Morningstar Rating

Stock Research and Analysis

by Timothy Puls

Bulls Say

Itau will continue to attract new depositors and borrowers with its vast branch network. The bank is well prepared to capture stronger loan growth as Brazil's economy improves.
Credit card use is on the uptick as a means of payment in everyday Brazilian life. Itau is uniquely positioned to take advantage of both higher credit use and higher transactional volume with several credit card brands.
Brazil's largest banks have historically been able to earn lofty interest margins and very attractive returns, even as the Brazilian economy has slowed. Read more 

Bears Say

Itau has lagged industry average loan growth throughout 2012 and 2013. With relatively fewer originated loans replacing expiring credit, Itau risks losing market share to more aggressive competitors.
Itau's future is highly leveraged to macroeconomic developments in Brazil, and near-term growth is likely to be below historical levels.
A depositor lawsuit against Brazilian banks continues to be an overhang. A timeline for when this will be resolved is uncertain, but an unfavorable ruling against the banks would lead to large losses and negative consequences for the lending environment. Read more 

Management

We assign Itau a Standard Stewardship Rating. Itau Unibanco's ownership control, like that of many large corporations in Latin America, lies with a few individuals or families. An outsize proportion of Itau's voting control lies with the Egydio de Souza   Read more 

Profile

Itau Unibanco is one of three non-state-controlled banks in Brazil’s six-bank oligopoly. The firm became Brazil’s largest non-state bank when Itau and Unibanco merged in   Read more 

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