Itaú’s Q3 Profit Hits R$10.7 Billion, Up 18% Year-on-Year

Itaú Unibanco, Brazil’s largest private bank, reported impressive financial results for the third quarter of 2024, showcasing its resilience and adaptability in a challenging economic environment. The bank’s performance exceeded market expectations, reflecting its strategic initiatives and strong market position.

The bank posted a recurring net income of R$10.675 billion ($1.87 billion), marking an 18.1% increase compared to the same period in 2023. This growth surpassed analysts’ projections, which averaged R$10.424 billion.

The robust performance was driven by several factors, including increased credit volume, higher revenues from wholesale banking operations, and reduced credit costs. Itaú’s Return on Equity (ROE) reached 22.7%, up from 22.4% in the previous quarter and 21.1% a year earlier.

This improvement in profitability underscores the bank’s ability to generate higher returns for shareholders despite economic headwinds. The bank’s total credit portfolio expanded to R$1.278 trillion ($224.2 billion), representing a 9.9% year-over-year growth and a 1.9% increase from the previous quarter.

This growth was primarily driven by loans to micro, small, and medium-sized enterprises, as well as increased lending to individuals. Notable growth areas included vehicle financing, personal loans, and mortgage lending.

Itaú’s financial margin, a key profitability indicator, reached R$28.512 billion ($5 billion), showing an 8.5% increase from the previous year. The margin with clients grew by 7.4% to R$27.455 billion ($4.82 billion), reflecting strong customer relationships and effective pricing strategies.

Itaú’s Q3 Profit Hits R$10.7 Billion, Up 18% Year-on-Year

The bank’s cost of credit decreased by 11% year-over-year to R$8.2 billion ($1.44 billion). This reduction was primarily observed in the retail banking segment in Brazil, attributed to improved loan quality in recent vintages.

Additionally, a positive impact of R$500 million ($87.7 million) related to a specific case in the wholesale segment, likely connected to the debt restructuring of retailer Americanas, contributed to this decrease.

Itaú’s 90-day non-performing loan (NPL) ratio improved to 2.6%, down from 3.0% a year earlier and 2.7% in the previous quarter. This improvement in asset quality reflects the bank’s effective risk management strategies and the overall improvement in Brazil’s economic conditions.

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The bank’s total assets grew to R$3.008 trillion ($527.7 billion), a 12.3% increase from the previous year. Itaú’s equity reached R$192.248 billion ($33.7 billion), up 10.5% year-over-year, further strengthening its capital position.

In light of these strong results, Itaú revised its guidance for credit portfolio growth in 2024, increasing the projected range from 6.5%-9.5% to 9.5%-12.5%. This upward revision reflects the bank’s confidence in its growth strategies and the improving economic outlook.

The bank has been investing heavily in technology and digital channels, including the launch of a “superapp” aimed at providing personalized financial advice to clients. This digital transformation strategy has been key to maintaining Itaú’s competitive edge in an increasingly digital banking landscape.

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