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Itau Unibanco Holding S.A. (ITUB - Free Report) posted recurring managerial results of R$8.74 billion ($1.78 billion) for second-quarter 2023, up 13.8% 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$38.83 billion ($7.93 billion) in the reported quarter, up 10.2% on a year-over-year basis.
Managerial financial margin jumped 14.8% year over year to R$26 billion ($5.31 billion). However, commissions and fees were down 1.3% to R$10.36 billion ($2.11 billion).
Non-interest expenses totaled R$14.27 billion ($2.91 billion), up 7.2% year over year.
In the second quarter, efficiency ratio was 39.6%, down from 40.8% in the year-earlier quarter. A decrease in this ratio indicates increased profitability.
Credit Quality Weak
The cost of credit charges climbed 25.3% on a year-over-year basis to R$9.44 billion ($1.93 billion).
Non-performing loan ratio (loan transactions overdue more than 90 days) was 3% in the second quarter, up from the prior-year quarter’s 2.7%.
Balance Sheet Position Strong
As of Jun 30, 2023, Itau Unibanco’s total assets rose 1.5% to R$2.59 trillion ($0.53 trillion) from the last reported quarter. Liabilities, including deposits, debentures, securities, borrowings and on lending totaled R$1.31 trillion ($0.27 trillion), inching up 1% on a sequential basis.
Itau Unibanco’s credit portfolio, including corporate securities and financial guarantees provided, declined marginally from the last quarter’s reported figure to R$1.15 trillion ($0.24 trillion) as of Jun 30, 2023.
Capital & Profitability Ratios Rise
As of Jun 30, 2023, the Common Equity Tier 1 ratio was 12.2%, up from 11.1% as of Jun 30, 2022.
Annualized recurring managerial return on average equity was 20.9% in the second quarter, up from 20.8% in the year-earlier quarter.
Our Viewpoint
Itau Unibanco’s second-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.
Deutsche Bank (DB - Free Report) reported second-quarter 2023 profits attributable to shareholders of €763 million ($831 million), down 27% from the year-ago quarter. The Germany-based lender reported profit before tax of €1.41 billion ($1.53 billion), down 9% year over year.
Results of DB were largely driven by higher net revenues and strong capital position. However, higher provisions for credit losses and a rise in operating expenses were offsetting factors.
Barclays (BCS - Free Report) reported second-quarter 2023 net income attributable to ordinary equity holders of £1.33 billion ($1.66 billion), up 24% from the prior-year quarter.
BCS recorded an increase in expenses and lower revenues in the reported quarter. Also, higher credit impairment charges hurt results to some extent.
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Itau Unibanco (ITUB) Q2 Earnings & Revenues Increase Y/Y
Itau Unibanco Holding S.A. (ITUB - Free Report) posted recurring managerial results of R$8.74 billion ($1.78 billion) for second-quarter 2023, up 13.8% 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$38.83 billion ($7.93 billion) in the reported quarter, up 10.2% on a year-over-year basis.
Managerial financial margin jumped 14.8% year over year to R$26 billion ($5.31 billion). However, commissions and fees were down 1.3% to R$10.36 billion ($2.11 billion).
Non-interest expenses totaled R$14.27 billion ($2.91 billion), up 7.2% year over year.
In the second quarter, efficiency ratio was 39.6%, down from 40.8% in the year-earlier quarter. A decrease in this ratio indicates increased profitability.
Credit Quality Weak
The cost of credit charges climbed 25.3% on a year-over-year basis to R$9.44 billion ($1.93 billion).
Non-performing loan ratio (loan transactions overdue more than 90 days) was 3% in the second quarter, up from the prior-year quarter’s 2.7%.
Balance Sheet Position Strong
As of Jun 30, 2023, Itau Unibanco’s total assets rose 1.5% to R$2.59 trillion ($0.53 trillion) from the last reported quarter. Liabilities, including deposits, debentures, securities, borrowings and on lending totaled R$1.31 trillion ($0.27 trillion), inching up 1% on a sequential basis.
Itau Unibanco’s credit portfolio, including corporate securities and financial guarantees provided, declined marginally from the last quarter’s reported figure to R$1.15 trillion ($0.24 trillion) as of Jun 30, 2023.
Capital & Profitability Ratios Rise
As of Jun 30, 2023, the Common Equity Tier 1 ratio was 12.2%, up from 11.1% as of Jun 30, 2022.
Annualized recurring managerial return on average equity was 20.9% in the second quarter, up from 20.8% in the year-earlier quarter.
Our Viewpoint
Itau Unibanco’s second-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 and EPS Surprise
Itau Unibanco Holding S.A. price-eps-surprise | 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 - Free Report) reported second-quarter 2023 profits attributable to shareholders of €763 million ($831 million), down 27% from the year-ago quarter. The Germany-based lender reported profit before tax of €1.41 billion ($1.53 billion), down 9% year over year.
Results of DB were largely driven by higher net revenues and strong capital position. However, higher provisions for credit losses and a rise in operating expenses were offsetting factors.
Barclays (BCS - Free Report) reported second-quarter 2023 net income attributable to ordinary equity holders of £1.33 billion ($1.66 billion), up 24% from the prior-year quarter.
BCS recorded an increase in expenses and lower revenues in the reported quarter. Also, higher credit impairment charges hurt results to some extent.