• Managerial Recurring Results for the Quarter: BRL10.9 billion, a 2% increase from the previous quarter.
• Annual Earnings: BRL41.4 billion, representing an 18.2% growth year-over-year.
• Consolidated ROE: 22.1%, with 23.4% in Brazil.
• Loan Portfolio: BRL1.359 trillion, a 15.5% increase over December 2023.
• Financial Margin with Clients: 3.7% growth in the quarter and 8.3% year-over-year, totaling BRL108 billion in 2024.
• Commission Fees and Insurance Results: BRL14.3 billion, a 3.9% increase from the last quarter and 7.7% year-over-year.
• Cost of Credit: BRL8.6 billion for the quarter, with a year-over-year decrease from BRL36.9 billion in 2023 to BRL34.5 billion in 2024.
• Non-Interest Expenses Growth: 6.8% year-over-year.
• Efficiency Ratio: 37.7% in Brazil and 39.5% consolidated.
• Capital Ratio: 13.7% for the quarter.
• Additional Dividend Distribution: BRL18 billion, with BRL15 billion in dividends and interest on capital, and BRL3 billion in share buybacks.

• Warning! GuruFocus has detected 6 Warning Signs with ITUB.

Release Date: February 06, 2025

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

Positive Points

• Itau Unibanco Holding SA (NYSE:ITUB) achieved a strong growth in managerial recurring results, totaling BRL10.9 billion for the quarter, marking a 2% increase from the previous quarter.
• The company reported a significant annual growth of 18.2% in earnings, reaching BRL41.4 billion for the year, leading to a consolidated ROE of 22.1% and 23.4% in Brazil.
• The loan portfolio grew by 15.5% over December 2023, reaching BRL1.359 trillion, with improved credit quality and reduced delinquency levels.
• Itau Unibanco Holding SA (NYSE:ITUB) made substantial progress in its ESG agenda, committing to increase loan transactions with positive economic impacts from BRL400 billion to BRL1 trillion.
• The bank's investment in technology and AI has led to a 99% reduction in high-impact incidents and the implementation of over 1,300 AI models, enhancing operational efficiency.

Negative Points

• Despite strong earnings, the bank's guidance for 2025 indicates a potential slowdown in loan portfolio growth, with expectations ranging from 4.5% to 8.5%.
• The financial margin with the market is projected to be lower, between BRL1 billion and BRL3 billion, due to increased volatility and the monetary cycle.
• Non-interest expenses grew by 6.8% year-over-year, reaching the upper range of the guidance, which could pressure future profitability.
• The bank faces challenges in maintaining its efficiency ratio, with a slight increase expected due to higher inflation and ongoing investments in technology.
• There is a risk of over-leveraging in the private consigned credit market, which could impact credit quality if not managed carefully.

Q & A Highlights

Q: Can you provide more details on the guidance for expenses and the factors contributing to the efficiency improvements? A: Milton Maluhy Filho, CEO, explained that the year-on-year evolution of results is influenced by three main factors: improved profit sharing, labor provisions, and investments in technology. The bank has been investing heavily since 2021, which will lead to future efficiency gains as they transition to more modern, digital platforms. This investment cycle is expected to stabilize over the next two to three years, allowing for significant operational cost reductions and enhanced digital capabilities.

Q: With the current market dynamics, where do you see the best opportunities for growth in spreads, and how do you plan to address competition? A: Milton Maluhy Filho highlighted that the bank is well-prepared for any future scenarios, whether positive or challenging. The focus is on resilient target clients through the cycle, particularly in the mid to high-income segments. The bank's modernization efforts have enhanced its ability to react quickly to market changes, allowing it to capitalize on growth opportunities while maintaining a strong balance sheet and credit quality.

Q: What is the appropriate level of capital for Itau Unibanco, and is there room for more capital returns to shareholders? A: The CEO stated that the bank aims to maintain a capital level of around 12%, which is 50 basis points above the minimum required by the Board of Directors. The bank prioritizes business growth, but if excess capital remains, it will be distributed to shareholders through dividends or buybacks. This approach is expected to continue, reflecting a new normal for capital management.

Q: Can you explain the rationale behind the guidance for financial margins with clients and the market? A: The CEO explained that the financial margin with clients is expected to grow due to a favorable product mix and working capital effects. The margin with the market is more challenging to project due to volatility and interest rate impacts. The bank remains prudent in its projections, with the potential to adjust guidance if necessary based on market conditions.

Q: How do you view the growth prospects for the loan portfolio in Brazil versus Latin America, and what are your expectations for credit quality? A: Growth in Brazil is expected to be higher than in Latin America, with a focus on individual and SME segments. The bank is comfortable with its credit quality, having improved NPL ratios and maintained strong provisioning. The CEO emphasized the bank's readiness to seize growth opportunities while managing credit risks effectively.

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