Itau Unibanco S.A.(ITUB) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company's earnings for Q1 2024 totaled R$9.8 billion, representing a growth of 3.9% compared to the previous quarter [8] - The consolidated recurring return on equity (RoE) was 21.9%, with a quarter-over-quarter increase of 70 basis points [8] - The cost of credit dropped nominally for the third consecutive quarter, reaching R$8.8 billion, a decrease of 3.9% quarter-over-quarter [9] - Operating expenses (OpEx) fell by 6.2% to R$14.4 billion, leading to a record efficiency ratio of 38.3%, a decrease of 200 basis points [10] Business Line Data and Key Metrics Changes - Vehicle loans grew by 1.7% during the quarter and 5.4% year-over-year, while the mortgage portfolio remained flat in the quarter but grew by 3.1% year-over-year [11] - The credit portfolio, excluding FX variations, grew by 5.6% year-over-year, while including FX variations, it grew by 2.8% [12] - The individual loans portfolio grew by 2.6% year-on-year but decreased by 0.6% in Q1 due to seasonality in the credit card portfolio [29] - The SME's portfolio grew by 1.9% in the quarter and 10.2% year-over-year, while the large corporates portfolio grew by 9.3% year-over-year and 3.6% in the quarter [30] Market Data and Key Metrics Changes - The company maintained a strong position in the capital markets, ranking first in debt capital markets with a market share of 32% [67] - The first quarter typically sees weaker issuance and acquiring business due to seasonality, with a noted 5.8% drop year-over-year in this area [19] Company Strategy and Development Direction - The company is focused on a de-risking strategy, having reduced its credit portfolio to less resilient segments by 83% since December 2022, with full reduction expected by Q3 2024 [14] - The 2024 guidance estimates a growth of the credit portfolio between 6.5% and 9.5%, with confidence in achieving this despite current adjustments [45][46] - The company aims to enhance its digital transformation to improve client experience and operational efficiency [96][124] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter tends to be weaker due to seasonal factors, but they remain optimistic about future growth and profitability [39][40] - The company expects to maintain healthy indicators with good coverage by provisions and a healthy level of 90-day delinquency [41] - Management expressed confidence in achieving the 2024 guidance and emphasized disciplined capital allocation and risk management [120] Other Important Information - The company announced the payment of extraordinary dividends, which reduced its capital base, but it has since generated more earnings [43][106] - The company is actively managing costs, with core costs growing at 2%, below the 12-month headline inflation rate of 3.9% [42] Q&A Session Summary Question: Dynamics of loan growth by individual client segments - Management highlighted the importance of managing the de-risking process and expressed optimism about profitability and growth opportunities across various client segments [87][90] Question: Concerns about growing expenses with inflation - Management acknowledged the need for efficiency and emphasized ongoing investments in digital transformation to enhance client experience and operational scale [96][124] Question: Discussion on extraordinary dividends - Management indicated that they expect to announce extraordinary dividends by the end of the year, contingent on projections and capital generation [106][111] Question: Opportunities in the SME segment - Management expressed confidence in the SME segment, noting consistent growth and the potential for further expansion [112][115]