• Managerial Recurring Results: 10.7 billion rise, 6% growth quarter over quarter, 20% growth year over year.
• Return on Equity (ROE): Consolidated ROE at 22.7%, Brazil ROE at 23.8%.
• Common Equity Tier One Ratio: 13.7%, 60 basis points growth in the period.
• Loan Portfolio Growth: 1.9% quarter over quarter, nearly 10% year over year.
• Financial Margin with Clients: 4.5% growth quarter over quarter, 8.2% growth year over year.
• Individual Loan Segment Growth: 2.5% quarter over quarter.
• SME Portfolio Growth: 4.1% quarter over quarter.
• Risk-Adjusted NIM (Brazil): Expanded from 6.2% to 6.5%.
• Cost of Credit: Improved from 8.8 billion to 8.2 billion.
• Non-Interest Expenses Growth: 6.1% accumulated, 5.8% quarterly.
• Efficiency Ratio: 37.5% in Brazil, 39.1% consolidated.
• Capital Accumulation: Common equity tier one increased from 13.1% to 13.7%.
• Credit Portfolio Growth Guidance: Adjusted to 9.5% - 12.5% due to FX rate effects.

• Warning! GuruFocus has detected 5 Warning Sign with ITUB.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Itau Unibanco Holding SA (NYSE:ITUB) reported strong quarterly managerial recurring results of 10.7 billion reais, marking a 6% growth quarter over quarter and nearly 20% year over year.
• The company achieved a consolidated return on equity (ROE) of 22.7% and a ROE in Brazil of 23.8%, indicating robust profitability.
• The financial margin with clients grew by 4.5% quarter over quarter and 8.2% year over year, showcasing solid revenue generation capacity.
• The loan portfolio saw significant growth, with a 1.9% increase quarter over quarter and nearly 10% growth year over year.
• Itau Unibanco Holding SA (NYSE:ITUB) surpassed its sustainable finance goal of 400 billion reais a year and a half early, setting a new target of 1 trillion reais by 2030.

Negative Points

• The efficiency ratio worsened from 45% to 47%, indicating a need for structural changes to improve operational efficiency.
• The cost of credit, although improved, still poses a challenge, with a nominal cost of 8.2 billion reais this quarter.
• The bank's coverage ratio fell in the large corporate segment due to specific provisioning adjustments.
• There is a potential impact from exchange rate volatility, which necessitated an adjustment in the guidance for credit portfolio growth.
• The acquiring business showed a deceleration in growth, with a total payment volume (TPV) increase of only 4% year over year, the lowest since 2020.

Q & A Highlights

Q: Can we expect an extraordinary dividend to bring the capital index closer to the internal level of 12.5% in the last quarter? A: Milton Maluhy Filho, CEO, explained that the bank has a larger capital base and fewer regulatory uncertainties than last year. He expects the extraordinary dividend to be higher than last year's, with the bank maintaining a well-capitalized position. The decision will be finalized at the beginning of the year, with more clarity on projections.

Q: What are the lines that the bank is focusing on for growth, and how does it compare to competitors? A: Milton Maluhy Filho, CEO, stated that the bank focuses on risk-adjusted returns and is growing across all segments, including high-income and SMEs. The bank prioritizes quality growth with adequate returns, emphasizing the importance of capital allocation and client-centric strategies.

Q: How does the exchange rate influence the guidance for credit portfolio growth and financial margins? A: Milton Maluhy Filho, CEO, clarified that the exchange rate primarily affects the portfolio rather than the margin. The guidance adjustment reflects currency volatility, with the bank maintaining growth expectations in line with previous ranges.

Q: What is the impact of IFRS 9 on Itau Unibanco, and how does it compare to peers? A: Milton Maluhy Filho, CEO, noted that the bank has been using an expected loss model since 2010, minimizing the impact of IFRS 9. The bank's proactive management of provisions ensures predictability and stability, potentially providing a competitive advantage over peers.

Q: How is the bank managing the credit cycle, and are there concerns about credit quality? A: Milton Maluhy Filho, CEO, expressed confidence in the bank's ability to manage credit quality, with room for further improvement in NPL ratios. The bank remains vigilant about macroeconomic factors and adjusts its risk appetite dynamically to ensure sustainable growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.