 18,985 4,910 4,357 9,966 47,161

25,197 30,672 4,910 4,465 12,438 77,682

91

(g) loan operations by segment

(h) loans – average balances and term

Indusval Multistock and Consolidated

2009

Portfolio % 2008 Portfolio %

Middle Market 1,529,691 93.51 1,642,090 95.30

In reais – loans and discounts 1,120,201 68.48 1,212,614 70.38

In reais – BNDES/Finame 116,157 7.10 159,922 9.28

In foreign currency 293,333 17.93 269,554 15.64

Retail 33,805 2.07 53,868 3.13

Credits acquired 72,351 4.42 26,890 1.56

Other 17 0.00 186 0.01

1,635,864 1,723,034

Middle Market

2009

Total amount

Number of customers

Number of contracts

Average balance per customer

Average balance per contract

Average term (*)

Loans and discounted bills

Overdraft accounts 70,102 165 172 425 408 122

Loans 1,019,725 605 1,191 1,685 856 510

Discounted bills 30,374 105 545 289 56 72

BNDES/Finame 116,157 54 191 2,151 608 649

ACC/ACE/Finimp 293,333 101 313 2,904 937 220

1,529,691

Retail

CDC – vehicles 33,805 5,021 5,021 7 7 451

(*) Based on the days of the contracted transaction term.

Middle Market

2008

Total amount

Number of customers

Number of contracts

Average balance per customer

Average balance per contract

Average term (*)

Loans and discounted bills

Overdraft accounts 59,541 226 243 263 245 138

Loans 1,135,101 666 1,211 1,686 927 412

Discounted bills 17,972 66 332 272 54 103

BNDES/Finame 159,922 43 168 3,719 952 607

ACC/ACE/Finimp 269,554 112 342 2,407 788 199

1,642,090

Retail

CDC – vehicles 53,869 5,433 5,433 10 10 620

(*) Based on the days of the contracted transaction term.

92

(i) middle market transactions – guarantees

(j) composition of loans assigned by type of loan and nature of risk

2009

TransactionsTotal

transactions

Guaranteed by

receivables

Monitored lien/warrants

and CPRS

Other types of

lienLien on

propertiesLien on vehicles

Securities/ shares/

CDBTotal

guarantees

Overdraft accounts 70,102 60,008 2,019 2,316 2,469 66,812

Loans 1,019,725 596,746 124,158 21,393 125,668 21,883 28,121 917,969

Discounts 30,374 30,374 30,374

BNDES/Finame 116,157 32,658 3,144 56,846 10,943 10,606 114,197

ACC/ACE/Finimp 293,333 55,500 52,520 8,433 23,477 139,930

1,529,691 775,286 179,822 86,672 138,630 34,805 54,067 1,269,282

Percentage – % 50.68 11.76 5.67 9.06 2.28 3.53 82.98

2008

TransactionsTotal

transactions

Guaranteed by

receivables

Monitored lien/warrants

and CPRS

Other types of

lienLien on

propertiesLien on vehicles

Securities/ shares/

CDBTotal

guarantees

Overdraft accounts 59,541 29,372 8,254 2,403 610 2,446 602 43,687

Loans 1,135,101 624,314 109,167 51,434 83,982 25,126 104,111 998,134

Discounts 17,972 17,972 17,972

BNDES/Finame 159,922 34,365 54,128 66,263 154,756

ACC/ACE/Finimp 269,554 68,045 61,692 33,464 163,201

1,642,090 774,068 179,113 107,965 84,592 93,835 138,177 1,377,750

Percentage – % 47.14 10.91 6.57 5.15 5.71 8.41 83.90

2009

Category Operation Result Asset amount

Amount of the liability

assumed

Loans with substantial transfer of risks and benefits Loans 3,252

Loans with substantial retention of risks and benefits Loans 2,661 25,834 28,366

CDC – vehicles 6,483 17,658 21,833

12,396 43,492 50,199

2008

Category Operation Result Asset amount

Amount of the liability

assumed

Loans with substantial transfer of risks and benefits Loans 2,262

Loans with substantial retention of risks and benefits Loans 7,076 187,128 109,597

9,338 187,128 109,597

93

In 2008, of the total loans with substantial retention of risks and benefits, R$106,226 were assigned to FIDC FC Multisegmentos (wound up on July 12, 2009). For these loans the retained risks and benefits are limited to the amount of the subordinated quotas held by Banco Indusval, in the amount of R$21,619. The other loans are assigned with co-obligation i.e., with retention of default risk.

7 fOreign exchange pOrtfOliO

Indusval Multistock and Consolidated

2009 2008

Assets

Exchange purchases pending settlement 280,347 331,616

Rights on sales of exchange 7,444 2,370

Advances in local currency (2,000)

Other 6,482 14,518

294,273 346,504

Liabilities

Exchange sales pending settlement 7,286 2,309

Liabilities for purchases of exchange 282,118 248,688

Advances on foreign exchange contracts (263,966) (232,127)

Other 233 418

25,671 19,288

8 Other receivaBles – sunDry

Indusval MultistockIndusval Multistock and

Consolidated

2009 2008 2009 2008

Deferred tax assets (Note 11 (b)) 60,286 31,878 60,286 31,878

Debtors for purchase of assets 17 186 17 186

Debtors for deposits in guarantee 8,381 9,158 8,381 10,724

Taxes and contributions for offset 12,286 12,887 12,666 13,947

Sundry debtors – local and other 2,137 1,393 2,058 1,398

83,107 55,502 83,408 58,133

Current assets 14,440 14,320 14,741 15,384

Long-term receivables 68,667 41,182 68,667 42,749

94

9 investments in suBsiDiaries – inDusval multistOck

2009

Indusval Multistock

Corretora

BIM Promotora de

Vendas Total

Capital 13,838 500

Shares/quotas owned (units) 266 500

Shareholders' equity 21,562 45

Net income (loss)

Second half of 2009 1,091 25

2009 5,274 (236)

2008 4,330 (217)

Holding at December 31, 2009 – % 51.154 100

Holding at December 31, 2008 – % 100 100

Equity in the results

Second half of 2009 558 25 583

2009 4,733 (236) 4,497

2008 4,330 (217) 4,113

Investment

December 31, 2009 11,030 45 11,075

December 31, 2008 28,232 281 28,513

Aiming to promote the long-term growth and development of the business of Indusval Corretora, a strategic partnership was entered into by Banco Indusval S.A. and Serendipity Holding Financeira Ltda. This partnership was formalized following the partial split-off of the Corretora’s capital, approved by its stockholders at the Extraordinary General Meeting (AGE) held on April 8, 2009. The Corretora’s capital prior to the split-off was R$22,103, comprising 832 registered shares, with no par value, of which 416 were preferred and 416 were common shares. As part of the arrangement, assets and liabilities in the amount of R$11,944 were transferred to the Bank and following the partial split-off, Corretora’s capital was reduced to R$13,838, comprising 520 registered shares with no par value, of which 260 are common shares and 260 are preferred shares. On June 1st, 2009, Serendipity acquired 254 common shares comprising 97.69% of the voting capital and 48.84% of the total capital of Indusval Corretora. The Bank has six common shares and 260 preferred shares, corresponding to 2.31% of voting capital and 51.15% of the Corretora’s total capital. The partial split-off was approved by BACEN on July 9, 2009 and the sale of shares to Serendipity is in the process of ratification by BACEN.

95

2009

Term (days)

Deposits, funds obtained and onlendingsUndetermined

maturity Up to 90From

91 to 180From

181 to 360 More than 360 Total

Demand 39,409 39,409

Interbank 19,803 30,622 676 51,101

Time (*) 193,868 288,877 135,650 553,392 1,171,787

Other 335 335

Total deposits 39,744 213,671 319,499 136,326 553,392 1,262,632

Funds from acceptance and issuance of securities (agribusiness letters of credit – LCA) 7,792 2,631 136 10,559

Local onlendings 22,598 22,970 19,680 77,328 142,576

Foreign borrowings 127,528 133,813 95,538 20,546 377,425

39,744 371,589 478,913 251,680 651,266 1,793,192

(*) Of total time deposits at December 31, 2009, R$ 505,763 are time deposits with special guarantee (DPGE).

10 DepOsits, funDs OBtaineD anD OnlenDings

(a) Deposits, funds obtained and onlendings by maturity – indusval multistock consolidated

2008

Term (days)

Deposits, funds obtained and onlendingsUndetermined

maturity Up to 90From

91 to 180From

181 to 360 More than 360 Total

Demand 44,187 44,187

Interbank 95,545 9,592 53,590 158,727

Time (*) 224,606 45,846 58,766 269,042 598,260

Other 1,240 1,240

Total deposits 45,427 320,151 55,438 112,356 269,042 802,414

Funds from acceptance and issuance of securities (agribusiness letters of credit – LCA) 8,047 9,738 1,470 3,266 22,521

Local borrowings 85,678 42,483 128,161

Local onlendings 9,710 22,459 69,890 57,564 159,623

Foreign borrowings 301,403 43,731 9,668 132,551 487,353

45,427 724,989 173,849 193,384 462,423 1,600,072

96

(b) analysis of major customers – time deposits

2009

Accumulated

Customers Amount % percentage

10 largest customers 287,950 24.57 24.57

11th to 60th largest customers 501,750 42.82 67.39

61st to 160th largest customers 267,185 22.80 90.19

Other 114,902 9.81 100.00

Total transactions 1,171,787

2008

Accumulated

Customers Amount % percentage

10 largest customers 266,316 44.52 44.52

11th to 60th largest customers 194,449 32.50 77.02

61st to 160th largest customers 100,742 16.84 93.86

Other 36,753 5.14 100.00

Total transactions 598,260

(c) funds raised in the open market

Indusval Multistock and Consolidated

2009 2008

Own portfolio 107,885 2,742

Financial Treasury Bills (LFT) 2,742

National Treasury Bills (LTN) 107,885

Third-party portfolios 257,919

National Treasury Bills (LTN) 200,897

Financial Treasury Bills (LFT) 57,022

365,804 2,742

97

(b) changes in deferred tax assets

11 incOme tax anD sOcial cOntriButiOn – inDusval multistOck

(a) calculation of expense

2009 2008

Profit before income tax and social contribution and after profit sharing 371 94,710

Composite income tax and social contribution at the statutory rate – 40% (148) (37,884)

Effect of additions and deductions in the calculation of taxes

Investments in subsidiaries 1,386 1,645

Interest on own capital paid 10,803 10,188

Effect of temporary additions and deductions (*) (27,286) (18,133)

Effect of the 6% increase in the social contribution rate as from May 2008 1,849

Other amounts (756) (1,071)

Income tax and social contribution expense for the year (16,001) (43,406)

(*) Mainly comprises temporary additions of expenses for the provision for loan losses.

2009 2008

Opening balance 31,878 11,731

Appropriation / write-off 28,408 20,147

Total deferred tax assets (Note 8) 60,286 31,878

Deferred tax liabilities (Note 12 (c)) (1,960) (883)

Deferred tax assets net of deferred tax liabilities 58,326 30,995

Percentage of stockholders’ equity 13.48 6.91

Balance at December 31, 2009 Up to 360 days

From 361 to 720 days

From 721 to 1800 days

More than 1800 days

Allowance for loan losses 58,142 50,559 3,095 3,930 558

Adjustment to market value 1,674 1,674

Other 470 399 71 60,286 52,632 3,095 4,001 558

(d) estimates of realization

The Bank’s management, based on a technical study which considers the continuation of the historical profitability and the generation of future tax liabilities, estimates the realization of the deferred tax assets within a maximum period of three years. The present value of the deferred tax assets, based on the Long-term Interest Rate (TJLP), is R$56,137.

(c) projected realization of deferred tax assets

98

Indusval MultistockIndusval Multistock

Consolidated

2009 2008 2009 2008

Creditors – pending settlement account 449 154 6,047 8,055

Clearing houses for the custody and settlement of securities 6 147

Creditors for share loans 22,526 37,919 22,526 37,919

Transactions with financial assets to be settled 3,519

Other 494 698

22,975 38,073 29,073 50,338

12 Other liaBilities

(a) negotiation and intermediation of securities

(b) provision for contingent liabilities

The Bank maintains a system to monitor all the administrative and legal proceedings in which it is the plaintiff or defendant, and based on the opinion of its legal advisors, classifies the lawsuits based on whether a favorable outcome is expected when applying the accounting practices described in Note 3 (m).

(i) contingent assets

Contingent assets: no contingent assets were recognized, and there are no significant lawsuits classified as probable realization.

(ii) contingent liabilities

Contingencies classified as probable: are provided for and amount to R$182 at December 31, 2009.

Contingencies classified as possible: pursuant to legislation, the recognition of these contingencies is not required. The Bank is a party to the following lawsuits presenting risk of possible loss:

• Corporate Income Tax (IRPJ) credit compensation in the amount of R$3,424, arising from overpayments resulting from the recalculation of the effects of discontinuing the suit related to Law No. 8,200;

• Services Tax (ISS) levied on income from the trading of marketable securities in the Commodities Exchange, in the amount of R$3,126 (case distributed in 1988); and

• Voluntary disclosure involving interest on arrears of IRPJ, Social Contribution on Net Income (CSLL), Social Integration Program (PIS) and Social Contribution on Revenues (Cofins), in the amount of R$2,411.

99

2009 2008

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Taxes and contributions on profits 14,923 15,258 43,449 45,879

Taxes and contributions payable 3,670 3,816 4,916 5,078

Taxes and contributions (Note 11(b)) 1,960 2,060 883 883

Legal obligations 944 944 10,184 11,178

21,497 22,078 59,432 63,018

Current assets 18,593 19,174 48,365 50,957

Long-term receivables 2,904 2,904 11,067 12,061

Changes in legal obligations for the year may be summarized as follows:

2009

Indusval Multistock and Consolidated

Opening balance at December 31, 2008 11,178

Change in the period reflected in the result

Adjustment / charges 311

Increase 1,308

Discontinuation of suit (11,853)

Closing balance at December 31, 2009

944

(c) taxes and social security – legal obligations

This balance refers to the dispute regarding service tax (ISS) payable pursuant to Complementary Law No.116/03 levied on the means, instruments and stages of the financial transactions carried out by the Bank.

(d) tax recovery program (refis)

In November 2009, Banco Indusval enrolled in the tax refinancing program established by Law No. 1,1941/09 (New Refis), which resulted in the discontinuation of the following suits:

• CSLL: challenging CSLL payable by financial institutions from 1995 to 1998, at rates higher than those applied to companies in general, in violation of the constitutional principle of equality. Payment was made in cash, considering that a portion of the related amount was already deposited in the courts.The positive result generated, net of taxation and the realization of deferred tax assets were of R$2,735; and

• Plano verão (Summer Plan): challenging the index used for the restatement of certain balance sheet accounts, related to the Consumer Price Index (IPC) of 1989. Payment was made in cash, generating a positive result, net taxation and the realization of deferred tax assets were of R$735.

13 stOckhOlDers’ equity

(a) capital

Fully subscribed and paid-up capital comprises 42,475,101 shares, of which 27,000,000 are common shares and 15,475,101 are preferred shares with no par value.

100

At the Board of Directors Meeting held on September 17, 2009, a decision was taken to cancel 524,900 shares which were held in treasury after having been acquired through the Share Buyback Program, authorized by the Board of Directors in meetings held on May 13, 2008 and October 3, 2008, pursuant to the provisions of CVM Instruction No. 10/80 and subsequent amendments. The shares were canceled with no decrease in the Bank’s capital, through the absorption of R$ 3,489 appropriated to the Reserve for the Equalization of Dividends.

In addition, the Board approved the closure of the share buyback plan dated October 3, 2008, and approved a new plan to repurchase up to 1,458,925 preferred shares.

In 2009, 441,400 preferred shares were repurchased.

At December 31, 2009, 427,000 preferred shares were held in treasury.

(b) Dividends and interest on own capital

The by laws provide for the distribution of a minimum annual dividend of 25% of net income adjusted in accordance with Article 202 of Law No. 6,404/76.

During 2009, interest on own capital was distributed in the total amount of R$27,009, comprising R$0.6423 per share (2008 –R$25,469), calculated based on the Long-term Interest Rate (TJLP), pursuant to Article 9 of Law No. 9,249/95 and recorded for tax purposes as a financial expense. The tax benefit arising from this distribution was R$10,803 (2008 – R$10,188).

(c) revenue reserves

The Bank’s by laws provide for the following appropriation of annual net income to reserves:

• The Reserve for Equalization of Dividends shall be limited to 40% of the capital to guarantee resources for the payment of dividends, including as interest on own capital or its prepayment, designed to maintain the flow of remuneration to the shareholders and formed with resources which are:

(i) Equivalent to up to 50% of net income for the year, adjusted as set forth in Article 202 of Brazilian Corporation Law;

(ii) Equivalent to up to 100% of the realized portion of the revaluation reserve, recorded as retained earnings; (iii) Equivalent to up to 100% of prior-year adjustments, recorded as retained earnings; and

(iv) Arising from the credit corresponding to prepayment of dividends.

• The Reserve for Working Capital Reinforcement shall be limited to 30% of the capital to guarantee the financial means for the Bank’s operation, formed with resources equivalent to up to 20% of net income for the year, adjusted as set forth in Article 202 of Brazilian Corporation Law.

(d) revaluation reserve

The Bank carried out a revaluation of properties in the first half of 2005 (properties in use), based on an appraisal report issued by qualified experts and approved by the stockholders at an Extraordinary General Meeting.

The revaluation reserve, for own assets and these of the associated companies, is realized based on the depreciation, disposal or sale of the corresponding revalued assets through transfers to retained earnings, including the tax effects of the provisions recorded. The realized reserve for 2009, net of taxes was R$67 and at December 31, 2009 the balance amounts to R$1,995.

101

14 Benefits tO emplOyees

(a) personnel

Employees

2009

Banco Indusval Multistock

Indusval Multistock

Corretora

BIM Promotora de

Vendas Total

Operational 151 15 166

Support and control 149 12 6 167

300 27 6 333

Employees

2008

Banco Indusval Multistock

Indusval Multistock

CorretoraBIM Promotora

de Vendas Total

Operational 155 11 166

Support and control 139 15 9 163

294 26 9 329

(b) private pension plan

Banco Indusval S.A. and its subsidiaries offer their employees a supplementary pension plan with a defined contribution, managed by a private entity. The program commenced in September 2008, and is sponsored by the Bank and its subsidiaries and employees. During the year ended December 31, 2009, contributions totaled R$454 (2008 – R$165) in Banco Indusval and R$472 (2008 – R$169) on a consolidated basis.

(c) contributions and profit sharing

As from 2006, the Bank adopted its own model for the payment of profit sharing using criteria and parameters established in accordance with the agreement approved by the Ministry of Labor. It has also established the payment of profit sharing to the directors. In 2009, profit sharing payments totaled R$5,550 (2008 – R$9,796) to employees and R$74 (2008 – R$4,471) to directors in Banco Indusval and R$5,585 (2008 – R$9,876) to employees and R$80 (2008 – R$4,536) to directors on a consolidated basis.

102

15 analysis Of the statement Of OperatiOns accOunts

(a) income from financial intermediation

Six-month period ended December 31 Years ended December 31

2009 2008 2009 2008

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Advance to depositors 131 131 1,541 1,541 506 506 2,231 2,231

Loans 97,519 97,519 170,656 170,656 215,120 215,120 298,253 298,253

Discounted bills 4,718 4,718 6,843 6,843 9,155 9,155 13,101 13,101

Financing 12,757 12,757 29,478 29,478 35,390 35,390 33,971 33,971

Recovery of receivables 4,022 4,022 1,431 1,431 4,221 4,221 2,693 2,693

Loan operations 119,147 119,147 209,949 209,949 264,392 264,392 350,249 350,249

Short-term interbank investments 22,350 22,350 33,454 33,454 36,938 37,479 60,914 60,914

Fixed income securities 26,986 27,277 16,889 17,433 53,496 56,085 45,157 46,328

Variable income securities 4,075 5,320 7 4,075 5,324 9

Investment funds 128 128 404 404 2,865 2,865 405 405

Mark-to-market adjustment – securities (1,123) (1,095) 45 41 (372) (346) 186 327

Foreign investments 1 1 137 137 2 2 184 184

Result of securities 52,417 53,981 50,929 51,476 97,004 101,409 106,846 108,167

Export 9,686 9,686 21,512 21,512 27,413 27,413 33,607 33,607

Import 756 756 401 401 1,182 1,182 461 461

Financial (44) (44) 712 712 (104) (104) 594 594

Rate variations 3,786 3,786 114,878 114,878 4,805 4,805 125,773 125,773

Funds available in foreign currency 209 209 4,170 4,170 8,426 8,426 6,441 6,441

Results of foreign exchange 14,393 14,393 141,673 141,673 41,722 41,722 166,876 166,876

185,957 187,521 402,551 403,098 403,118 407,523 623,971 625,292

103

(b) expenses for financial intermediation

(c) revenues from services rendered and bank fees

Six-month periods ended December 31 Years ended December 31

2009 2008 2009 2008

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Interbank deposits (3,387) (3,130) (13,500) (11,865) (12,460) (11,510) (19,769) (16,920)

Time deposits (54,666) (54,662) (53,018) (52,962) (94,127) (94,117) (96,476) (96,397)

Purchase and sale commitments (20,366) (20,378) (44,365) (44,365) (35,652) (35,709) (87,338) (87,338)

Agribusiness letters of credit (LCA) (420) (420) (1,531) (1,531) (1,309) (1,309) (1,531) (1,531)

Funds obtained in the market (78,839) (78,590) (112,414) (110,723) (143,548) (142,645) (205,114) (202,186)

Share loans 8,121 8,121 8,121 8,121

Local borrowings (2,097) (2,097) (284) (284) (2,353) (2,353) (1,082) (1,082)

Foreign borrowings (1,535) (1,535) (165,336) (165,336) (6,654) (6,654) (183,576) (183,576)

Local onlendings – PSH (592) (592) (592) (592)

Local onlendings – BNDES (4,148) (4,148) (5,618) (5,618) (8,359) (8,359) (6,215) (6,215)

Local onlendings – FINAME (2,516) (2,516) (2,234) (2,234) (5,087) (5,087) (2,714) (2,714)

Loans, assignments and onlendings (10,888) (10,888) (165,351) (165,351) (23,045) (23,045) (185,466) (185,466)

Swap (12,318) (11,528) 4,955 4,955 (29,992) (29,202) 5,211 5,211

Futures (1,047) (961) 12,838 12,805 (4,716) (4,634) 13,367 13,245

Options (691) (695) (3,345) (3,562) (2,155) (2,256) (4,833) (5,072)

Forward 300 300 2,464 2,464 (188) (188) 2,352 2,352

Result from derivative financial instruments (13,756) (12,884) 16,912 16,662 (37,051) (36,280) 16,097 15,736

Loan operations (43,252) (43,252) (33,100) (33,100) (88,026) (88,026) (44,740) (44,740)

Other receivables (8,152) (8,152) (6,004) (6,004) (23,251) (23,251) (8,496) (8,496)

Provision for loan losses (51,404) (51,404) (39,104) (39,104) (111,277) (111,277) (53,236) (53,236)

(154,887) (153,766) (299,957) (298,516) (314,921) (313,247) (427,719) (425,152)

Six-month periods ended December 31 Years ended December 31

2009 2008 2009 2008

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Management of funds 50 285 37 248 88 478 78 519

Collection 1,052 1,052 1,493 1,493 2,117 2,117 3,459 3,459

Transfer of funds 13 13 18 18 24 24 34 34

Guarantees provided 375 375 495 495 664 664 1,121 1,121

Custody services 9 44 22 31 10 54 46 64

Brokerage services 3,062 3,982 6,873 13,326

Foreign exchange brokerage services 1 18 11 30

Other services 234 562 2,004 3,174 831 1,282 2,853 4,397

1,733 5,394 4,069 9,459 3,734 11,503 7,591 22,950

Bank fees 417 417 900 900 737 737 1,489 1,489

2,150 5,811 4,969 10,359 4,471 12,240 9,080 24,439

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(d) personnel expenses

(e) Other administrative expenses

Six-month periods ended December 31 Years ended December 31

2009 2008 2009 2008

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Salaries (12,167) (13,048) (14,402) (16,105) (23,420) (25,153) (26,595) (29,183)

Fees (3,515) (3,744) (3,479) (3,758) (7,201) (7,641) (6,885) (7,392)

Benefits (3,480) (3,802) (3,628) (4,187) (6,626) (7,269) (6,865) (7,787)

Social charges (5,090) (5,458) (5,788) (6,431) (9,947) (10,683) (10,766) (11,786)

Training (157) (162) (296) (304) (299) (309) (543) (555)

Interns (56) (72) (234) (234) (162) (190) (418) (418)

(24,465) (26,286) (27,827) (31,019) (47,655) (51,245) (52,072) (57,121)

Six-month periods ended December 31 Years ended December 31

2009 2008 2009 2008

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Water, electricity and gas (158) (162) (156) (157) (351) (358) (299) (300)

Rent (631) (632) (562) (565) (1,194) (1,197) (1,010) (1,013)

Communications (1,363) (1,440) (1,387) (1,662) (2,607) (2,843) (2,638) (3,187)

Charitable contributions (615) (622) (892) (956) (755) (809) (1,120) (1,187)

Maintenance and conservation of assets (108) (178) (161) (303) (285) (553) (521) (726)

Materials (109) (115) (126) (142) (224) (235) (270) (328)

Data processing (644) (846) (807) (1,079) (1,232) (1,706) (1,355) (1,767)

Promotions and public relations (258) (270) (310) (318) (333) (348) (466) (482)

Advertising and publicity (159) (164) (4) (159) (168)

Publications (230) (239) (203) (223) (595) (658) (549) (618)

Insurance (71) (72) (110) (110) (90) (91) (141) (141)

Financial system services (1,023) (1,158) (1,384) (1,746) (2,704) (3,229) (2,676) (3,429)

Third-party services (4,657) (6,922) (7,814) (8,115) (13,729) (18,555) (11,563) (15,659)

Surveillance and security (36) (37) (39) (39) (70) (71) (74) (74)

Specialized technical services (2,564) (2,686) (3,551) (3,727) (4,546) (4,811) (5,584) (5,805)

Transportation (212) (214) (248) (263) (426) (436) (440) (494)

Travel (667) (675) (845) (873) (1,207) (1,217) (1,696) (1,740)

Other (2,432) (2,554) (1,812) (1,973) (4,521) (4,792) (3,538) (3,819)

(15,778) (18,822) (20,566) (22,415) (34,869) (41,913) (34,099) (40,937)

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(f) tax expenses

Six-month periods ended December 31 Years ended December 31

2009 2008 2009 2008

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Indusval Multistock Consolidated

Service tax (ISS) (111) (298) (255) (577) (234) (626) (483) (1,296)

Social Integration Program (PIS) (548) (594) (960) (1,042) (1,312) (1,411) (1,688) (1,853)

Social Contribution on Revenues (COFINS) (3,372) (3,644) (5,911) (6,349) (8,071) (8,665) (10,389) (11,326)

Other (208) (213) (486) (497) (451) (469) (812) (831)(4,239) (4,749) (7,612) (8,465) (10,068) (11,171) (13,372) (15,306)

16 Operating limits – inDusval multistOck cOnsOliDateD

At December 31, 2009, the Bank’s Basel ratio was 22.53% (2008 – 23.95%), calculated based on the consolidated financial information.

2009

Reference stockholders’ equity (PR) 450,992

Tier I 448,897

Stockholders’ equity 432,694

Revaluation reserves (1,995)

Mark-to-market adjustments (100)

Provision in excess of the minimum required by Res. No. 2,682 18,298

Tier II 2,095

Mark-to-market adjustments 100

Revaluation reserves 1,995

Required reference stockholders’ equity (PRE) 220,202

Credit risk 200,534

Market risk 5,619

Operational risk 14,049

Surplus PR 230,790

Basel ratio – % 22.53

17 relateD parties

(a) subsidiaries

The transactions between the parent company and its subsidiaries were carried out at normal market rates and terms, on a commutative basis, and comprise following:

2009 2008

Assets (liabilities)

Income (expenses)

Assets (liabilities)

Income (expenses)

Demand deposits (109) (520)

Time deposits (67) (9) (274)

Interbank deposits (4,944) (952) (24,416) (2,905)

Other (356) (599) (154) (1,376)

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(b) compensation of key management personnel

2009 2008

Short-term benefits 7,764 12,264

Long-term benefits 91 20

Share-based payments 604 175

8,459 12,459

(c) share-based payments plan

During the year ended December 31, 2009, the amount of R$604 (2008 – R$175) was recorded as expense related to the appropriation of benefits under the Share-based Payment Plan.

Number

Date of grant

Vesting period

Exercise term

Exercise price (PE) Granted

Not exercised

22.07.08 Three years Five years 10.07 161,869 161,869

02.02.09 Three years Five years 5.06 229,067 229,067

390,936 390,936

(d) Other transactions with related parties – intergroup contract balances

Link with company Contract objective and characteristics 2009 2008

Directors Demand and investment deposits 272 433

Time deposits:110% of CDI after grace period 20,887

Time deposits 115% of CDI after grace period 39,559

LCA: 100% of CDI at maturity 15,245

LCA: 103% of CDI at maturity 5,007

Share loan to Bank: BVMF3 shares and 1% remuneration rate 6,424

Companies linked to directors Demand and investment deposits 191 142

Time deposits 110% of CDI after grace period 29,794

Time deposits 115% of CDI after grace period 34,817

People linked to directors Demand and investment deposits 407 1,063

Time deposits 110% of CDI after grace period 22,374

Time deposits 115% of CDI after grace period 30,286

LCA: 100% of CDI at maturity 3,829

LCA: 103% of CDI at maturity 285

Share loan to Bank: BVMF3 shares and 1% remuneration rate 4,588

Companies linked to directors Foreign borrowings: 8%p.a. 15,283

Foreign borrowings: 7%p.a. 54,454

Branch abroad Foreign borrowings: 6% p.a. 17,508

143,615 159,233

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18 management Of investment funDs

19 supplementary infOrmatiOn

(a) guarantees and sureties

2009 2008

Valeu FIM, Crédito Privado, Investimento no Exterior e Longo Prazo 37,281 32,003

Comercial Máster FIA 8,866

Indusval Maestro FIM Longo Prazo 7,845

Agrisus FIA Investimentos no Exterior 5,091 4,806

GSS FIM, Crédito Privado, Investimento no Exterior e Longo Prazo 4,382 3,803

Multi FI Renda Fixa Indusval Crédito Privado 3,493 1,605

2009 2008

Cash 4,051 40,111

Short-term interbank investments 353,143 70,763

Marketable securities and derivative financial instruments 724,975 331,544

(-) Funds obtained in the open market (365,804) (2,742)

(-) Derivative financial Instruments (20,485) (17,048)

Free cash 695,880 422,628

2009 2008

Sureties – financial institutions 20,640 35,001

Sureties – individuals and non-financial companies 37,123 28,055

Loans for import 5,109 7,650

62,872 70,706

(b) indusval multistock corretora

The subsidiary Indusval Multistock Corretora operates as an intermediary in the trading of contracts in the forward, futures and options markets totaling R$2,004,610 for 2009 (2008 – R$325,245). It is also responsible for the custody of customers’ securities totaling R$752,816 in 2009 (2008 – R$565,007), deposited with the Brazilian Custody and Settlement Company (CBLC).

(c) Branch abroad (cayman)

The foreign branch in Cayman commenced operations in June 2009 and, as described in Note 2, its financial statements are consolidated in the financial statements of Banco Indusval S.A.

(d) free cash – indusval multistock consolidated

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(e) financial instruments – indusval multistock consolidated

2009 2008

Book value

Market value

Book value

Market value

Assets

Investment in interbank deposits 60,092 60,092 48,792 48,792

Investments in foreign currency 154 154 2,169 2,169

Marketable securities 704,490 704,490 314,496 314,496

Loan operations

Originated loans 1,210,541 1,191,794 1,183,907 1,173,154

Trade finance 293,333 283,779 269,554 347,615

Purchased credits 72,351 71,496 26,890 27,169

CDC vehicles 16,238 21,860 53,868 61,615

FIDC quotas 21,193 21,193

Derivatives

Fixed rate 33,568 33,568 3,278 3,278

Currencies (futures) 521 521

Swaps 388 388 4,070 2,601

Share forward 11,179 11,179 11,011 10,775

Options 8,918 8,918

Liabilities

Interbank deposits 51,101 51,095 158,727 158,840

Time deposits 1,171,787 1,173,565 598,260 598,281

Agribusiness letters of credit 10,559 10,559 22,521 22,521

Funds obtained via options 2,074 2,074 32,080 31,196

Liabilities related to forward transactions 11,708 11,708 11,011 10,775

Onlendings 142,576 142,547 159,623 159,623

Local borrowings (including senior FIDC quotas) 128,161 128,161

Foreign liabilities 377,425 376,549 487,353 531,552

Derivatives

Fixed rate 591,101 591,101 183,632 183,632

Currencies (futures) 19,435 19,435

Swaps 21,909 21,909 1,772 3,984

The amount of interbank deposits was calculated in accordance with the investment curve.

The amount of marketable securities was determined based on the prices disclosed by Andima for the date established.

The amount of loans, interbank deposits, time deposits and foreign liabilities was calculated based on the monthly average rate of the last month of the year for each type of transaction.

The market value of derivatives, purchased credit and funds obtained via options were determined based on the internal pricing model, the parameters whose data supplied by BM&FBovespa.

109

(f) service agreement – cvm instruction no. 381

The policy of the Bank, its subsidiaries and parent company for contracting services not related to the external audit, from our independent auditors, is based on the applicable regulations and on internationally accepted principles which safeguard the independence of the auditors. These principles establish that the auditors: (i) should not audit their own work, (ii) should not perform managerial functions for their clients and (iii) should not promote the interests of their clients.

During the years ended December 31, 2009 and 2008, the independent auditors and related parties did not render services unrelated to the external audit at a level higher than 5% of total fees related to external audit services.

(g) insurance coverage

Banco Indusval has insurance contracts to cover risks related to property and equipment. Management considers this amount sufficient to cover possible losses.

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CORPORATE INFORMATION

BOarD Of DirectOrs

chairmanLuiz Masagão Ribeiro

vice chairmanManoel Felix Cintra Neto

Directors Maria Cecilia Cavalcante CiampoliniCarlos CiampoliniAntonio Geraldo da RochaJúlio dos Santos Oliveira Júnior Mário Fukumitsu Adroaldo Moura da Silva Wladimir Antonio Puggina

executive BOarD

Manoel Felix Cintra Neto – PresidentLuiz Masagão Ribeiro – Superintendent OfficerCarlos Ciampolini – Executive OfficerZiro Murata Junior – CFO and Investor Relations Officer Gilberto L. dos Santos Lima Filho – Treasury Officer – SPBRoberto Carlos de C. Almeida – Commercial OfficerGilmar Melo de Azevedo – Commercial OfficerKatia Aparecida Rocha Moroni – International Department OfficerEliezer Lizardo Ribeiro da Silva – Credit Officer

BancO inDusval multistOckCorporate Name: Banco Indusval S/A

headquartersRua Boa Vista, 356 – 7º andarCEP: 01014-000 – São Paulo – SP – BrazilPhone number: (55 11) 3315-6777E-mail: [email protected]: www.indusval.com.brCorporate Taxpayer Number: 61,024,352/0001-71Customer Service and Ombudsman: 0800 7040418

inDusval multistOck cOrretOra De valOresCorporate Name: Indusval S.A. Corretora de Títulos e Valores Mobiliários

headquartersRua Boa Vista, 356 – 7º andarCEP: 01014-000 – São Paulo – SP – BrazilPhone number: (55 11) 3315-6777E-mail: [email protected]: www.indusval.com.brCorporate Taxpayer Number: 65,913,436/0001-40

investOr relatiOns

irOZiro Murata Junior

managerMaria Angela Rodrigues Valente

analystFernanda Ruiz Vieira

Rua Boa Vista, 356 – 7º andarCEP: 01014-000 São Paulo – SP – BrazilPhone number: (55 11) 3315-6821Fax number: (55 11) 3315-6655www.indusval.com.br/ir

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stOck traDing markets

BM&FBOVESPA S/A – Securities, Commodities and Futures ExchangeTicker: IDVL3 and IDVL4

inDepenDent auDitOrs

PriceWaterhouseCoopers Auditores Independentes

infOrmatiOn sOurces

Diário Oficial do Estado de São Paulo Folha de São Paulowww.indusval.com.br/ir

inDusval units

Banco indusval multistock

são pauloRua Boa Vista, 356 – 11º andarCEP: 01014-000 – São Paulo – SP – BrazilPhone number: (55 11) 3315-6777Customer Service and Ombudsman: 0800 7040418

campinasAv. José Bonifácio Coutinho Nogueira, 150 – 6º andar – sala 603 CEP: 13091-611 – Campinas – SP – Brazil Phone number: (55 19) 3206-0788Fax: (55 19) 3207-3654

goiâniaAv. Republica do Líbano, 1551– 7º andar – sala 702CEP: 74115-030 – Goiânia – GO – BrazilPhone number: (55 62) 3878-0888Fax: (55 62) 3878-0860

curitibaRua Marechal Deodoro 950 – 9º andarCEP: 80060-010 – Curitiba – PR – BrazilPhone number: (55 41) 3303-6700Fax: (55 41) 3303 6716

Belo horizonteAv. Olegário Maciel, 2.144 – 11º andar – salas 1101 e 1102CEP: 30180-112 – Belo Horizonte – MG – BrazilPhone number: (55 31) 2111-0888Fax: (55 31) 2111-0861

maringáAv. Duque de Caxias, 882 – Sala 303CEP: 87020-025 – Maringá – PR – BrazilPhone number: (55 44) 3302-4000Fax: (55 44) 3303-4016

campo grandeRua Alberto Néder, 328 – sala 91CEP: 79002-160 – Campo Grande – MS – BrazilPhone number: (55 67) 2106-3950Fax: (55 67) 2106-3966

porto alegreRua Furriel Luiz Antonio Vargas, 250 – sala 802CEP: 90470-130 – Porto Alegre – RS – BrazilPhone number: (55 51) 3406-9100Fax: (55 51) 3406-9116

rio de JaneiroRua Lauro Muller, 116 – sala 3403CEP: 22290-160 – Rio de Janeiro – RJ – BrazilPhone number: (55 21) 3578-3200Fax: (55 21) 3578-3220

uberlândiaAvenida Jaime Ribeiro da Luz, 971 – sala 32CEP: 38408-188 – Uberlândia – MG – BrazilPhone number: (55 34) 2102-8300Fax: (55 34) 2102-8320

recifeAv. Engenheiro Domingos Ferreira, 2589 – sala 204CEP: 51020-031 – Recife – PE – BrazilPhone number: (55 81) 3092-2150Fax: (55 81) 3092-2166

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indusval multistock corretora de valores

headquartersRua Boa Vista, 356 – 7º andarCEP: 01014-000 – São Paulo – SP – BrazilPhone number: (55 11) 3315-6777E-mail: [email protected]: www.indusval.com.brCorporate Taxpayer Number: 65,913,436/0001-40

vila OlímpiaRua das Olimpíadas, 205 – Cj. 11 a 14CEP: 04551-000 – São Paulo – SP – BrazilPhone number: (55 11) 3576-6770Fax: (55 11) 3576-6990

campinasAv. José Bonifácio Coutinho Nogueira, 150 – 6º andar – sala 603 CEP: 13091-611 – Campinas – SP – BrazilPhone number: (55 19) 3206-0788Fax: (55 19) 3207-3654

rio de JaneiroRua Lauro Muller, 116 – Sala 3403CEP: 22290-160 – Rio de Janeiro – RJ – BrazilPhone number: (55 21) 3578-3200Fax: (55 21) 3578-3220

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ACkNOwLEDGEMENTS FOR PARTICIPATION IN THE “VER ALéM” (SEE BEYOND) PROjECT

Projeto Arrastão educators, for believing in this experience and accepting to participate in it.

The Young Participants in Projeto Arrastão, for looking and being able to view

TheMediaGroup Professionals for their enthusiasm, support and creative development of the project.

The Bank’s Communication and Sustainability team, which demonstrated great pleasure and commitment to coordinating the human, financial and material resources needed to develop the “Ver Além” project, in which the pictures in this report were taken.

Banco Indusval Multistock’s Senior Management, which believed in this project and supported it with their keen vision.

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