Itau Unibanco (ITUB) Q3 Earnings & Revenues Increase Y/Y

Itau Unibanco Holding S.A. ITUB posted recurring managerial results of R$8.07 billion ($1.54 billion) for third-quarter 2022, up 19.2% year over year.

The results were supported by an increase in operating 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$36.7 billion ($7 billion) in the reported quarter, up 20.3% on a year-over-year basis.

The managerial financial margin increased 22.5% year over year to R$23.9 billion ($4.56 billion). Also, managerial commissions and fees were down 0.8% to R$10.4 billion ($1.90 billion).

Non-interest expenses totaled R$13.93 billion ($2.65 billion), up 8.7% year over year.

In the third quarter, the efficiency ratio was 41.1%, down from 44% in the year-earlier quarter. A decrease in this ratio indicates increased profitability.

Credit Quality Weak

Cost of credit charges climbed 52.7% on a year-over-year basis to R$7.99 billion ($1.52 billion).

The non-performing loan ratio (loan transactions overdue more than 90 days) (NPL) was 2.8% in the third quarter, up from the prior-year quarter’s 2.6%.

Balance Sheet Position Strong

As of Sep 30, 2022, Itau Unibanco’s total assets increased 5.6% to R$2.42 trillion ($0.44 trillion) from the last reported quarter. Liabilities, including deposits, debentures, securities, and borrowings and onlending, totaled R$1.21 trillion ($0.22 trillion), increasing 3.2% on a sequential basis.

Itau Unibanco’s credit portfolio, including corporate securities and financial guarantees provided, reached R$1.11 trillion ($0.20 trillion) as of Sep 30, 2022, up 2.5% from the last reported quarter.

Capital Ratio & Profitability Ratios Up

As of Sep 30, 2022, the Common Equity Tier 1 ratio was 11.7%, down from 11.3% on Sep 30, 2021.

Annualized recurring managerial return on average equity climbed to 21% in the third quarter from 19.7% in the year-earlier quarter.

Our Viewpoint

Itau Unibanco’s third-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 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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Foreign Banks

HSBC Holdings HSBC reported a third-quarter 2022 pre-tax profit of $3.1 billion, down 41.8% from the prior-year quarter.

Results reflected a rise in adjusted revenues. However, adjusted expenses increased from the year-ago quarter, which was a headwind for HSBC. Expected credit losses and other credit impairment charges were a net charge in the quarter under review against a release in the prior-year quarter.

UBS Group AG UBS reported a third-quarter 2022 net profit attributable to shareholders of $1.73 billion, down 37.6% from the prior-year quarter.

UBS’ performance was affected by a fall in revenues and a decline in total net credit loss releases. Nonetheless, operating expenses decreased from the prior-year quarter.

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