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UPDATE 1-Brazil's Itau CEO, asked about Nubank, says banks are in regulated sector

(Adds more CEO comments, context)

By Carolina Mandl

SAO PAULO, Nov 4 (Reuters) - Investors should learn to distinguish between tech companies in sectors like retail and those in the financial space that face more regulation, Itau Unibanco Holding SA's chief executive told journalists on Thursday when questioned about upstart rival fintech Nubank.

Nubank plans to list on the New York Stock Exchange in December with a market capitalization of roughly $50 billion, while Itau is valued at $40 billion, which currently makes it the most valuable bank in Latin America.

"Investors should understand that banks are regulated and require capital to grow," Milton Maluhy Filho said without specifically mentioning Nubank. He added banks are valued by investors using traditional metrics, such as price to earnings or shareholders equity.

With 48 million clients, Nubank posted a net loss of 528.4 million reais ($94.5 million) in the first nine months of 2021 and reported shareholders equity of 10.3 billion reais.

Maluhy's remarks came one day after Itau reported a 34.8% jump in third-quarter net income, to 6.779 billion reais, mainly driven by lending, lower provisions and higher fee income.

Itau has increased its focus in digital sales of products and reduced some fees charged from clients. Itau now offers free-of-charge cards and digital accounts, in a clear response to a fierce competition with fintechs like Nubank.

Maluhy said a new strategy in credit cards allowed the bank to issue 4.7 million new credit cards in the third quarter while revenues went up 8.3% in the quarter, even as fees for card maintenance went down.

Questioned by an analysts how he would build a bank now, Maluhy said it would be launched 100% digital, but he would add a physical footprint as the business scaled up because he sees branches as important for client loyalty.

($1 = 5.5833 reais) (Reporting by Carolina Mandl; Editing by Steve Orlofsky)