Itau Unibanco Q1 Earnings Call Highlights

Key Points

• Itaú Unibanco said first-quarter 2026 managerial net income rose 10% year over year to BRL 12.3 billion, with ROE remaining very strong at 24.8% consolidated and 26.4% in Brazil. Management noted results were weighed by an early dividend payment and calendar effects.
• Loan growth remained solid, led by resilient client segments, private payroll lending, and SME lending. The bank also said credit quality stayed within expectations, with delinquency trends and product-level NPL ratios still better than market averages.
• Executives reiterated full-year guidance and emphasized strong capital and efficiency metrics, including a 12.0% CET1 ratio and a record-low 34.9% Brazil efficiency ratio. They cautioned that macroeconomic conditions have worsened, but said the portfolio remains resilient and profitability should stay above 20%.

Itau Unibanco NYSE: ITUB reported what Chief Executive Officer Milton Maluhy Filho called a “very strong” first quarter of 2026, with managerial net income of BRL 12.3 billion, up 10% from a year earlier, as profitability remained high despite margin headwinds tied to an early dividend payment and calendar effects.

Maluhy said the quarter did not include the additional dividend distribution that typically occurs in the period because BRL 20 billion was paid in the fourth quarter of last year. Normalizing for that effect, he said net income would have been BRL 12.7 billion, making it more comparable to prior first quarters.

The bank reported consolidated return on equity of 24.8%, while ROE in Brazil reached 26.4%. Adjusted for an 11.5% capital level, consolidated ROE was 25.8% and Brazil ROE was 27.6%, figures Maluhy described as “very strong.”

Loan Growth and Margin Trends

Itaú’s loan portfolio grew 1.2% in the quarter excluding foreign exchange effects and 9% year-over-year on the same basis. In Brazil, the portfolio expanded 7.8% from a year earlier and 0.3% from the prior quarter.

Maluhy emphasized that growth continued to be concentrated in client groups the bank classifies as more resilient through credit cycles. He said more than 90% of new card originations now come from “target clients,” and those clients are approaching 80% of the existing card portfolio.

Private payroll lending remained one of the fastest-growing areas, rising 19% in the quarter and 63% year-over-year. Maluhy said Itaú is the market leader in private payroll loans and is growing with “strong quality,” appropriate pricing and a long-term approach. Government-backed lending programs also supported growth in micro, small and medium-sized enterprises, with that portfolio up 4% sequentially and 52% year-over-year.

Net interest margin with clients declined to BRL 31.5 billion from BRL 31.7 billion in the fourth quarter. Maluhy attributed the decrease mainly to two factors: the early dividend distribution, which reduced margin by BRL 600 million, and fewer business and calendar days in the quarter. Excluding those effects, he said core margin performance remained strong, helped by average balance growth and a favorable product mix.

Market margin was BRL 800 million, despite what Maluhy described as significant volatility in local and global markets. He said the capital index hedge cost remained a headwind, with a negative impact of BRL 700 million in the quarter.

Fees, Insurance and Expenses

Commissions, fees and insurance results reflected typical first-quarter seasonality, according to management. Card issuance declined from the fourth quarter, while current account fees for individuals continued a downward trend as the bank redesigns packages and seeks to increase customer lifetime value.

Insurance was a positive highlight, sustaining strong performance from the previous quarter and growing 17% year-over-year. Overall services and insurance revenues increased 5.3% from a year earlier.

Maluhy said several revenue lines remain closely tied to economic activity, including payments, capital markets, cards and investment banking. In response to a question from Goldman Sachs analyst Tito Labarta, Maluhy said the bank remains comfortable with its full-year guidance, but added that services and insurance are more likely to be toward the lower end of the guided range because of weaker activity, particularly in debt capital markets and performance fees in asset management.

Non-interest expenses declined 5% from the fourth quarter and increased nearly 5% year-over-year. In Brazil, expenses fell 5.6% sequentially and rose 5.2% from a year earlier. Maluhy said the bank continues to target the midpoint of its expense guidance, implying annual growth of 3.5%.

The efficiency ratio in Brazil reached 34.9%, which Maluhy said was a record low and the first time the bank had moved below 35%. Adjusting for the early dividend payment effect, the ratio would have been 34.4%.

Credit Quality Takes Center Stage

Maluhy devoted a significant portion of the call to credit quality, saying the topic is important given tighter macroeconomic conditions, higher interest rates and broader economic uncertainty.

Short-term delinquency, measured as loans 15 to 90 days past due, increased 10 basis points at the consolidated level and 20 basis points in Brazil. In individuals, the increase was 23 basis points, which Maluhy said was lower than most prior first-quarter seasonal increases. Long-term delinquency remained stable at the consolidated level, while Brazil’s individual portfolios were stable and SMEs rose 10 basis points.

Management said the increase in SME delinquency was expected and partly mechanical, as grace periods on government-backed loans expire. Maluhy said less than 5% of that portfolio remains under a grace period, and that the loans are covered by government guarantees.

The bank also disclosed comparative delinquency data by product. Maluhy said over-90-day delinquency in Itaú’s personal loan portfolio was 5.1%, compared with 9.3% for the market. In credit cards, Itaú’s over-90-day NPL ratio was 5.1%, roughly half the market level. Auto loan delinquency was 3.5%, compared with 6.2% in the market, and private payroll lending delinquency was 4.2%, versus 7.1% for the market.

Maluhy said the bank has not changed its write-off criteria despite regulatory flexibility under Resolution 4966. He said Itaú continues to apply write-off timelines based on recoverability estimates, consistent with its prior approach.

Capital, Guidance and Outlook

Itaú ended the quarter with a CET1 ratio of 12.0% and AT1 capital of 1.4%. Maluhy said core capital generation was sufficient to fund capital uses and growth in risk-weighted assets, even after the large dividend distribution in the prior quarter.

During the question-and-answer session, executives repeatedly reaffirmed the bank’s guidance, including for profitability, portfolio growth, financial margin and cost of credit. Maluhy told XP analyst Bernardo Guttmann that Itaú avoids giving specific ROE guidance but remains comfortable delivering profitability above 20%.

He also acknowledged that macroeconomic conditions had worsened since the beginning of the year, citing geopolitical events, oil prices, inflation uncertainty, energy costs, fertilizer prices and slower global growth. Still, he said the bank’s portfolio was built to be resilient and that current delinquency trends support the existing guidance.

“Good results do not generate future accommodation,” Maluhy said in closing remarks. He said the bank remains focused on discipline, client service, capital allocation and long-term execution amid a challenging macroeconomic and political environment.

About Itau Unibanco NYSE: ITUB

Itaú Unibanco SA NYSE: ITUB is a Brazilian banking and financial services conglomerate headquartered in São Paulo. The company was formed by the merger of Banco Itaú and Unibanco in 2008 and is one of the largest private-sector banks in Brazil and among the leading banks in Latin America. Itaú Unibanco is publicly listed in Brazil and maintains an international listing on the New York Stock Exchange.

The bank offers a full range of financial products and services across retail, commercial and wholesale banking.

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