Itau Unibanco (ITUB) Q3 Earnings & Revenues Increase Y/Y
Itau Unibanco Holding S.A. ITUB posted recurring managerial results of R$9.04 billion ($1.84 billion) for third-quarter 2023, up 11.9% year over year.
The results were supported by higher revenues and an increase in managerial financial margin. Rising total deposits and assets reflected a strong balance sheet position. However, an escalation in non-interest expenses was an offsetting factor.
Revenues & Costs Increase
Operating revenues were R$39.53 billion ($8.06 billion) in the reported quarter, up 8.1% on a year-over-year basis.
The managerial financial margin jumped 9.9% year over year to R$26.27 billion ($5.35 billion). Also, commissions and fees were up 2.7% to R$10.69 billion ($2.18 billion).
Non-interest expenses totaled R$14.74 billion ($3 billion), up 5.8% year over year.
In the third quarter, the efficiency ratio was 40%, down from 41.4% in the year-earlier quarter. A decrease in this ratio indicates increased profitability.
Credit Quality Weak
The cost of credit charges climbed 15.9% on a year-over-year basis to R$9.26 billion ($1.88 billion).
The non-performing loan ratio (loan transactions overdue more than 90 days) was 3% in the third quarter, up from the prior-year quarter’s 2.8%.
Balance Sheet Position Strong
As of Sep 30, 2023, Itau Unibanco’s total assets rose 3.6% to R$2.67 trillion ($0.52 trillion) from the last reported quarter. Liabilities, including deposits, debentures, securities, borrowings and on-lending, totaled R$1.32 trillion ($0.26 trillion), inching up 1.4% on a sequential basis.
Itau Unibanco’s credit portfolio, including corporate securities and financial guarantees provided, increased 1% from the last quarter’s reported figure to R$1.16 trillion ($0.22 trillion) as of Sep 30, 2023.
Capital & Profitability Ratios Rise
As of Sep 30, 2023, the Common Equity Tier 1 ratio was 13.1%, up from 11.7% as of Sep 30, 2022.
Annualized recurring managerial return on average equity was 21.1% in the third quarter, up from 21% in the year-earlier quarter.
Our Viewpoint
Itau Unibanco’s third-quarter results were driven by a rise in managerial financial margin. The declining efficiency ratio indicates a rise in profitability, which is a positive factor. However, 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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Foreign Banks
Deutsche Bank DB reported a third-quarter 2023 profit attributable to its shareholders of €1.03 billion ($1.12 billion), down 7.5% from the year-ago quarter. DB reported a profit before tax of €1.72 billion ($1.88 billion), up 6.7% year over year.
DB generated net revenues of €7.13 billion ($7.76 billion), up 3.1% year over year. This upside primarily resulted from higher revenues in the Corporate Bank and Private Bank segments.
Barclays BCS reported a third-quarter 2023 net income attributable to ordinary equity holders of £1.27 billion ($1.61 billion), down 16% from the prior-year quarter.
BCS recorded an increase in revenues, along with higher credit impairment charges. Operating expenses increased marginally in the quarter under review.
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