Itaú Unibanco Should Benefit From Improving Economic Conditions in Brazil as Inflation Fades

The challenge for Itaú Unibanco will be to navigate a volatile Brazilian economy and uncertain political environment, which is still working through the impact of high inflation, which exceeded 12% in April 2022 and the high interest rates intended to fight it. That said, inflation has moderated, falling to 4.51% in January 2024, and the Brazilian central bank has begun to cut rates, reducing them to 11.25% in January 2024 from a high of 13.75%, creating prospects for a soft landing for the Brazilian economy. The bank will face margin headwinds from lower interest rates, but a healthier economy should lead to higher loan growth and reduced credit risk for the bank.