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Itau Unibanco Holding S.A. ITUB reported recurring managerial results of R$10.8 billion ($1.87 billion) for the fourth quarter of 2024, which increased 14.9% year over year.
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Higher revenues and an increase in managerial financial margin supported the results. Improving credit quality was an added advantage. However, an increase in non-interest expenses acted as a spoilsport.
For 2024, the company reported recurring managerial results of R$41.4 billion ($7.15 billion), which increased 18.2% year over year.
ITUB’s Revenues & Expenses Increase
Operating revenues were R$44.1 billion ($7.6 billion) in the reported quarter, up 7.6% year over year.
For the year, operating revenues were R$169 billion ($29.2 billion) in the reported quarter, up 7.8% year over year.
The managerial financial margin increased 8.3% year over year to R$29.4 billion ($5.13 billion). Also, commissions and fees rose 4.5% to R$11.7 billion ($2 billion).
Non-interest expenses totaled R$16.7 billion ($2.9 billion), up 8.9% year over year.
In the fourth quarter, the efficiency ratio was 39.5%, down from 39.9% in the year-earlier quarter. A decrease in this ratio indicates increased profitability.
ITUB’s Credit Quality Improves
The cost of credit charges declined 5.5% on a year-over-year basis to R$8.6 billion ($1.5 billion).
The non-performing loan ratio (loan transactions overdue more than 90 days) was 2.4% in the fourth quarter, down from the prior-year quarter’s 2.8%.
ITUB’s Balance Sheet Position: Mixed Bag
As of Dec. 31, 2024, Itau Unibanco’s total assets fell 6.6% to R$2.85 trillion ($492.8 billion) from the last reported quarter. Liabilities, including deposits, debentures, securities, borrowings and on-lending, totaled R$2.63 trillion ($454.7 billion), which increased 82.6% on a sequential basis.
As of the same date, ITUB’s credit portfolio, including private securities and financial guarantees provided, rose 6.3% to R$1.35 trillion ($233.4 billion) from the prior quarter.
ITUB’s Capital & Profitability Ratios Rise
As of Dec. 31, 2024, the Common Equity Tier 1 ratio was 15%, up from 13.7% as of Dec. 31, 2023.
Annualized recurring managerial return on average equity was 22.2%, up from 21.2% in the year-earlier quarter.
Our View on ITUB
Itau Unibanco’s fourth-quarter results were driven by a rise in managerial financial margin. The declining efficiency ratio indicates an increase in profitability, which is a positive factor. Growth in commissions and fees, insurance operations’ results and efforts to have a healthy credit portfolio are positives.