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.