Itau Unibanco S.A.(ITUB) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported earnings of BRL 8.7 billion for Q2 2023, representing a growth of 3.6% with a strong ROE of 20.9% [65] - The efficiency ratio improved to 39.6% on a consolidated basis, with Brazil achieving the lowest ratio ever at 37.7% [66][79] - The margin with clients grew by 3.7% to reach BRL 24.9 billion, indicating strong core results [65][69] Business Line Data and Key Metrics Changes - The loan portfolio saw a growth of 0.6% in Q2, with individual loans growing by 8.9% year-on-year, while the SMEs portfolio remained virtually flat [49] - The credit card portfolio experienced a strategic reduction, leading to a healthier risk profile and a drop in delinquency rates [50][60] - Revenue from services and insurance grew significantly, with insurance operations increasing by 2.9% in the quarter and 17.5% year-on-year [57] Market Data and Key Metrics Changes - The company noted a stable delinquency ratio with a slight increase of 0.1 percentage points, consistent with expectations [48] - The NPL (Non-Performing Loans) ratio for individuals showed a positive trend, with a 20 basis point drop in delinquency rates [60][76] - The acquiring business reached a volume of BRL 208 billion, reflecting a 22% growth in revenue [56] Company Strategy and Development Direction - The company is focused on digital transformation and efficiency improvements, aiming to enhance client experience and reduce costs [81][82] - There is an emphasis on maintaining a strong balance sheet and managing risk effectively throughout the interest rate cycle [70][102] - The company aims to be the main bank for clients, enhancing engagement and cross-selling opportunities [18][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, expecting a more benign credit cycle and potential revenue growth of 10% to 15% in 2024 [94][96] - The company anticipates stability in delinquency ratios and a positive outlook for the next quarters, with more chances of positive surprises than negative [77] - Management acknowledged the challenges in the capital markets but remains committed to delivering sustainable earnings [90] Other Important Information - The company maintained its guidance for the year, with slight adjustments to the effective tax rate expected to be between 27% and 29% [86][87] - The company is actively monitoring the impact of potential tax reforms on its operations and cost structure [30][31] Q&A Session Summary Question: What happened with the operational event affecting system availability? - Management apologized for the impact on investors and clients, acknowledging the need for resilience and improvements in the bank's operations [91][92] Question: What are the expectations for revenue growth in 2024? - Management is optimistic about achieving 10% to 15% revenue growth, driven by improvements in core segments and a more favorable credit cycle [94][96] Question: How does the company plan to manage capital allocation and payout? - Management indicated a direction towards increasing payout while ensuring capital is retained only as necessary for growth opportunities [99]