December's portfolio already reflects the sale of Credicard. For comparison purposes, the following adjustments were carried out: the December 2003 portfolio includes all due installments of purchases charged on Unicard and Fininvest credit card, excludes Credicard portfolio and includes Hipercard (which was acquired in March 2004). This way, the resulting growth in total credit operations was 14.7% in 2004.

For the Retail segment, loan operations increased 28.6% in the period. The steeper growth was observed in Hipercard credit portfolio, of 53% since its acquisition, in March; the small and micro-business credit portfolios, rising by 52.7% in 2004, and consumer financing operations, up by 32.1%. The total of credit operations with individuals grew 23.2% in 2004.

The corporate loan portfolio rose by 10.3% in the year. In Wholesale operations, credit operations with large companies advanced 0.8%, despite a soft demand related to the 8.1% appreciation of the Real vis-à-vis the Dollar in 2004.

As of December, 2004, the balance for the consolidated allowance for loan losses reached R$1,669 million, representing 5.2% of the portfolio, composed of:

R$573 million according to Brazilian Central Bank Resolution 2682, related to overdue credits;
R$745 million according to risk parameters of Brazilian Central Bank Resolution 2682, related to falling due credits;
R$351 million based on more conservative percentages than those required by the Regulatory Authority, representing an increase of R$128 million from 2003.

The ratio of credits rated E-H relative the total credit portfolio decreased to 4.9% at year-end 2004, from 6% a year earlier. The improvement in credit quality registered in the portfolio is evident by the index that measures net write-offs in relation to total credit operations. This ratio fell to 3.5% in 2004 from 3.9% in the prior year.