Detailed narrative
Digital Transformation & One Itaú Progress
Itaú Unibanco reported significant advancements in its digital transformation, with over 10 million clients successfully migrated to the One Itaú platform, achieving an 80 NPS and a 99.3% conversion rate. This initiative has led to 54% of migrated clients holding three or more products, boosting engagement by 32%.
The Super App saw a 25% increase in usage per client, with 19 new products launched in the past 18 months, including 'Cofrinhos' (Piggy Bank) reaching BRL 13 billion in balance and an expense tracking tool with 1.8 million active users.
Digital origination of loans grew 31% year-over-year, and daily financing origination increased 72% year-over-year, underscoring the impact of technology investments.
NII and NIM Expansion Drivers
The bank achieved a strong quarter for NII with clients, growing 3.1% quarter-over-quarter and 15.4% year-over-year. Consolidated NIM expanded to a historic high of 9.2%, with Brazil NIM reaching 10%, a level not seen since 2019. Core margin expanded by BRL 1.1 billion, driven by average volume, product and segment mix, spreads, liability margins, and the investment franchise.
Risk-adjusted NIM also saw significant expansion, reaching 6.3% consolidated and 6.9% in Brazil, indicating margin growth while maintaining strong credit quality.
Disciplined Credit Quality and Portfolio Management
Itaú maintained well-behaved delinquency rates, with consolidated NPL over 90 days stable at 1.9% and down year-over-year. Short-term delinquency indicators were positive, with overall NPL 15-90 days decreasing by 10 basis points. The annualized cost of credit over the loan portfolio remained flat at 2.7%, significantly below historical averages.
The bank emphasized its long-term portfolio management strategy, focusing on resilient clients and high-quality assets, which has resulted in a more resilient and less volatile portfolio compared to previous periods.
Efficiency Gains and Cost Management
The efficiency ratio improved, declining to 36.4% in Brazil for the first half of 2025 (from 37.0% in H1 2024) and to 38.4% consolidated (from 38.5%). This improvement is attributed to heavy investments in business technology and modernization. The bank also provisioned approximately BRL 600 million in extraordinary expenses for restructuring, signaling ongoing efforts to enhance efficiency and adapt its footprint to client demands and digital evolution.
Capital Generation and Allocation Strategy
The Common Equity Tier 1 (CET1) ratio posted a solid increase of 50 basis points quarter-over-quarter, reaching 13.1%. Net income, adjusted for interest on equity provisions, generated a 60 basis point capital increase. The bank announced call options on USD 1.5 billion of perpetual foreign currency debt instruments, enabled by BRL 5 billion in local perpetual debt issuance, with the AT1 ratio expected to converge to approximately 1.3%.
Management reiterated its focus on reinvesting capital for adequate profitability and distributing excess capital, rather than targeting a specific high payout ratio.
Fee Income Performance and Diversification
Fee income lines showed mixed performance. Card issuance revenues grew 4.5% year-over-year, and asset management revenues increased 17.5% year-over-year, driven by BRL 47.5 billion in net inflows and strong performance fees. Insurance, pension, and capitalization businesses grew 7.7% quarter-over-quarter and 25.2% year-over-year.
However, Advisory & Brokerage Services revenues declined due to lower DCM activity compared to a historically strong prior year, highlighting the impact of market volumes on certain fee lines.
Resilience of Agribusiness Portfolio
Despite market challenges🌐 in the agribusiness sector, Itaú's BRL 130 billion portfolio demonstrated strong resilience. Management highlighted its balanced approach, with diversified exposure across agricultural distributions, well-selected rural producers, and adequate monocultures. The bank maintains a disciplined management approach with careful penetration and strong guarantees, allowing it to perform healthily even in a volatile environment, with its market share at 5% of the sector's RJs.