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Itau Unibanco Holding SA ADR ITUB

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Morningstar’s Analysis

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Itau Reports OK Q4 Results; Expect Some Recovery in Revenue in 2021

Eric Compton, CFA Senior Equity Analyst

Analyst Note

| Eric Compton, CFA |

No-moat-rated Itau Unibanco posted average fourth-quarter results, with recurring net income of BRL 5.4 billion up 7.1% quarter over quarter and down 26.1% from a year ago. The quarter-over-quarter results can be attributed to a sequential improvement in net interest income, slightly lower credit costs, and higher operating expenses. As we incorporate these results into our model, we do not plan to materially change our longer-term forecasts. However, our initial analysis shows our current fair value estimate of $3.90 per ADR share increasing by close to 15% due to the time value of money and a more favorable exchange rate.

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Company Profile

Business Description

Itau Unibanco is the largest privately held bank in Brazil, the result of the 2008 merger between Banco Itau and Unibanco. In addition to Brazil, the bank has significant operations in Chile, Colombia, Argentina, Uruguay, and Paraguay. Its commercial and consumer loans account for 33% and 41% of the bank's total loans, respectively, while foreign loans now account for 26% of the bank's portfolio. In addition to banking, Itau operates the fourth- largest insurer in Brazil; it specializes in consumer-related insurance.

Praca Alfredo Egydio de Souza Aranha, 6th Floor, 100-Torre Conceicao
Sao Paulo, SP, 4344902, Brazil
T +55 1127943547
Sector Financial Services
Industry Banks - Regional
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2021
Stock Type
Employees 96,540