By Brazil Stock Guide – Itaú Unibanco Holding SA (ITUB4 BZ; ITUB US) reported recurring managerial net income of R$ 12.41 billion in the second quarter, up 7.8% from a year earlier, as credit expansion and stronger net interest income helped offset higher provisions and sluggish fee revenue.
The result increased 1% from the first quarter and came broadly in line with market expectations. It was 0.5% below the R$ 12.47 billion consensus compiled by the bank.
Annualized recurring return on equity reached 24.3%, compared with 23.3% a year earlier and 24.8% in the previous quarter.
“The consistency of our results reflects the clarity of a long-term strategy,” Chief Executive Officer Milton Maluhy Filho said. “Growing profitably while maintaining asset quality requires analytical discipline, responsible lending and the practical use of technology.”
Brazil generated 94.6% of Itaú’s recurring earnings during the quarter. Profit from the domestic operations rose 8.9% from a year earlier to R$ 11.73 billion, with a 25.7% return on allocated capital.
Recurring earnings from the rest of Latin America fell 8% year over year to R$ 674 million, although they increased 2.2% from the first quarter. Return on allocated capital in the region reached 12.3%.
Fee outlook cut after mixed quarter
Itaú lowered its 2026 forecast for the combined growth of fee income and insurance results to between 2% and 5%, from a previous range of 5% to 9%.
The bank attributed the revision mainly to greater capital-markets volatility than it had anticipated at the beginning of the year.
Combined fee and insurance revenue totaled R$ 14.09 billion, increasing just 0.4% from the first quarter and 3.6% from a year earlier.
The underlying performance was mixed. Revenue from individual current accounts fell 21.2% year over year, while payments and collections revenue declined 7.5%.
Asset-management revenue increased 7.3%, while financial advisory and brokerage revenue jumped 32.5% from a year earlier, supported by stronger investment-banking volumes. Insurance results advanced 8.7%, driven by higher earned premiums.
All other 2026 guidance ranges were maintained. Itaú continues to expect total credit growth of between 5.5% and 9.5%, including expansion of 6.5% to 10.5% in Brazil.
Customer net interest income is expected to grow between 5% and 9%, while net interest income from market activities is projected at between R$ 2.5 billion and R$ 5.5 billion.
The bank maintained its cost-of-credit forecast at between R$ 38.5 billion and R$ 43.5 billion and expects non-interest expenses to rise between 1.5% and 5.5%.
Itaú also said it began using an internal cost-of-capital assumption of approximately 14.75% a year in managing its businesses from August.
Credit book reaches R$ 1.52 trillion
Itaú’s total credit portfolio reached R$ 1.52 trillion, growing 2.7% from the first quarter and 9.6% from a year earlier.
Loans to individuals in Brazil increased 1.6% during the quarter to R$ 487.1 billion. Mortgage lending rose 3.9% sequentially and 13.3% year over year, while payroll-deductible loans expanded 3.5% and 11.7%, respectively.
Private-sector payroll loans, a product recently expanded in Brazil, grew 14.3% during the quarter.
Credit to small and medium-sized companies increased 11.6% from a year earlier to R$ 307.4 billion. The large-corporate portfolio rose 10.1% to R$ 474.9 billion, led by infrastructure and energy clients.
Customer net interest income increased 3.3% from the first quarter and 5.1% year over year to R$ 32.56 billion. The average customer margin remained at 9.1%, while the risk-adjusted margin improved to 6.2% from 6.1%.
Net interest income from market activities rose 13.6% sequentially to R$ 931 million, supported by a stronger banking-book result that more than offset weaker trading revenue.
Headline delinquencies stable, but formation rises
The consolidated ratio of loans more than 90 days past due remained at 1.9% for a sixth consecutive quarter.
The underlying indicators, however, showed some normalization. Loans between 15 and 90 days past due increased to 1.8% from 1.7%, driven by Latin America and small and medium-sized companies in Brazil.
The 90-day delinquency ratio for Brazilian individuals rose to 3.7% from 3.6%, while the ratio for small and medium-sized companies increased to 2% from 1.9%. Itaú attributed the movements to seasonal migration from early arrears and the expiration of grace periods on government-backed lending programs.
New nonperforming loans increased to R$ 10.66 billion from R$ 9.69 billion in the first quarter. NPL formation rose to 0.8% of the credit portfolio from 0.7%.
Renegotiated loans increased 4.6% during the quarter to R$ 36.3 billion, equivalent to 2.6% of the total portfolio.
Itaú said approximately R$ 1.1 billion had been renegotiated under Brazil’s Desenrola debt-relief program, involving more than 300,000 clients. After discounts and restructuring, the remaining exposure totaled R$ 275 million. The bank described the program’s impact on credit-quality indicators and credit costs as immaterial.
Cost of credit remains at 2.7%
Credit costs totaled R$ 10.14 billion, rising 1.9% from the first quarter and 7.4% from a year earlier. The annualized cost-of-credit ratio remained stable at 2.7%.
Expected credit-loss provisions increased 8.4% year over year to R$ 10.48 billion. Recoveries of loans previously written off rose 20.2% sequentially to R$ 1.49 billion, partly reflecting the Desenrola program.
Retail banking generated recurring earnings of R$ 5.49 billion, unchanged from the first quarter but 11.1% higher than a year earlier. Wholesale banking profit declined 0.6% sequentially to R$ 5.61 billion, while increasing 4.1% year over year.
Capital position strengthens
Non-interest expenses totaled R$ 16.73 billion, up 3.3% from the first quarter and 3.1% from a year earlier. Higher personnel, technology, marketing and transaction-related costs were partly offset by the continued reduction of Itaú’s physical network.
The bank ended June with 90,429 employees, down from 95,714 a year earlier. The number of branches and service posts declined to 2,210 from 2,738.
The consolidated efficiency ratio improved to 37.4% from 38% a year earlier, while the ratio for the Brazilian operations stood at 35.5%.
Itaú’s common-equity Tier 1 capital ratio increased to 12.3% from 12% in March, while its Basel ratio rose to 15.4% from 14.8%. Its liquidity coverage ratio reached 202%, and its net stable funding ratio stood at 122.1%.
For the first half of 2026, recurring managerial net income increased 9.1% to R$ 24.69 billion. Recurring ROE reached 24.5%, up from 22.8% in the same period last year.
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