Yahoo Finance Itau Unibanco (ITUB) Q1 Earnings & Revenues Increase Y/Y
Itau Unibanco Holding S.A. ITUB posted recurring managerial results of R$8.43 billion ($1.62 billion) for first-quarter 2023, up 14.6% year over year.
The results were supported by higher commissions and fees, as well as revenues. Increases in total deposits and credit portfolios reflect a strong balance sheet position. However, a rise in non-interest expenses was an offsetting factor.
Revenues Rise, Costs Increase
Operating revenues were R$37.3 billion ($7.17 billion) in the reported quarter, up 8.1% on a year-over-year basis.
The managerial financial margin increased 17.3% year over year to R$24.69 billion ($4.75 billion). Also, commissions and fees were up 5.9% to R$10.34 billion ($1.99 billion).
Non-interest expenses totaled R$13.78 billion ($2.65 billion), up 7.7% year over year.
In the first quarter, the efficiency ratio was 39.8%, down from 41.8% in the year-earlier quarter. A decrease in this ratio indicates increased profitability.
Credit Quality Weak
The cost of credit charges climbed 30.4% on a year-over-year basis to R$9.08 billion ($1.74 billion).
The non-performing loan ratio (loan transactions overdue more than 90 days) was 2.9% in the first quarter, up from the prior-year quarter’s 2.6%.
Balance Sheet Position Strong
As of Mar 31, 2023, Itau Unibanco’s total assets increased 3.1% to R$2.54 trillion ($0.50 trillion) from the last reported quarter. Liabilities, including deposits, debentures, securities, borrowings and onlending, totaled R$1.30 trillion ($0.26 trillion), increasing 3.9% on a sequential basis.
Itau Unibanco’s credit portfolio, including corporate securities and financial guarantees provided, reached R$1.15 trillion ($0.23 trillion) as of Mar 31, 2023, up 1% from the last reported quarter.
Capital & Profitability Ratios Rise
As of Mar 31, 2023, the Common Equity Tier 1 ratio was 12%, up from 11.1% on Mar 31, 2022.
Annualized recurring managerial return on average equity was 20.7% in the first quarter, up from 20.4% in the year-earlier quarter.
Our Viewpoint
Itau Unibanco’s first-quarter results were driven by the rise in the managerial financial margin. The declining efficiency ratio indicates a rise in profitability, which is a positive factor. However, the weak credit quality was concerning.
Itau Unibanco Holding S.A. Price, Consensus and EPS Surprise
Itau Unibanco Holding S.A. price-consensus-eps-surprise-chart | Itau Unibanco Holding S.A. Quote
Itau Unibanco currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Foreign Banks
UBS Group AG UBS reported first-quarter 2023 net profit attributable to shareholders of $1.03 billion, down 51.8% from the prior-year quarter.
UBS’ quarterly performance was worrisome, as there were increases in expenses. Lower revenues acted as another major headwind.
Nevertheless, the performance of the Personal & Corporate Banking division was impressive. UBS’ Asset Management arm, Group Functions, The Investment Bank and Global Wealth Management segments did not perform well.
ICICI Bank IBN released fourth-quarter fiscal 2023 (ended Mar 31) results. Net income was INR91.22 billion ($1.1 billion), up 30% from the prior-year quarter.
IBN’s results were driven by a rise in net interest income and non-interest income, higher rates, and growth in loans and deposits. However, provisions increased in the quarter. Also, higher operating expenses posed as the undermining factor for IBN.
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