Itau Unibanco (NYSE:ITUB) reported third-quarter recurring net income of BRL 12.6 billion, up 6.7% from a year earlier, as loan growth and higher client interest income supported results. The bank also warned of a more challenging economic environment in 2027.
Chief Executive Officer Milton Maluhy Filho said the bank was preparing for slower economic activity, elevated interest rates and potential credit stress, while looking for opportunities to lend to resilient customers. He said Itaú had not yet completed its 2027 budget or issued guidance for the year.
Third-quarter recurring profit rose 2.5% from the second quarter. Consolidated return on equity was 23.6%, while return on equity in Brazil was 24.5%.
Loan Growth and Interest Income
Net interest income from clients rose 7% year over year to BRL 33.3 billion. It increased 2.6% from the previous quarter after adjusting the earlier period for the sale of Itaú’s Colombian retail operation, which included a BRL 10 billion loan portfolio and exited on Aug. 1.
The total loan portfolio grew 1.4% from the second quarter and 10.2% from a year earlier. Excluding the Colombian sale, growth was 2.2% sequentially and 10.9% year over year, Maluhy Filho said.
Growth was strongest in several lending categories backed by collateral or payroll deductions. Mortgage loans expanded 15.8% year over year, payroll loans rose 16.3%, and the small and medium-sized enterprise portfolio increased 15.1%. The CEO said government-sponsored SME lending facilities grew 32.4% from a year earlier.
The auto loan portfolio was flat from the prior quarter and down 3.6% year over year following risk reductions. Maluhy Filho said he did not expect major growth in auto lending, but saw potential wholesale lending opportunities if customers have less access to debt capital markets.
Net interest income from market activities was BRL 1.3 billion after the cost of the capital ratio hedge. The consolidated efficiency ratio was 37.5%, while the Brazil ratio was 35.7%.
Credit Quality and Provisions
Maluhy Filho described credit quality as broadly stable. The cost of credit remained at 2.7% of the portfolio, or approximately BRL 10.4 billion. He said long-term delinquency in the SME portfolio rose 10 basis points, as expected, and forecast that the 2.1% rate would remain broadly stable in the following quarter.
The CEO said 58% of the SME portfolio was collateralized, compared with 36% in December 2019. For micro and small companies, the figure was 72%.
Using central bank data that excluded Itaú from the market comparison, the bank reported delinquency of more than 15 days on individual loans at 6.7%, versus 13.1% for the rest of the market. Maluhy Filho said the bank’s expected-loss models recognize provisions early: for individual loans excluding mortgages, loans 31 days past due carried a 58% provision.
Asked how much of the expected credit loss reflected future risks, Maluhy Filho said a forward-looking scenario adjustment had affected retail profitability in the quarter. He said much of the provisioning reflected portfolio growth and customers migrating between risk stages, and that he was comfortable with the bank’s provisions.
2026 Guidance and 2027 Outlook
Itaú maintained its other 2026 guidance lines but lowered its effective tax-rate forecast to 28% to 29%, from 29.5% to 32.5%. Maluhy Filho cited interest-rate dynamics and the geographic mix of the bank’s businesses. He said growth in commissions and fees and results from insurance operations was expected to finish near the lower end of the respective guidance ranges.
The CEO expects a tougher wholesale credit environment in 2027 than in 2026. He also said Itaú had raised its assumed cost of capital to 15.25% from 14.5%, adding that loan pricing would adjust over time as funding costs and economic conditions change.
Maluhy Filho said higher credit losses and weaker demand could present challenges, but that the bank was positioned to take opportunities if other lenders or capital markets pull back. He cautioned that gaining market share was a consequence of the bank’s strategy, not an objective on its own.
Capital and Dividends
Itaú ended the quarter with a Common Equity Tier 1 capital ratio of 12.7%. Its liquidity coverage ratio was 206%, compared with a regulatory requirement of 100%, while its net stable funding ratio was 123.7%.
On shareholder distributions, Maluhy Filho said the bank would continue projecting capital needs and considering excess capital above a 12% CET1 threshold when assessing additional payouts. He said the dividend per share would be higher as a consequence of higher results this year, but that the payout level remained difficult to estimate. He did not foresee anything that would justify retaining more capital than under the bank’s existing approach.
About Itau Unibanco (NYSE:ITUB)
Itaú Unibanco is a Brazilian financial services company headquartered in São Paulo. It was formed in 2008 through the merger of Banco Itaú and Unibanco and serves individuals, businesses and institutional clients.
The company provides retail and commercial banking services, including deposit accounts, loans, credit cards and payment solutions. Its other activities include investment banking, asset and wealth management, insurance and related financial services.
Itaú Unibanco operates primarily in Brazil and also has a presence in other markets in Latin America and internationally.
