3Q
23
Itaú Unibanco Holding S.A.
_Management discussion
- analysis and complete financial statements
Third quarter of 2023
Contents
Management discussion & analysis
Page 03
Executive Summary | 05 |
Income Statement and Balance Sheet Analysis | 11 |
Managerial Financial Margin | 12 |
Cost of Credit | 13 |
Credit Quality | 14 |
Commissions and Fees & Result from Insurance | 16 |
Result from Insurance, Pension Plan and Premium Bonds | 18 |
Non-interest Expenses | 19 |
Balance Sheet | 21 |
Credit Portfolio | 22 |
Funding | 24 |
Capital, Liquidity and Market Ratios | 25 |
Results by Business Segments | 26 |
Results by Region - Brazil and Latin America | 28 |
Activities Abroad | 29 |
Additional Information | 30 |
Comparison between BRGAAP and IFRS | 31 |
Glossary | 33 |
Independent Auditor's Report | 35 |
Complete financial statements
Page 37
Management Discussion & Analysis | Executive Summary |
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Itaú Unibanco Holding S.A. | 04 |
Management Discussion & Analysis | Executive Summary |
Managerial Income Summary
Banco Itaú Argentina
In August 2023, we entered into an agreement to sell all shares of Banco Itaú Argentina. Due to this sale, Unibanco as of September 2023 does not include the balances of Banco Itaú Argentina, while the income account the results for the month of July 2023.
the consolidated balance sheet of Itaú statement for the third quarter only took into
The table below presents the financial indicators of Itaú Unibanco up to the end of each period.
In R$ million (except where indicated) | ||||||||
Results | Recurring Managerial Result | |||||||
Operating Revenues | (1) | (2) | ||||||
Managerial Financial Margin | ||||||||
Recurring Managerial Return on Average Equity - Annualized - Consolidated | ||||||||
(3) | ||||||||
Recurring Managerial Return on Average Equity - Annualized - Brazil | ||||||||
(3) | ||||||||
Performance | Recurring Managerial Return on Average Assets - Annualized | (4) | ||||||
Nonperforming Loans Ratio (90 days overdue) - Total | ||||||||
Nonperforming Loans Ratio (90 days overdue) - Brazil | ||||||||
Nonperforming Loans Ratio (90 days overdue) - Latin America | ||||||||
Coverage Ratio (Total Allowance/NPL 90 days overdue) | ||||||||
(5) | ||||||||
Efficiency Ratio (ER) | ||||||||
(6) | ||||||||
Recurring Managerial Result per Share (R$) | ||||||||
(7) | ||||||||
Net Income per Share (R$) | (7) | |||||||
Number of Total Shares at the end of the period - in million | ||||||||
Shares | (8) | |||||||
Book Value per Share (R$) | (9) | |||||||
Dividends and Interest on Own Capital net of Taxes | ||||||||
Market Capitalization | (10) | |||||||
Market Capitalization | (10) | (US$ million) | ||||||
Total Assets | ||||||||
Total Credit Portfolio, including Financial Guarantees Provided and Corporate Securities | ||||||||
Deposits + Debentures + Securities + Borrowings and Onlending | ||||||||
Sheet | (11) | |||||||
Loan Portfolio/Funding | (11) | |||||||
Balance | Stockholders' Equity | |||||||
Solvency Ratio - Prudential Conglomerate (BIS Ratio) | ||||||||
Tier I Capital - BIS III | ||||||||
Common Equity Tier I - BIS III | ||||||||
Liquidity Coverage Ratio (LCR) | ||||||||
Net Stable Funding Ratio (NSFR) | ||||||||
Portfolio Managed and Investment Funds | ||||||||
Total Number of Employees | ||||||||
Other | Brazil | |||||||
Abroad | ||||||||
Branches and CSBs - Client Service Branches | ||||||||
ATM - Automated Teller Machines | ||||||||
(12) |
3Q23 | 2Q23 | 3Q22 | 9M23 | 9M22 |
9,040 | 8,742 | 8,079 | 26,217 | 23,118 |
39,537 | 38,827 | 36,567 | 115,814 | 104,852 |
26,275 | 25,997 | 23,901 | 76,964 | 67,586 |
21.1% | 20.9% | 21.0% | 20.9% | 20.7% |
22.0% | 21.5% | 21.6% | 21.5% | 21.3% |
1.4% | 1.4% | 1.4% | 1.4% | 1.4% |
3.0% | 3.0% | 2.8% | 3.0% | 2.8% |
3.5% | 3.5% | 3.2% | 3.5% | 3.2% |
1.3% | 1.3% | 1.3% | 1.3% | 1.3% |
209% | 212% | 215% | 209% | 215% |
40.0% | 39.6% | 41.1% | 39.8% | 41.2% |
0.92 | 0.89 | 0.82 | ||
0.77 | 0.87 | 0.80 | ||
9,803 | 9,800 | 9,801 | ||
17.75 | 17.27 | 16.04 | ||
2,684 | 2,660 | 1,932 | ||
266,246 | 279,494 | 274,228 | ||
53,168 | 57,996 | 50,721 | ||
2,678,896 | 2,585,768 | 2,422,978 | ||
1,163,213 | 1,151,617 | 1,111,024 | ||
1,327,516 | 1,308,923 | 1,216,188 | ||
67.9% | 68.5% | 72.4% | ||
174,042 | 169,199 | 157,175 | ||
16.3% | 15.1% | 14.7% | ||
14.6% | 13.6% | 13.2% | ||
13.1% | 12.2% | 11.7% | ||
187.8% | 179.7% | 158.2% | ||
127.3% | 127.9% | 122.6% | ||
1,734,824 | 1,681,772 | 1,610,267 | ||
97,486 | 99,864 | 100,361 | ||
87,197 | 88,078 | 88,279 | ||
10,289 | 11,786 | 12,082 | ||
3,509 | 3,635 | 3,816 | ||
41,746 | 42,400 | 43,891 |
Note: (1) Operating Revenues represents the sum of Managerial Financial Margin, Commissions and Fees and Revenues from Insurance, Pension Plan and Premium Bonds Operations before Retained Claims and Selling Expenses; (2) Detailed in the Managerial Financial Margin section; (3) The Annualized Recurring Managerial Return was calculated by dividing the Recurring Managerial Result by the Average Stockholders' Equity. This result was then multiplied by the number of periods in the year to derive the annualized rate. The bases for the calculation of returns were adjusted by the amounts of dividends proposed after the balance sheet closing date and not yet approved at Shareholders' or Board Meetings; (4) The return was calculated by dividing the Recurring Managerial Result by the Average Assets; (5) Includes the balance of the allowance for financial guarantees provided; (6) For further details of the Efficiency Ratio calculation methodologies, please refer to the Glossary section; (7) Calculated based on the weighted average number of outstanding shares for the period; (8) shares representing total capital stock net of treasury shares; (9) Interest on own capital. Amounts paid/provided for, declared and reserved in stockholders' equity; (10) Total number of outstanding shares (common and non-voting shares) multiplied by the average price per non- voting share on the last trading day in the period; (11) As detailed in the Balance Sheet section; (12) Includes electronic service branches (ESBs), service points at third-party locations and Banco24Horas ATMs.
Itaú Unibanco Holding S.A. | 05 |
Management Discussion & Analysis | Executive Summary |
Managerial Income Statement
In this report, besides making adjustments for extraordinary items, we have applied managerial criteria to present our income statement. In the accounting statements, these criteria affect the breakdown of our income statement, but not the amount of net income. Among the managerial adjustments, we highlight the tax effects of investments abroad and the reclassifications made to better represent the way the bank is managed. Both adjustments aim to eliminate distortions between lines and are neutral for the net income of the operation.
These reclassifications enable us to perform business analyses from the management point of view, and a reconciliation of the management and accounting figures is shown in the table below.
Reconciliation between Accounting and Managerial Financial Statements | 3rd quarter of 2023
Accounting | Extraordinary | Managerial adjustments | Managerial | ||
In R$ million | Items | Tax effects | Reclassifications | ||
Oper ating Revenues | 37,792 | 931 | 1,040 | (226) | 39,537 |
Managerial Financial Margin | 23,701 | 79 | 1,040 | 1,455 | 26,275 |
Financial Margin with Clients | 24,025 | 79 | - | 1,455 | 25,559 |
Financial Margin with the Market | (324) | - | 1,040 | - | 715 |
Commissions and Fees | 12,089 | 14 | - | (1,410) | 10,694 |
Revenues from Insurance, Pension Plan and Premium Bonds | 1,756 | - | - | 812 | 2,569 |
Operations Before Retained Claims and Selling Expenses | |||||
Other Operating Income | 919 | 12 | - | (931) | - |
Equity in Earnings of Affiliates and Other Investments | 224 | - | - | (224) | - |
Non-operating Income | (897) | 826 | - | 71 | - |
Cost of Cr edit | (8,017) | (152) | - | (1,094) | (9,263) |
Provision for Loan Losses | (9,016) | (152) | - | (44) | (9,212) |
Impairment | - | - | - | (100) | (100) |
Discounts Granted | - | - | - | (1,035) | (1,035) |
Recovery of Loans Written Off as Losses | 999 | 0 | - | 84 | 1,083 |
Retained Claims | (372) | - | - | - | (372) |
Other Oper ating Expenses | (19,992) | 944 | (147) | 2,157 | (17,039) |
Non-interest Expenses | (17,879) | 937 | - | 2,201 | (14,742) |
Tax Expenses for ISS, PIS, Cofins and Other Taxes | (2,107) | 7 | (147) | (44) | (2,291) |
Insurance Selling Expenses | (6) | - | - | - | (6) |
Income befor e Tax and Pr ofit Shar ing | 9,411 | 1,724 | 893 | 836 | 12,863 |
Income Tax and Social Contr ibution | (1,707) | (182) | (893) | (898) | (3,679) |
Pr ofit Shar ing Management Member s - Statutor y | (62) | - | - | 62 | - |
Minor ity Inter ests | (103) | (41) | - | - | (144) |
Net Income | 7,539 | 1,501 | - | - | 9,040 |
Extraordinary Items Net of Tax Effects
in R$ million | 3Q23 | 2Q23 | 3Q22 | 9M23 | 9M22 | |
Net Income | 7,539 | 8,478 | 7,880 | 24,196 | 22,058 | |
(-) Extraordinary Items | (1,501) | (265) | (199) | (2,021) | (1,059) | |
Sale of Banco Itaú Argentina S.A. (BIA) | (1,212) | - | - | (1,212) | - | |
Goodwill amortization | (159) | (159) | (135) | (462) | (395) | |
Result on the partial sale of XP Inc. shares | (7) | (122) | - | (129) | (123) | |
Voluntary severance program | - | - | - | - | (757) | |
Liability adequacy test | - | 12 | - | 12 | 39 | |
Corporate reorganization of Câmara Interbancária de Pagamentos (CIP) | - | - | - | - | 239 | |
Other | (123) | 3 | (64) | (230) | (62) | |
Recurring managerial result | 9,040 | 8,742 | 8,079 | 26,217 | 23,118 |
Itaú Unibanco Holding S.A. | 06 |
Management Discussion & Analysis | Executive Summary |
3rd quarter of 2023 Income Statement
In R$ million | 3Q23 | 2Q23 | Δ∍ | 3Q22 | Δ∍ | 9M23 | 9M22 | Δ∍ | |
Oper ating Revenues | 39,537 | 38,827 | 1.8% | 36,567 | 8.1% | 115,814 | 104,852 | 10 .5% | |
Managerial Financial Margin | 26,275 | 25,997 | 1.1% | 23,901 | 9.9% | 76,964 | 67,586 | 13.9% | |
Financial Margin with Clients | 25,559 | 24,927 | 2.5% | 23,385 | 9.3% | 74,534 | 65,413 | 13.9% | |
Financial Margin with the Market | 715 | 1,070 | -33.1% | 516 | 38.6% | 2,430 | 2,173 | 11.8% | |
Commissions and Fees | 10,694 | 10,363 | 3.2% | 10,410 | 2.7% | 31,403 | 30,680 | 2.4% | |
Revenues from Insurance | 1 | 2,569 | 2,467 | 4.1% | 2,256 | 13.9% | 7,447 | 6,585 | 13.1% |
Cost of Cr edit | (9,263) | (9,441) | -1.9% | (7,992) | 15.9% | (27,792) | (22,494) | 23.5% | |
Provision for Loan Losses | (9,212) | (9,609) | -4.1% | (8,275) | 11.3% | (27,830) | (23,087) | 20.5% | |
Impairment | (100) | (5) | 1760.9% | 158 | -163.1% | (133) | 333 | -140.1% | |
Discounts Granted | (1,035) | (820) | 26.2% | (867) | 19.4% | (2,722) | (2,062) | 32.0% | |
Recovery of Loans Written Off as Losses | 1,083 | 993 | 9.1% | 992 | 9.1% | 2,893 | 2,322 | 24.6% | |
Retained Claims | (372) | (383) | -2.9% | (412) | -9.8% | (1,140) | (1,138) | 0 .2% | |
Other Oper ating Expenses | (17,039) | (16,699) | 2.0% | (16,139) | 5.6% | (49,903) | (46,494) | 7 .3% | |
Non-interest Expenses | (14,742) | (14,272) | 3.3% | (13,939) | 5.8% | (42,803) | (40,052) | 6.9% | |
Tax Expenses for ISS, PIS, Cofins and Other Taxes | (2,291) | (2,421) | -5.4% | (2,197) | 4.3% | (7,084) | (6,429) | 10.2% | |
Insurance Selling Expenses | (6) | (5) | 18.1% | (3) | 82.9% | (16) | (13) | 21.7% | |
Income befor e Tax and Minor ity Inter ests | 12,863 | 12,304 | 4 .5% | 12,025 | 7 .0% | 36,979 | 34,725 | 6.5% | |
Income Tax and Social Contr ibution | (3,679) | (3,388) | 8.6% | (3,744) | -1.7% | (10,237) | (10,734) | -4 .6% | |
Minor ity Inter ests in Subsidiar ies | (144) | (174) | -17 .2% | (201) | -28.6% | (525) | (874) | -39.9% | |
Recur r ing Manager ial Result | 9,040 | 8,742 | 3.4% | 8,079 | 11.9% | 26,217 | 23,118 | 13.4% |
- Revenues from Insurance includes Revenues from Insurance, Pension Plan and Premium Bonds Operations before Retained Claims and Selling Expenses.
Credit Portfolio including Financial Guarantees Provided and Corporate Securities
In R$ billion, end of period
In divid u als
Credit Card Loans
Personal Loans
Payroll Loans 1
Vehicle Loans
Mortgage Loans
V er y Small, Small and Middle Mar ket Loans 2
Individuals + V er y Small, Small and Middle Mar ket Loans Cor por ate Loans
Credit Operations
Corporate Securities 3
Total for Br azil with Financial Guar antees Pr ovided and Cor por ate Secur ities
Latin Amer ica
Argentina4
Chile
Colombia
Paraguay
Panama
Uruguay
Total with Financial Guar antees Pr ovided and Cor por ate Secur ities
Total with Financial Guar antees Pr ovided and Cor por ate Secur ities (ex-for eign exchange r ate var iation) 5
3Q23
4 0 8.0
127.7
60.7
73.8
32.8
112.9
175.6
583.6
370 .4
203.3
167.1
954 .0
209.2
4.6
138.9
28.2
12.1
1.5
23.8
1,163.2
1,163.2
2Q23 | Δ∍ | 3Q22 | Δ∍ | |
405.4 | 0 .6% | 385.0 | 6.0% | |
128.4 | -0.5% | 128.8 | -0.8% | |
58.2 | 4.2% | 51.5 | 17.9% | |
74.9 | -1.4% | 72.2 | 2.3% | |
32.4 | 1.0% | 31.8 | 3.1% | |
111.5 | 1.3% | 100.7 | 12.1% | |
170 .0 | 3.3% | 170 .2 | 3.2% | |
575.5 | 1 | .4% | 555.2 | 5.1% |
359.6 | 3 | .0% | 345.1 | 7 .3% |
199.0 | 2.1% | 203.7 | -0.2% | |
160.5 | 4.1% | 141.5 | 18.1% | |
935.0 | 2 | .0% | 900 .3 | 6.0% |
216.6 | -3 | .4% | 210 .7 | -0 .7% |
9.1 | -49.3% | 10.6 | -56.7% | |
145.6 | -4.5% | 136.6 | 1.7% | |
27.1 | 4.0% | 29.1 | -3.0% | |
11.1 | 9.3% | 12.8 | -5.0% | |
1.4 | 7.9% | 1.9 | -20.9% | |
22.3 | 6.7% | 19.8 | 20.4% | |
1,151.6 | 1 | .0% | 1,111.0 | 4 .7% |
1,148.3 | 1.3% | 1,100 .3 | 5.7% |
- Includes operations originated by the institution, plus acquired operations. (2) Includes Rural Loans to Individuals. (3) Includes Debentures, Certificates of Real Estate Receivables (CRI), Commer- cial Paper, Rural Product Notes (CPR), Financial Bills, Investment Fund Quotas and Eurobonds. (4) Portfolio of Argentine clients outside Argentina. (5) Calculated based on the conversion of the for- eign currency portfolio (US Dollar and Latin American currencies). Note: The Mortgage and Rural Loan portfolios from the companies segment are allocated based on the size of the client. Further details are provided on pages 22 and 23.
Itaú Unibanco Holding S.A. | 07 |
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Management Discussion & Analysis | Executive Summary |
Performance analysis for the third quarter of 2023
Management commentary
The recurring managerial result reached R$9.0 billion in the third quarter of 2023, a 3.4% increase from the previous quarter. Recurring managerial return on equity was 21.1% on a consolidated basis and 22.0% in operations in Brazil.
The loan portfolio increased by 1.0% on a consolidated basis. The loan portfolio in Brazil was up by 2.0%, with a more moderate increase for individuals, and a more significant increase for corporate and very small, small and middle-market companies, driven by our strategic management of the loan portfolio. The individual loan portfolio in Brazil was up 0.6% in the quarter. The highlight in the period was a 4.2% growth in the personal loans portfoio, with increases in installment payment plans (concentrated in Uniclass and Personnalité segments) and in personalized credit. Also is worth mentioning the 1.3% increase in mortgage loans, with origination concentrated in the Uniclass and Personnalité segments. The 0.5% reduction in the credit card portfolio was driven by the change in the mix of clients and, over time, a reduction in card issuance through external channels. The card portfolio in the Personnalité and Uniclass segments continues to grow, with a 3.6% increase in this quarter. The higher average credit volume had a positive impact on our margin with clients, as did the larger number of calendar days in the period, higher gains from structured operations in the wholesale business segment and higher liabilities' margin. Driven by these effects, the margin with clients was up by 2.5%, closing the quarter at R$25.6 billion.
Credit quality metrics continue to stand out. Non-performing loans over 90 days overdue (NPL
- remained stable at 3.0% in the third quarter, notably for individuals in Brazil, which has remained at 4.9% since December 2022. Non-performing loans 15-90 days overdue (NPL 15-90) was down 0.2 p.p., closing the quarter at 2.3%. Indicators in Brazil and abroad were down 0.2 p.p., 0.2 p.p. in the individuals portfolio and 0.1 p.p. in both corporate and very small, small and middle-market companies. Cost of credit was down 1.9% in the quarter, at R$9.3 billion. Commissions and fees and result from insurance operations increased by 3.6%. We recorded higher revenues from card activities, both in issuance, driven by higher volumes, and in acquiring activities, driven by the increase in the credit card transaction volume. Additionally, it is worth mentioning the increase in our revenue from investment banking services and in revenues form insurance, as a consequence of higher earned premiums in the quarter. As expected, non-interest expenses were up 3.3% from the previous quarter due to the effects of negotiating the collective wage agreement. In this quarter, 39 brick-and-mortar branches and client site branches (CSBs) in Brazil were closed. As mentioned in the previous quarter, this move was driven by our optimizing the branch network, based on our clients' behavior and needs and taking into consideration our phygital strategy, with the proper availability of physical and digital channels. With this dynamic of the result for the quarter, the efficiency ratio was 40.0% on a consolidated basis and 37.9% in Brazil.
In the nine-month period, compared to the same period in 2022, the recurring managerial result was up 13.4% and recurring managerial return on equity was up by 0.2 p.p., reaching 20.9%. The positive effect of the portfolio growth, the higher liabilities' margin, in addition to the positive impact of the repricing of our working capital, more than outpaced lower credit spreads. Accordingly, financial margin with clients were up 13.9%. On the other hand, the cost of credit increased, due to higher loan portfolio in the retail business segment, in addition to larger discounts granted. Commissions and fees and result from insurance operations rose by 4.4% year-on-year. This increase was the result of higher revenues from card activities, both issuer and acquirer, in addition to a better result from insurance operations. Non-interest expenses were up by 6.9%, whereas the efficiency ratio decreased by 1.4 p.p.
21.0% | 19.3% | 20.7% | 20.9% | 21.1% |
8,079 | 8,435 | 8,742 | 9,040 | |
7,668 | ||||
3Q22 | 4Q22 | 1Q23 | 2Q23 | 3Q23 |
Recurring Managerial Result
Annualized Recurring Managerial Return on Average Equity (quarterly)
main figures
recurring managerial result
R$9.0 bn | +3.4% |
3Q23 | 3Q23 x 2Q23 |
credit portfolio | |
R$1,163.2 bn | +1.0% |
3Q23 | 3Q23 x 2Q23 |
financial margin with clients
R$25.6 bn | +2.5% |
3Q23 | 3Q23 x 2Q23 |
financial margin with the market | |
R$0.7 bn | -33.1% |
3Q23 | 3Q23 x 2Q23 |
cost of credit | |
R$9.3 bn | -1.9% |
3Q23 | 3Q23 x 2Q23 |
fees and insurance | |
R$12.9 bn | +3.6% |
3Q23 | 3Q23 x 2Q23 |
non-interest expenses | |
R$14.7 bn | +3.3% |
3Q23 | 3Q23 x 2Q23 |
recurring managerial return on
average equity
21.1% | +0.1 p.p. |
3Q23 x 2Q23 |
Itaú Unibanco Holding S.A. | 08 |
Management Discussion & Analysis | Executive Summary |
Banco Itaú Argentina
Banco Itaú Argentina
In August 2023, we entered into an agreement to sell all shares of Banco Itaú Argentina. Due to this sale, the consolidated balance sheet of Itaú Unibanco as of September 2023 does not include the balances of Banco Itaú Argentina. In July 2023, the credit portfolio of Itaú Argentina was R$4.0 billion. Itaú Unibanco's income statement for the third quarter only took into account the results for the month of July 2023. Below, for your information, we present the income statement for July 2023, for the second quarter of 2023 and for the seven months ended July 2023:
In R$ million | July 2023 | 2Q23 | Δ | 7M23 |
operating revenues | 306 | 840 | -63.5% | 1,889 |
financial margin with clients | 176 | 470 | -62.6% | 1,085 |
financial margin with the market | 97 | 272 | -64.4% | 560 |
commissions and fees | 34 | 99 | -65.6% | 243 |
cost of credit | (2) | (16) | -85.5% | (33) |
other operating expenses | (123) | (376) | -67.2% | (831) |
non-interest expenses | (92) | (293) | -68.5% | (648) |
tax expenses and other | (31) | (83) | -62.7% | (183) |
income before tax and minority interests | 181 | 448 | -59.7% | 1,024 |
income tax and social contribution | (80) | (195) | -58.9% | (447) |
recurring managerial result | 101 | 254 | -60.3% | 578 |
The result of the sale was negative in R$1.2 billion and was considered as an extraordinary item in the 3Q23 results.
In the first seven months of 2023, Banco Itaú Argentina's recurring managerial result was R$578 million, while the impact of exchange rate variation and inflation, charged directly to shareholders' equity, generated an expense of R$691 million. Therefore, in the first seven months of 2023 the impact was negative by R$113 million.
2023 Forecast
2023 guidance reaffirmed and normalized by the sale of Banco Itaú Argentina
- Includes financial guarantees provided and corporate securities; (2) Composed of results from loan losses, impairment and discounts granted; (3) Commissions and fees (+) income from insurance, pension plan and premium bonds operations (-) expenses for claims (-) insurance, pension plan and premium bonds selling expenses; (4) Forecast of the results between August and
December 2023 and the credit portfolio of 12/31/2023 of Banco Itaú Argentina.
Itaú Unibanco Holding S.A. | 9 |
Management Discussion & Analysis | Executive Summary |
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Itaú Unibanco Holding S.A. | 10 |
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Itaú Unibanco Holding SA published this content on 06 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 November 2023 21:48:17 UTC.