Itau Unibanco S.A.(ITUB) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The recurring managerial net income reached 6.5 billion reals, an increase of 2.3% compared to the previous quarter [4] - The recurring ROE increased by 40 basis points to 18.9% [4] - The efficiency ratio in Brazil improved to 42.2%, a drop of 100 basis points, marking the lowest level in years [6][30] - The NPL ratio for 90 days in Brazil decreased by 30 basis points to 3.6% [5] Business Line Data and Key Metrics Changes - The Brazilian real portfolio grew by 4.6% [4] - The credit card book rebounded with a growth of 6.7% in the quarter [17] - Payroll linked loans accelerated, growing by 5.5% [4] - Mortgage origination was strong, reaching 12.8 billion reals [5] - The SME loan portfolio doubled over the last four years, increasing from 60 billion reals to 133 billion reals [13] Market Data and Key Metrics Changes - The total loan portfolio adjusted for FX variation grew by 5% in the quarter and 13.8% year-over-year [18] - The bank's total loan portfolio was negatively impacted by an 11.7% decrease due to FX variation in Latin America [18] Company Strategy and Development Direction - The company is implementing the iVarejo 2030 project to redefine customer experience across all retail segments, aiming for 100% implementation by the end of 2022 [7][8] - The ambition is to increase sales through digital channels fourfold by 2025, with digital revenues expected to represent 50% of total retail operations [8] - The bank aims to allocate 400 billion reals to sustainable development by 2025, up from the previous target of 100 billion reals [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a financial margin with clients closer to the top of the range due to improved credit quality and a better mix of loan products [42][44] - The bank's guidance for loan portfolio growth was revised upwards to between 8.5% to 11.5% for the consolidated book [37] - Management noted that the effective tax rate could decrease by 5 to 6 percentage points if the ongoing fiscal reform is approved [55] Other Important Information - The bank added 4.7 million customers through digital channels in the quarter, with 90% of new customers not having a current account [6] - The bank's credit card issuance doubled compared to March, with 75% of new cards issued to non-current account holders [24] Q&A Session Summary Question: Guidance on margin with clients and loan growth - Management explained that the margin with clients is expected to grow due to an improved mix of loan products and a recovery in retail and SME segments [42][43] Question: Guidance on expenses and salary negotiations - Management indicated that they remain focused on efficiency programs and believe they can meet their guidance for expenses despite potential salary increases [45] Question: Breakdown of loan growth expectations - Management stated that they do not provide detailed guidance on the breakdown of credit portfolio expectations but expect good growth in retail and SMEs [46] Question: Fee income performance and growth expectations - Management highlighted that fee income is expected to grow, particularly in credit cards and investment banking, with a strong pipeline in the latter [62] Question: Strategy regarding headcount stability - Management noted that maintaining a stable headcount is part of their strategy to support growth and efficiency, contrasting with competitors who have reduced headcount [66]