Core Viewpoint - Itau Unibanco Holding S.A. (ITUB) reported a recurring managerial profit of R$10.5 billion ($1.83 billion) for Q1 2025, reflecting a 5% year-over-year increase, supported by higher revenues and an increase in managerial financial margin, although offset by rising non-interest expenses [1] Financial Performance - Operating revenues for the quarter reached R$46.8 billion ($8.2 billion), marking a 9.4% increase year over year [2] - The managerial financial margin rose 18.6% year over year to R$30.4 billion ($5.3 billion) [2] - Commissions and fees increased by 2.9% to R$11.6 billion ($2 billion) [2] - Non-interest expenses totaled R$15.8 billion ($2.8 billion), up 9.8% year over year, primarily due to investments in technology [2] Efficiency and Credit Costs - The efficiency ratio improved to 38.1%, down 20 basis points from the previous year, indicating enhanced profitability [3] - The cost of credit charges increased by 10.3% year over year to R$9.6 billion ($1.7 billion) [3] Balance Sheet Overview - As of March 31, 2025, total assets decreased by 1.9% to R$2.62 trillion ($458.5 billion) [4] - Total liabilities, including deposits and borrowings, fell by 1.6% to R$2.59 trillion ($453.3 billion) [4] - The credit portfolio, including private securities and financial guarantees, grew by 3.7% to R$1.4 trillion ($245 billion) [5] Capital and Profitability Ratios - The Common Equity Tier 1 ratio was 12.6%, down from 13% a year earlier [6] - The annualized recurring managerial return on average equity increased to 22.3%, up from 21.9% in the previous year [6] Overall Assessment - The first-quarter results were positively influenced by the rise in managerial financial margin and a declining efficiency ratio, indicating improved profitability [7] - Growth in commissions and fees, along with a focus on maintaining a healthy credit portfolio, are seen as positive developments [7]

Core Viewpoint - Investors are evaluating Banco Santander (SAN) and Banco Itau (ITUB) to determine which stock offers better value opportunities at present [1]. Group 1: Zacks Rank and Earnings Outlook - Banco Santander has a Zacks Rank of 2 (Buy), indicating a positive earnings estimate revision trend, while Banco Itau has a Zacks Rank of 4 (Sell) [3]. - The improving earnings outlook for Banco Santander suggests a favorable investment opportunity compared to Banco Itau [7]. Group 2: Valuation Metrics - Banco Santander has a forward P/E ratio of 7.74, whereas Banco Itau has a forward P/E ratio of 9.09 [5]. - The PEG ratio for Banco Santander is 0.90, indicating better value relative to its expected earnings growth compared to Banco Itau's PEG ratio of 1.11 [5]. - Banco Santander's P/B ratio is 0.93, significantly lower than Banco Itau's P/B ratio of 1.62, suggesting that SAN is undervalued compared to ITUB [6]. - Based on these valuation metrics, Banco Santander holds a Value grade of B, while Banco Itau has a Value grade of F [6].

Financial Performance - Operating revenues increased by 8.4% to R$168,050 million for the year ended December 31, 2024, compared to R$154,971 million in 2023[742] - Net income attributable to owners of the parent company rose by 24.1% to R$41,085 million for the year ended December 31, 2024, from R$33,105 million in 2023[744] - Net interest income increased by R$6,136 million, or 6.3%, for the year ended December 31, 2024, primarily due to a R$19,873 million increase in interest and similar income[744] - Non-interest income grew by 12.1%, or R$6,943 million, for the year ended December 31, 2024, driven by a 106.5% increase in other income[747] - Other operating expenses increased by 4.0% to R$88,183 million for the year ended December 31, 2024, from R$84,826 million in 2023[759] Asset Quality - Expected loss from financial assets increased by R$1,866 million, or 6.1%, for the year ended December 31, 2024, mainly due to an increase in expected loss with other financial assets[751] - The 15 to 90 days NPL ratio decreased by 30 basis points to 2.0% as of December 31, 2024, compared to December 31, 2023[754] - The 90-day NPL ratio decreased by 50 basis points to 2.6% as of December 31, 2024, attributed to improved loan quality in recent vintages[758] Taxation - Current and deferred income and social contribution taxes amounted to R$5,428 million for the year ended December 31, 2024, down from R$5,823 million in 2023[760] - The managerial adjustments of tax effects for current and deferred income and social contribution taxes were R$5,781 million for the year ended December 31, 2024, compared to R$4,855 million in 2023[761] Business Segments - Net income from the Retail Business segment increased by 15.5% to R$15,124 million for the year ended December 31, 2024, compared to R$13,099 million in 2023[773] - Operating revenues for the Retail Business segment rose by R$4,462 million, or 4.6%, driven by a 4.8% increase in the interest margin due to higher average credit volume[773] - Non-interest income in the Retail Business segment increased by 4.3% to R$39,101 million, attributed to higher revenues from insurance products and card issuance[773] - Net income from the Wholesale Business segment grew by 5.9% to R$20,913 million for the year ended December 31, 2024, from R$19,756 million in 2023[776] - Operating revenues for the Wholesale Business segment increased by R$3,383 million, or 6.2%, due to a 3.2% rise in the interest margin and a 14.4% increase in non-interest income[777] - The Activities with the Market + Corporation segment saw net income rise by 94.2% to R$5,366 million, with operating revenues increasing by R$4,315 million, or 77.4%[781] Financial Position - Total assets increased by R$311,375 million, or 12.2%, to R$2,854,475 million as of December 31, 2024, primarily due to growth in financial assets at amortized cost[784] - Financial assets at amortized cost increased by R$226,579 million, or 13.4%, mainly due to higher loan and lease operations and interbank deposits[784] - Total loans and lease operations increased by R$114,903 million, or 12.6%, reaching R$1,025,493 million as of December 31, 2024, compared to R$910,590 million in 2023[788] - Financial liabilities grew by R$238,288 million, or 11.9%, totaling R$2,239,979 million as of December 31, 2024[790] - Total stockholders' equity attributed to the owners of the parent company reached R$211,090 million, an increase of R$20,913 million, or 11.0%[790] Capital and Liquidity - The Liquidity Coverage Ratio (LCR) improved to 221.3% as of December 31, 2024, compared to 191.8% in 2023, significantly exceeding the Central Bank's minimum requirement of 100%[814] - Total capital increased to R$227,602 million, up R$20,740 million from R$206,862 million in 2023, with a total capital ratio of 16.5%[807] - Common Equity Tier I (CET1) capital rose to R$188,265 million, maintaining a CET1 ratio of 13.7%[805] - As of December 31, 2024, the Net Stable Funding Ratio (NSFR) was 122.0%, down from 126.9% in 2023, indicating a stable liquidity position above the Central Bank's minimum requirement of 100%[818][819] Investments and Expenditures - Capital expenditures for the year ended December 31, 2024, totaled R$7,368 million, a decrease of 19.8% from R$9,191 million in 2023[848] - Fixed assets decreased by 52.0% to R$1,833 million in 2024 from R$3,815 million in 2023[848] - Intangible assets increased by 3.0% to R$5,535 million in 2024 compared to R$5,376 million in 2023[848] Risk Management - The sensitivity analysis for interest rate risk indicated potential losses of R$10,576.6 million under Scenario III for the trading and banking portfolios[856] - The cash flow hedge strategy aims to protect against future cash flows of interest payments, while fair value hedges protect against changes in market risk due to variable rates[737] Strategic Initiatives - The company continues to explore growth opportunities both domestically and internationally as part of its strategic review[885]

Core Viewpoint - Investors in the Banks - Foreign sector should consider The Bank of East Asia Ltd. (BKEAY) as a more attractive option compared to Banco Itau (ITUB) due to its stronger valuation metrics and better earnings estimate revisions [1][3][7] Valuation Metrics - BKEAY has a forward P/E ratio of 6.34, while ITUB has a forward P/E of 8.10, indicating BKEAY is undervalued relative to ITUB [5] - The PEG ratio for BKEAY is 0.82, compared to ITUB's PEG ratio of 0.99, suggesting BKEAY offers better value considering its expected earnings growth [5] - BKEAY's P/B ratio is 0.26, significantly lower than ITUB's P/B of 1.45, further highlighting BKEAY's undervaluation [6] Analyst Outlook - BKEAY holds a Zacks Rank of 2 (Buy), indicating a positive analyst outlook, while ITUB has a Zacks Rank of 4 (Sell), reflecting a less favorable view [3] - The stronger estimate revision activity for BKEAY suggests a more optimistic future performance compared to ITUB [7]

Core Insights - The article compares The Bank of East Asia Ltd. (BKEAY) and Banco Itau (ITUB) to determine which stock offers better value for investors [1] Group 1: Zacks Rank and Earnings Outlook - BKEAY has a Zacks Rank of 2 (Buy), while ITUB has a Zacks Rank of 3 (Hold), indicating a stronger earnings outlook for BKEAY [3] - The Zacks Rank system emphasizes companies with positive earnings estimate revisions, suggesting that BKEAY is likely experiencing a more favorable earnings outlook [3] Group 2: Valuation Metrics - BKEAY has a forward P/E ratio of 6.63, compared to ITUB's forward P/E of 7.12, indicating that BKEAY may be undervalued relative to ITUB [5] - The PEG ratio for BKEAY is 0.85, while ITUB's PEG ratio is 0.88, suggesting that BKEAY has a better valuation considering its expected earnings growth [5] - BKEAY's P/B ratio is 0.26, significantly lower than ITUB's P/B of 1.35, further indicating that BKEAY may be undervalued [6] Group 3: Overall Value Assessment - Based on various valuation metrics, BKEAY holds a Value grade of A, while ITUB has a Value grade of D, reinforcing the conclusion that BKEAY is the superior value option [7]

Core Insights - Itaú Unibanco reported record net profits of R$10.9 billion, reflecting a 16% year-over-year growth, although it slightly missed EPS estimates [1] Financial Performance - The company achieved a net profit of R$10.9 billion for the quarter [1] - This represents a 16% increase compared to the same quarter last year [1] - EPS estimates were slightly missed, indicating potential areas for improvement in future earnings [1]

Financial Performance - Operating revenues for the year ended December 31, 2024, increased by 8.4% to R$168,050 million compared to R$154,971 million in 2023[25]. - Net income attributable to owners of the parent company rose by 24.1% to R$41,085 million in 2024 from R$33,105 million in 2023[25]. - Net interest income for 2024 was R$103,848 million, reflecting a 6.3% increase from R$97,712 million in 2023[25]. - Non-interest income grew by 12.1% to R$64,202 million in 2024, compared to R$57,259 million in 2023[25]. - Net income for the year ending December 31, 2024, reached R$42,128 million, an increase of 24% compared to R$33,877 million in 2023[199]. - Total comprehensive income for 2024 was R$46,864 million, up from R$37,881 million in 2023, reflecting a growth of 24%[199]. - Comprehensive income attributable to the owners of the parent company increased to R$45,821 million in 2024, compared to R$37,109 million in 2023, marking a rise of 23%[199]. - Earnings per share (basic) increased to R$4.20 in 2024, up from R$3.38 in 2023, marking a growth of 24.3%[197]. Asset and Liability Growth - Total assets grew by 12.2% to R$2,854,475 million as of December 31, 2024, up from R$2,543,100 million in 2023[29]. - Financial liabilities grew by R$238,288 million, or 11.9%, totaling R$2,239,979 million as of December 31, 2024[81]. - Total loans and lease operations increased by R$114,903 million, or 12.6%, reaching R$1,025,493 million as of December 31, 2024, compared to R$910,590 million in 2023[79]. - Total current liabilities reached R$1,395,888 million, while long-term liabilities were R$1,236,700 million, leading to total capitalization of R$2,854,475 million[115]. - The bank's total liabilities increased to R$2,633,191 million in 2024, up from R$2,344,050 million in 2023, representing a growth of 12.3%[196]. Income and Expense Analysis - Other operating expenses increased by 4.0% to R$88,183 million for the year ended December 31, 2024, from R$84,826 million in 2023[52]. - The increase in general and administrative expenses was R$3,657 million, or 4.8%, for the year ended December 31, 2024, primarily due to salary adjustments and higher profit-sharing expenses[52]. - The provision for expected loss increased slightly to R$47,758 million in 2024 from R$47,539 million in 2023, indicating a stable risk management approach[195]. Business Segment Performance - Net income from the Retail Business segment increased by 15.5% to R$15,124 million for the year ended December 31, 2024, compared to R$13,099 million in 2023[66]. - Operating revenues for the Wholesale Business segment increased by R$3,383 million, or 6.2%, for the year ended December 31, 2024, driven by a 3.2% increase in the interest margin[69]. - Net income from the Activities with the Market + Corporation segment increased by R$2,603 million, or 94.2%, for the year ended December 31, 2024, compared to R$2,763 million in 2023[72]. - Non-interest income in the Retail Business segment increased by 4.3% to R$39,101 million for the year ended December 31, 2024[64]. Regulatory and Market Environment - Brazil's sovereign credit rating was upgraded to Ba1 with a positive outlook on October 1, 2024, from Ba2, which may positively influence investor perceptions[151]. - The new consumer protection law effective August 30, 2024, allows for flexible monetary restatement and interest rates in contracts, impacting future financial agreements[122]. - The Central Bank's new regulations on credit derivatives and structured operations certificates are expected to enhance risk management practices in the Brazilian market[123]. - The Central Bank's upcoming regulations on banking as a service and credit card payment arrangements are anticipated to strengthen risk management frameworks in the payments market[124]. Capital and Equity - Total stockholders' equity attributed to the owners of the parent company increased by R$20,913 million, or 11.0%, reaching R$211,090 million[81]. - The company's total capital reached R$227,602 million, an increase of R$20,740 million, with a Basel Ratio of 16.5%[91]. - The BIS ratio stood at 16.5%, reflecting the company's capital adequacy in relation to risk-weighted assets[115]. Operational Efficiency - The total number of employees increased by 0.5% to 96,219 in 2024 from 95,702 in 2023[30]. - The total number of branches and client service branches decreased by 9.9% to 2,928 in 2024 from 3,250 in 2023[30]. - Significant investments have been made in the Bank's Information Technology systems to support operations and financial statement preparation[177]. Miscellaneous - The audit confirmed that the criteria and assumptions used by management for measuring the provision for expected loss are consistent with the information analyzed[173]. - Provisions and contingent liabilities are primarily related to judicial and administrative proceedings, which require careful assessment and management judgment[179].

Financial Data and Key Metrics Changes - Managerial recurring results for Q4 2024 totaled BRL10.9 billion, a 2% increase from BRL10.7 billion in the previous quarter [20] - For the year, earnings closed at BRL41.4 billion, reflecting strong growth of 18.2% [21] - The consolidated ROE was 22.1%, with a simulated adjustment showing 24.4% [22] Business Line Data and Key Metrics Changes - The individual loan segment grew 6.9% year-over-year, with credit card loans driving growth [27] - The SME portfolio grew 8.1% in the quarter, significantly influenced by governmental programs [29] - The large corporate segment saw growth of 6.8% quarter-over-quarter and 21% year-over-year, also impacted by FX rate effects [30] Market Data and Key Metrics Changes - The loan portfolio reached BRL1.359 trillion, growing 15.5% over December 2023 [24] - The financial margin with clients grew 3.7% in the quarter and 8.3% year-over-year, totaling BRL108 billion in 2024 [25] - Commissions, fees, and results from insurance totaled BRL14.3 billion, marking a 3.9% increase compared to the last quarter [25] Company Strategy and Development Direction - The company aims to transition to a "transition bank," focusing on sustainable finance and climate transition [13] - Significant investments in technology and modernization are ongoing, with a goal to migrate 15 million clients, achieving 5.3 million by year-end 2024 [15][16] - The bank is focused on enhancing client experience through hyper-personalization and transactionality [16] Management's Comments on Operating Environment and Future Outlook - The management expects lower GDP growth of 2.2% for 2025, with inflation projected at 5.8% [68] - The bank is well-prepared for future challenges, with strong credit indicators and a robust balance sheet [94] - Guidance for loan portfolio growth is set between 4.5% to 8.5% for 2025, with expectations for financial margin growth higher than portfolio growth [70][71] Other Important Information - The company announced an additional distribution of BRL18 billion, including BRL15 billion in dividends and BRL3 billion for share buybacks [62][63] - The common equity Tier 1 ratio is projected to adjust to 12.3% after the distribution [65] Q&A Session Summary Question: Guidance on expenses and efficiency improvements - Management highlighted three main effects on expenses: profit sharing improvements, labor provisions adjustments, and increased investments in technology [78][80][82] Question: Growth opportunities in the current market dynamics - Management emphasized the bank's preparedness for various scenarios and the importance of portfolio management to capture growth opportunities [94][96][100] Question: Appropriate level of capital and potential for additional capital returns - Management indicated a target capital index of 12%, with plans to distribute excess capital through dividends and buybacks if growth opportunities arise [112][114][116] Question: Clarification on margin guidance - Management explained that margin projections are influenced by various factors, including portfolio growth and market conditions, and emphasized the bank's ability to adapt to changing scenarios [123][125]

Core Insights - Itau Unibanco Holding S.A. reported a recurring managerial result of R$10.8 billion ($1.87 billion) for Q4 2024, reflecting a year-over-year increase of 14.9% [1] - For the full year 2024, the recurring managerial results reached R$41.4 billion ($7.15 billion), marking an 18.2% increase year-over-year [2] Financial Performance - Operating revenues for Q4 2024 were R$44.1 billion ($7.6 billion), up 7.6% year-over-year, while total operating revenues for the year were R$169 billion ($29.2 billion), increasing by 7.8% [3] - The managerial financial margin rose by 8.3% year-over-year to R$29.4 billion ($5.13 billion), and commissions and fees increased by 4.5% to R$11.7 billion ($2 billion) [3] - Non-interest expenses totaled R$16.7 billion ($2.9 billion), reflecting an 8.9% year-over-year increase [3] Efficiency and Profitability - The efficiency ratio improved to 39.5% in Q4 2024, down from 39.9% in the same quarter of the previous year, indicating enhanced profitability [4] - The annualized recurring managerial return on average equity was 22.2%, up from 21.2% in the prior year [8] Credit Quality - The cost of credit charges decreased by 5.5% year-over-year to R$8.6 billion ($1.5 billion) [5] - The non-performing loan ratio improved to 2.4% in Q4 2024, down from 2.8% in the prior-year quarter [5] Balance Sheet Overview - As of December 31, 2024, total assets decreased by 6.6% to R$2.85 trillion ($492.8 billion) [6] - Liabilities, including deposits and borrowings, increased significantly by 82.6% on a sequential basis to R$2.63 trillion ($454.7 billion) [6] - The credit portfolio rose by 6.3% to R$1.35 trillion ($233.4 billion) from the previous quarter [7] Capital Ratios - The Common Equity Tier 1 ratio improved to 15% as of December 31, 2024, up from 13.7% a year earlier [8]

Core Insights - Itaú Unibanco (NYSE: ITUB) reported a quarterly performance that fell slightly below market expectations, missing both top and bottom line estimates, yet demonstrated solid profit growth and expansion overall [1] Financial Performance - The company experienced accelerating profit growth during the quarter, indicating a positive trend despite the slight miss in estimates [1] Market Position - Itaú Unibanco continues to be a significant player in the financial sector, particularly in emerging markets, as highlighted by the focus of analysts on foreign equities [1]