Analyst Note| Michael Miller |
No-moat-rated Itau Unibanco reported solid third-quarter results as the bank saw good loan growth, particularly in its consumer lending products, and credit results that came in better than we had anticipated. The bank reported operating revenue of BRL 36.6 billion, 3.7% higher than last quarter and 16.1% higher than last year. Net income was 19.2% higher than last year at BRL 8.1 billion, which translates to a return on equity of 21%. As we incorporate these results, we are raising our fair value estimate for Itau Unibanco to $4.80 per ADR share from $4.60. Around $0.10 of the increase is from earnings and exchange rate movements since our last update while the other $0.10 is from higher loan growth projections.