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Itau Unibanco Holding S.A. (ITUB - Free Report) posted recurring managerial results of R$9.4 billion ($1.89 billion) for fourth-quarter 2023, up 22.6% 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$40.99 billion ($8.25 billion) in the reported quarter, up 8.2% on a year-over-year basis.
The managerial financial margin jumped 8.6% year over year to R$27.13 billion ($5.46 billion). Also, commissions and fees increased 7.4% to R$11.2 billion ($2.25 billion).
Non-interest expenses totaled R$15.34 billion ($3.09 billion), up 5.4% year over year.
In the fourth quarter, the efficiency ratio was 40.3%, 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 declined 6.7% on a year-over-year basis to R$9.15 billion ($1.84 billion).
The non-performing loan ratio (loan transactions overdue more than 90 days) was 2.8% in the fourth quarter, down from the prior-year quarter’s 2.9%.
Balance Sheet Position Strong
As of Dec 31, 2023, Itau Unibanco’s total assets rose 1% to R$2.7 trillion ($542.93 billion) from the last reported quarter. Liabilities including deposits, debentures, securities, borrowings and on-lending totaled R$1.35 trillion ($270.98 billion), rising 13.8% on a sequential basis.
ITUB’s credit portfolio, including corporate securities and financial guarantees provided, increased 1.1% from the last quarter’s reported figure to R$1.18 trillion ($236.87 billion) as of Dec 31, 2023.
Capital & Profitability Ratios Rise
As of Dec 31, 2023, the Common Equity Tier 1 ratio was 13.7%, up from 11.9% as of Dec 31, 2022.
Annualized recurring managerial return on average equity was 21.2% in the fourth quarter, up from 19.3% in the year-earlier quarter.
Our Viewpoint
Itau Unibanco’s fourth-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
Barclays (BCS - Free Report) is scheduled to report fourth-quarter and full-year 2023 results on Feb 20.
Over the past month, the Zacks Consensus Estimate for BCS’ 2023 earnings has moved 1.3% south to $1.57 per share, indicating growth of 3.3% from the prior-year quarter.
HSBC Holdings (HSBC - Free Report) is slated to announce fourth-quarter and full-year 2023 results on Feb 21.
Over the past seven days, the Zacks Consensus Estimate for HSBC’s 2023 earnings has been unchanged at $6.47 per share, implying a 74.9% jump from the prior-year reported number.
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Itau Unibanco (ITUB) Q4 Earnings & Revenues Increase Y/Y
Itau Unibanco Holding S.A. (ITUB - Free Report) posted recurring managerial results of R$9.4 billion ($1.89 billion) for fourth-quarter 2023, up 22.6% 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$40.99 billion ($8.25 billion) in the reported quarter, up 8.2% on a year-over-year basis.
The managerial financial margin jumped 8.6% year over year to R$27.13 billion ($5.46 billion). Also, commissions and fees increased 7.4% to R$11.2 billion ($2.25 billion).
Non-interest expenses totaled R$15.34 billion ($3.09 billion), up 5.4% year over year.
In the fourth quarter, the efficiency ratio was 40.3%, 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 declined 6.7% on a year-over-year basis to R$9.15 billion ($1.84 billion).
The non-performing loan ratio (loan transactions overdue more than 90 days) was 2.8% in the fourth quarter, down from the prior-year quarter’s 2.9%.
Balance Sheet Position Strong
As of Dec 31, 2023, Itau Unibanco’s total assets rose 1% to R$2.7 trillion ($542.93 billion) from the last reported quarter. Liabilities including deposits, debentures, securities, borrowings and on-lending totaled R$1.35 trillion ($270.98 billion), rising 13.8% on a sequential basis.
ITUB’s credit portfolio, including corporate securities and financial guarantees provided, increased 1.1% from the last quarter’s reported figure to R$1.18 trillion ($236.87 billion) as of Dec 31, 2023.
Capital & Profitability Ratios Rise
As of Dec 31, 2023, the Common Equity Tier 1 ratio was 13.7%, up from 11.9% as of Dec 31, 2022.
Annualized recurring managerial return on average equity was 21.2% in the fourth quarter, up from 19.3% in the year-earlier quarter.
Our Viewpoint
Itau Unibanco’s fourth-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.
Earnings Dates of Other Foreign Banks
Barclays (BCS - Free Report) is scheduled to report fourth-quarter and full-year 2023 results on Feb 20.
Over the past month, the Zacks Consensus Estimate for BCS’ 2023 earnings has moved 1.3% south to $1.57 per share, indicating growth of 3.3% from the prior-year quarter.
HSBC Holdings (HSBC - Free Report) is slated to announce fourth-quarter and full-year 2023 results on Feb 21.
Over the past seven days, the Zacks Consensus Estimate for HSBC’s 2023 earnings has been unchanged at $6.47 per share, implying a 74.9% jump from the prior-year reported number.