- Quarterly Managerial Recurring Results: BRL10.1 billion, 3.1% growth over 1Q 2024.
- Consolidated Return on Equity (ROE): 22.4%, 50 basis points growth quarter over quarter.
- Brazil ROE: 23.6%, 100 basis points growth quarter over quarter.
- Common Equity Tier I Ratio: 13.1%, 10 basis points growth in the quarter.
- Loan Portfolio: BRL1.3 trillion, with various segments showing growth (e.g., personal loans 2.3%, vehicle loans 3.1%).
- SME Portfolio Growth: 2.7% in the quarter, 12.5% year over year.
- Large Corporates Portfolio Growth: 8.6% in the quarter, 16.3% year over year.
- Loan Portfolio Growth (Excluding FX): 7.1% year over year.
- Credit Origination Growth: 6% in individual segment, 7% in SMEs, 23% in large corporate segment quarter over quarter.
- Clients' Net Interest Income (NII): 7.4% growth year over year.
- Core Clients' NII Growth: 2.7% in the quarter.
- Risk-Adjusted Annualized NIM: 5.7% for 2Q 2024.
- Commission Fees and Insurance Revenue: Credit and debit cards grew 0.8% in the quarter.
- Asset Management Business: 83.5% growth year over year.
- Funding through Asset Management: 22% increase year over year, 34% increase comparing 1H 2024 to 1H 2023.
- Short-Term Delinquency Indicator (NPL 15-90): Slight increase in Latin America, slight drop in Brazil.
- 90 Days NPL in Brazil: 3%, slight drop compared to last quarter.
- Noninterest Expenses: 4.7% growth quarter over quarter in Brazil, 5.0% consolidated growth year to date over year.
- Efficiency Ratio: Best efficiency ratio for the second quarter in historic time series.
- Core Cost Growth: 3.8%, below inflation rate of 4.2%.
- Capital Base Growth: 0.5%, adjusted for dividends.
Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Itau Unibanco Holding SA (ITUB, Financial) achieved double-digit quarterly managerial recurring results of BRL10.1 billion, marking a 3.1% growth over the first quarter of 2024.
- The consolidated return on equity (ROE) was 22.4%, with a quarter-on-quarter growth of 50 basis points, and in Brazil, the ROE was 23.6%, a growth of 100 basis points.
- The loan portfolio reached BRL1.3 trillion, with sound growth across various segments, including a 2.3% increase in personal loans and a 3.1% increase in vehicle loans.
- Commission fees and insurance recorded high-quality growth of 5%, contributing positively to the overall financial performance.
- The bank's capital base continued to grow organically, ending the quarter with a Common Equity Tier I ratio of 13.1%, a growth of 10 basis points.
Negative Points
- The credit card portfolio remained stable, indicating a need for further growth to offset previous declines.
- Noninterest expenses grew by 4.7% quarter over quarter in Brazil, partly due to higher investments and the accounting effect of vacations.
- The cost of credit remained flat despite the growing loan portfolio, indicating potential challenges in managing credit costs.
- The market NII had a slightly weaker quarter in Latin America, impacted by FX fluctuations.
- The efficiency ratio, although improving, still reflects the need for better cost management to sustain long-term profitability.
Q & A Highlights
Q: What is the perspective for acceleration of the portfolio of natural persons for this quarter, considering the derisking process?
A: The derisking process is nearing its end, and we are at an inflection point. We have continued to grow in the medium and high-income segments. As the negative effects of certain portfolios, like credit cards, diminish, we expect to see positive growth effects. We are focusing on quality growth across all income segments, maintaining discipline in net financial margins.
Q: How do you view the health of the economy and your ability to continue lending at the current pace, especially in the corporate segment?
A: The growth in the corporate segment has been healthy, driven by opportunities in the DCM market and strong capital positions. We have diversified our portfolio and reduced concentration risks. While the pace of growth in large corporates may slow, we expect continued healthy growth in SMEs. We remain cautious and focused on capital allocation and risk management.
Q: Can you provide an update on the One Itaú platform and its relevance to the bank's medium-term strategy?
A: One Itaú is crucial for our strategy, and we would be disappointed if it doesn't succeed. We started with a pilot phase, and the initial results are promising, with a 98% migration rate for clients moving to the super app. We aim to migrate around 2-2.5 million clients this year, potentially doubling that number. The focus is on improving client experience and cross-sell capacity.
Q: Can you explain the strong results in the Treasury line and whether this trend will continue?
A: The strong Treasury results this quarter were atypical, driven by various risk factors and trading opportunities. We do not expect this level of performance to be the norm. The margin with the market is expected to return to around BRL1.1 billion. There were no artifacts or non-recurrent gains in this quarter's results.
Q: What is the strategy for growing the payroll loan portfolio, given the competitive market and recent regulatory changes?
A: Our payroll loan portfolio is well-distributed across INSS, public, and private segments. The recent cap on INSS rates has impacted the market, but we have shifted production to internal channels, which are more competitive. We are investing in digital channels to enhance client experience and competitiveness. Despite the challenges, we see opportunities for growth in this segment.
Q: How do you view the sustainability of the current ROE levels, and do you plan to increase the frequency of capital allocation?
A: We do not provide long-term ROE guidance, but we aim to maintain profitability above 20%. The high ROE levels are driven by a benign credit cycle and strong wholesale operations. We plan to optimize capital once a year, considering regulatory uncertainties and growth opportunities. Extraordinary dividends may be considered in the future based on capital adequacy.
Q: What are the main regulatory discussions currently affecting the bank?
A: The main regulatory discussions involve the DTA treatment and the potential impact of IFRS 9. Credit card regulations are an ongoing topic. We are engaged in discussions with the Central Bank and the Finance Ministry to mitigate potential impacts on the banking system.
Q: Can you provide more details on the impact of IFRS 9 and the potential revaluation of provisions for Americanas?
A: The implementation of IFRS 9 will have an impact, but it is manageable for Itaú. We are discussing with regulators to find ways to mitigate the impact on the banking system. Regarding Americanas, we have made provisions, and any recovery will be reflected in future results. The exact impact will be determined based on ongoing discussions and the resolution of the case.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
