Brazil’s Itaú Unibanco reported a record net income of BRL 8.17 billion (USD 1.63 billion) for Q1 2023 on Monday — the second-highest net earnings in the bank’s history. Itaú shares rose more than 1.3 percent throughout Monday on the B3 stock exchange following the news.
Itaú Unibanco is the biggest lender in Latin America and is ranked 242nd among the world’s 500 most valuable brands, with a brand value of USD 8.7 billion, according to Brand Finance, a brand valuation consultancy.
The bank managed to maintain a stable no-perform-loan rate — the industry’s jargon for the 90-day default ratio — between Q4 2022 and Q1 2023, at 2.9 percent. This is slightly higher than the 2.6 percent no-perform-loan rate during the same quarter last year and was welcomed by analysts and investors given the challenging macroeconomic scenario.
High interest rates alone often benefit banks as they increase the spread of loans. At this point, however, with Brazil having the highest real interest rates in the world (6.82 percent per year), the benefits of high borrowing costs have come and gone.
High delinquency levels, especially in credit lines destined for individuals, such as credit cards and personal loans, are leading institutions to increase their provisions for doubtful debts, affecting their profits. Itaú is navigating this scenario better than its competitors thanks to its wide variety of operations and its leadership position in many areas.
The bank’s loan portfolio grew by 11.7 percent year-on-year to BRL 1.153 trillion. Currently, 78.3 percent of Brazilian households are indebted. Most defaulters have overdue credit card bills and utility bills.
Search
