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Itaú signals possible guidance revision amid economic uncertainty

CEO Milton Maluhy Filho says projections could improve if macro conditions exceed expectations, while analysts view bank’s outlook as conservative

02/07/2025

After another year of record results in 2024, Itaú Unibanco, Brazil’s largest private bank, released a conservative guidance for 2025, according to market analysts. Itaú CEO Milton Maluhy Filho emphasized on Thursday (6) that this stance reflects greater macroeconomic uncertainty but noted that if conditions improve beyond initial expectations, the bank may revise its projections upward.

“Guidance represents a range, not a fixed point,” he said. “In 2024, we started the year with a certain portfolio pace and ended with a completely different one” he added, referring to stronger-than-expected credit expansion last year. If the economic outlook turns out to be more favorable, Itaú has significant capacity to accelerate, he noted. “We’ve never been better positioned to handle any scenario.”

Credit growth

Itaú’s expanded loan portfolio reached R$1.35 trillion in December 2024, marking a 15.5% increase over 12 months. Adjusted for exchange rate fluctuations, the expansion was 10.2%. The bank had already revised its 2024 guidance upward, projecting growth between 9.5% and 12.5%, but for 2025, it now forecasts a much lower expansion of 4.5% to 8.5%.

The cost of credit is expected to range between R$34.5 billion and R$38.5 billion, a figure Mr. Maluhy said he is comfortable with.

For the bank’s Brazilian operations, Mr. Maluhy expects credit growth to land in the middle of the guidance range, between 6.5% and 7%. In the small and medium-sized business segment, growth could once again exceed double digits, he added.

Mr. Maluhy highlighted strong portfolio management efforts and said even the more volatile segments—such as personal and SME loans—are in healthy shape.

Regarding delinquency rates, he acknowledged there could be a slight increase but expects overall stability.

“It’s hard to imagine further improvement in default indicators, as they are already at historic lows,” he said. Itaú’s delinquency rate stood at 2.4% in the fourth quarter of 2024, down from 2.6% in the third quarter and 2.8% in the last three months of 2023.

During an earnings call, Mr. Maluhy was asked about Itaú’s net interest margin with the market, which is projected between R$1 billion and R$3 billion for 2025. He acknowledged that this figure is difficult to forecast, and given macroeconomic uncertainties, the bank chose a conservative estimate.

“Our ability to improve market-related margins is there, but it will depend on the scenario,” he said. “If we perform better than expected, we may revise guidance in the first or second quarter.”

On dividend distribution, Mr. Maluhy said that, barring any major changes, the bank expects to pay an additional dividend on 2025 earnings. “Our goal is not to retain excess capital,” he said. “When an extraordinary dividend is paid every year, it stops being extraordinary—so we’re calling it an ‘additional’ dividend now,” he added.

Mr. Maluhy also praised the government’s initiative to revamp the private payroll loan market in collaboration with banks. “It could become a very strong credit program, highly beneficial for the country,” he said.

The private payroll loan market is currently valued at around R$40 billion, with Itaú holding a 30% share. However, Mr. Maluhy said the bank would prefer to hold a smaller share in a much larger market—potentially four to five times its current size.

While acknowledging implementation challenges, he said that once the project is completed, it will greatly facilitate business participation.

“The new payroll loan system must be available across all channels—there cannot be a monopoly by a single marketplace,” he noted.

Market reaction

Analysts praised Itaú’s fourth-quarter results, highlighting credit growth, record-low delinquency rates, and strong profitability. However, the conservative guidance and slightly lower-than-expected implied profit left some market participants unimpressed.

Goldman Sachs estimates R$45.0 billion in net income for 2025, 3% below previous projections. “We believe Itaú continues to deliver the best performance among Brazil’s traditional banks. However, the overall earnings, dividend, and guidance announcement did not bring major positive surprises,” Goldman Sachs analysts said.

Citi analysts also described the guidance as somewhat disappointing, noting that Itaú’s credit provisions assume a highly challenging macroeconomic environment. However, they pointed out that if the economy proves resilient, there could be room for adjustments.

“Despite operating expense pressures, we believe Itaú has room to reach the upper end of its guidance range,” Citi noted.

*By Álvaro Campos e Mariana Ribeiro, Valor — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Itaú buys broker to speed up retail expansion

Until the beginning of October last year, Itaú was forbidden by the Central Bank of Brazil to make new acquisitions in the investment segment, due to its agreement with asset management firm XP. Once the separation between the two companies was concluded, this interdiction no longer existed and Itaú unveiled Thursday the purchase of Ideal, another brokerage firm. The bank will pay R$651.3 million for 50.1% of the firm and, after five years, will be able to acquire the remaining slice.

Ideal Investimentos is expected to be the spearhead for Itaú Unibanco to enter businesses that it has not yet operated, according to Carlos Constantini, chief executive of the bank’s wealth management and services division. As the digital brokerage serves mainly institutional investors in high-frequency trading, the executive does not expect that there will be any barrier to the approval of the deal, either by antitrust regulator Cade or by the Central Bank, as it happened with the transaction with XP.

“We are not buying a client base [as was the case with XP]. Ideal is still going to make a move to build retail. We’re buying people’s knowledge and the technology. It’s not comparable,” Mr. Constantini said. “It’s more the expectation of building a business than buying a business and keep driving.”

It was the recent divorce from XP that also allowed Itaú to look at its surroundings. “It’s going to be an exciting year to get the pieces on the board and play. I don’t think it’s going to be big acquisitions, but from our point of view it’s an opportunity to look at the whole platform and different ways of serving the customer where the bank is not,” the executive said.

Arrangements in the “broker as a service” model, to offer partner-branded investments and reach new customer bases are among the plans for the acquisition. Retail companies, utilities and the corporate segment served by Itaú are the potential targets. It will also be on Ideal’s platform that Itaú intends to accelerate the service to independent financial advisers, which is largely responsible for XP’s climb. The fintech ended 2021 with R$815 billion under custody.

“When we look ahead, the digital brokerage will play an important role in serving retail clients, whether directly or through the use of third parties, such as independent financial advisers, or in environments outside the financial market, such as retailers,” Mr. Constantini says. He said that for some time he had already discussed with Ideal’s partners some kind of partnership, but the conversations naturally evolved into an acquisition. The purchase of the control and then the entire operation will effectively be subject to regulatory approvals.

Unlike the transaction with XP (in which there was a commitment from both parties), this is a right that can be exercised or not. In the transaction, both Ideal’s founding partners and the Kaszek fund will be diluted in proportion to Itaú’s capital contribution. The private equity manager invested R$100 million in the business in September 2020.

In the view of Filipe Medeiros, CEO of AAZW, a company that provides technology and consulting services to independent financial advisers, for an institution as big as Itaú, it was natural for it to make a move to advance in this market and the purchase of Ideal serves this purpose. “The independent advisory market, represented in large part by independent agents, is already too big not to be considered by brokers and banks that want to enter this sector,” he said.

For Carlos Macedo, an analyst at OHM Research, Ideal is complementary to Itaú’s existing business and allows the bank to compete on equal terms with XP, BTG and Nubank. “It is worth remembering that service revenues in the traditional model — charging for account maintenance, transfers, etc. — are a business model that tends to die,” he said. “Services that have a higher added value, such as investment advice, for example, should still be able to generate revenue for banks. It makes sense for Itaú to seek to expand its operations in this field, since its competitors are quite active.”

Renata Cardoso, a partner for banking and finance at law firm Lefosse, says it is not yet possible to know how the CADE and the Central Bank will evaluate the purchase of Ideal by Itaú, but she points out that the deal is part of a large movement of mergers and acquisitions (M&A) in the financial services sector. “Big banks are using these acquisitions as a way to renew their business, reinvent the way they operate, and even acquire and develop new technologies. It is something we will continue to see throughout 2022.”

“It emerges as a mantra of focus on clients. They are the ones who will gain the most from the deal, since Ideal will help us expand and standardize the offer for different channels,” Itaú CEO Milton Maluhy Filho said in a statement. Nilson Monteiro, Ideal’s CEO, will remain at the head of its operations, together with the other founding partners of the company. The management and conduction of Ideal’s business will remain independent from Itaú, which will become another institution served by the brokerage house.

Source: Valor international

https://valorinternational.globo.com/

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