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ItauUnibanco's (ITUB) Q1 Earnings and Revenues Climb Y/Y
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ItauUnibanco Holding S.A. (ITUB - Free Report) posted recurring earnings of R$7.36 billion ($1.41 billion) for first-quarter 2022, up 15% year over year. Including non-recurring items, net income came in at R$6.74 billion ($1.29 billion), up 24.6%.
Results benefited from higher revenues and a rise in credit portfolio. However, increased non-interest expenses, cost of credit charges and non-performing loan ratio acted as headwinds.
Revenues Rise, Costs Increase
Operating revenues came in at R$33.04 billion ($6.31 billion) in the reported quarter, up 11.7% on a year-over-year basis.
Managerial financial margin increased 12.9% year over year to R$21.05 billion ($4.02 billion). Also, commissions and fees were up 7.2% to R$9.77 billion ($1.87 billion).
Non-interest expenses totaled R$12.80 billion ($2.44 billion), up 2.9%.
In the first quarter, the efficiency ratio was 41.8%, down 280 basis points (bps) from the year-earlier quarter’s level. A decrease in this ratio indicates increased profitability.
Credit Quality
Cost of credit charges climbed 69.5% on a year-over-year basis to R$6.97 billion ($1.33 billion).
The non-performing loan ratio (loan transactions overdue more than 90 days) came in at 2.6% during the first quarter, up from the prior-year quarter’s 2.3%.
Balance Sheet Position
As of Mar 31, 2022, ItauUnibanco’s total assets increased minimally to R$2.18 trillion ($0.46 trillion) from the last-reported quarter. Deposits totaled R$1.11 trillion ($0.23 trillion), down marginally on a sequential basis.
ItauUnibanco’s credit portfolio, including corporate securities and financial guarantees provided, reached R$1.03 trillion ($0.22 trillion) as of Mar 31, 2022, up marginally from the last-reported quarter.
Capital & Profitability Ratios
As of Mar 31, 2022, Common Equity Tier 1 ratio was 11.1%, down from 11.3% on Mar 31, 2021.
Annualized recurring return on average equity climbed to 20.4% in the first quarter from 18.5% recorded in the year-earlier quarter.
2022 Guidance
Management reiterated its guidance for 2022
The company expects costs of credit to be R$25-R$29 billion.
Non-interest expenses are expected to grow between 3% and 7%.
Total credit portfolio is now projected to grow 9-12%.
Commissions and fees from insurance operations are likely to be up 3.5-6.5%.
Managerial financial margin with clients is estimated to increase 20.5-23.5%.
Financial marginal with the market is now projected in the range of R$1-R$3 billion.
The effective tax rate is estimated to be 30-33%.
Our Viewpoint
Results of ItauUnibanco underline its decent performance during the March quarter on higher revenues. ITUB’s prospects look encouraging as it is focused on building strategies to expand inorganically. In addition, its business restructuring efforts will support the financials.
However, inflated expenses are a concern. Heightening competition and stressed conditions in Brazil’s economy pose significant risks.
Itau Unibanco Holding S.A. Price, Consensus and EPS Surprise
First Horizon National Corporation’s (FHN - Free Report) first-quarter 2022 adjusted earnings per share of 38 cents beat the Zacks Consensus Estimate of 34 cents. However, the figure declined 25% year over year. Results excluded after-tax impacts of 4 cents per share from notable items related to the IBERIABANK Corporation and TD-Bank merger transactions.
First Horizon’s results reflect higher loan balance, provision benefits and declining expenses. However, declines in net interest income (“NII”) and fee income affected revenues. Also, pressure on margin due to low interest rates was a spoilsport for FHN.
M&T Bank Corporation (MTB - Free Report) reported net operating earnings per share of $2.73 in first-quarter 2022, surpassing the Zacks Consensus Estimate of $2.26. However, MTB’s bottom line compares unfavorably with $3.41 per share reported in the year-ago period.
A rise in non-interest income and a strong capital position were tailwinds for M&T Bank. However, a fall in NII and net interest margin, and a surge in expenses were the key undermining factors.
Fifth Third Bancorp (FITB - Free Report) reported first-quarter 2022 earnings (excluding after-tax impacts of certain items) of 69 cents per share, missing the Zacks Consensus Estimate of 70 cents. Including the impacts of these items, earnings per share were 68 cents, indicating a 27% year-over-year decline.
Fifth Third’s performance displays a revenue decline, primarily due to a fall in fee income. Margin contraction and the deterioration of capital position played spoilsports for FITB.
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ItauUnibanco's (ITUB) Q1 Earnings and Revenues Climb Y/Y
ItauUnibanco Holding S.A. (ITUB - Free Report) posted recurring earnings of R$7.36 billion ($1.41 billion) for first-quarter 2022, up 15% year over year. Including non-recurring items, net income came in at R$6.74 billion ($1.29 billion), up 24.6%.
Results benefited from higher revenues and a rise in credit portfolio. However, increased non-interest expenses, cost of credit charges and non-performing loan ratio acted as headwinds.
Revenues Rise, Costs Increase
Operating revenues came in at R$33.04 billion ($6.31 billion) in the reported quarter, up 11.7% on a year-over-year basis.
Managerial financial margin increased 12.9% year over year to R$21.05 billion ($4.02 billion). Also, commissions and fees were up 7.2% to R$9.77 billion ($1.87 billion).
Non-interest expenses totaled R$12.80 billion ($2.44 billion), up 2.9%.
In the first quarter, the efficiency ratio was 41.8%, down 280 basis points (bps) from the year-earlier quarter’s level. A decrease in this ratio indicates increased profitability.
Credit Quality
Cost of credit charges climbed 69.5% on a year-over-year basis to R$6.97 billion ($1.33 billion).
The non-performing loan ratio (loan transactions overdue more than 90 days) came in at 2.6% during the first quarter, up from the prior-year quarter’s 2.3%.
Balance Sheet Position
As of Mar 31, 2022, ItauUnibanco’s total assets increased minimally to R$2.18 trillion ($0.46 trillion) from the last-reported quarter. Deposits totaled R$1.11 trillion ($0.23 trillion), down marginally on a sequential basis.
ItauUnibanco’s credit portfolio, including corporate securities and financial guarantees provided, reached R$1.03 trillion ($0.22 trillion) as of Mar 31, 2022, up marginally from the last-reported quarter.
Capital & Profitability Ratios
As of Mar 31, 2022, Common Equity Tier 1 ratio was 11.1%, down from 11.3% on Mar 31, 2021.
Annualized recurring return on average equity climbed to 20.4% in the first quarter from 18.5% recorded in the year-earlier quarter.
2022 Guidance
Management reiterated its guidance for 2022
The company expects costs of credit to be R$25-R$29 billion.
Non-interest expenses are expected to grow between 3% and 7%.
Total credit portfolio is now projected to grow 9-12%.
Commissions and fees from insurance operations are likely to be up 3.5-6.5%.
Managerial financial margin with clients is estimated to increase 20.5-23.5%.
Financial marginal with the market is now projected in the range of R$1-R$3 billion.
The effective tax rate is estimated to be 30-33%.
Our Viewpoint
Results of ItauUnibanco underline its decent performance during the March quarter on higher revenues. ITUB’s prospects look encouraging as it is focused on building strategies to expand inorganically. In addition, its business restructuring efforts will support the financials.
However, inflated expenses are a concern. Heightening competition and stressed conditions in Brazil’s economy pose significant risks.
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
ItauUnibanco 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 Banks
First Horizon National Corporation’s (FHN - Free Report) first-quarter 2022 adjusted earnings per share of 38 cents beat the Zacks Consensus Estimate of 34 cents. However, the figure declined 25% year over year. Results excluded after-tax impacts of 4 cents per share from notable items related to the IBERIABANK Corporation and TD-Bank merger transactions.
First Horizon’s results reflect higher loan balance, provision benefits and declining expenses. However, declines in net interest income (“NII”) and fee income affected revenues. Also, pressure on margin due to low interest rates was a spoilsport for FHN.
M&T Bank Corporation (MTB - Free Report) reported net operating earnings per share of $2.73 in first-quarter 2022, surpassing the Zacks Consensus Estimate of $2.26. However, MTB’s bottom line compares unfavorably with $3.41 per share reported in the year-ago period.
A rise in non-interest income and a strong capital position were tailwinds for M&T Bank. However, a fall in NII and net interest margin, and a surge in expenses were the key undermining factors.
Fifth Third Bancorp (FITB - Free Report) reported first-quarter 2022 earnings (excluding after-tax impacts of certain items) of 69 cents per share, missing the Zacks Consensus Estimate of 70 cents. Including the impacts of these items, earnings per share were 68 cents, indicating a 27% year-over-year decline.
Fifth Third’s performance displays a revenue decline, primarily due to a fall in fee income. Margin contraction and the deterioration of capital position played spoilsports for FITB.