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