Itau Unibanco Holding S.A. ADRITUB

Morningstar Rating

Stock Research and Analysis

by Maclovio Pina

"Latin America's largest bank"--that's what Itau Unibanco is after the recent merger of Itau and Unibanco. However, we think that despite all the headlines, size by itself does not create shareholder value unless it is a profitable venture. We have Read more

Bulls Say

Itau was one of Brazil's most profitable banks, and its management should help Itau Unibanco maintain that distinction.

Itau Unibanco is poised to profitably expand in Brazil and Latin America as one of the predominant players in the market.

Despite lower interest rates, Brazil's banks will still be able to achieve lofty interest margins and stout revenues. Read more

Bears Say

The economic downturn will put stress in Itau Unibanco's customers' cash flows, prompting a rise in loan losses.

If inflation rises and exports fall, industrial activity in Brazil will likely contract, making it hard for Itau Unibanco to grow at its former rate in the next couple of years.

A drop in Brazil's currency directly affects Itau Unibanco's fair value in U.S. dollars. For example, a 15% decline in the exchange rate implies a 15% fall in the ADR price without any modification to the bank's underlying businesses. Read more

Strategy

As Latin America's largest bank, Itau Unibanco seeks to grow its financial services both within its native Brazil and in neighboring countries. Not only is it building new branches to extend its geographical Read more

Management

We like that Itau Unibanco is run mostly by Itau's top management, despite the fact that Unibanco's former CEO is the new company's chairman. Historically, Itau has done a better job of creating shareholder value through more efficient operations, which Read more

Profile

With nearly 5,000 branches and about $300 billion in assets, Itau Unibanco is the largest financial institution in Latin America. Headquartered in Brazil, it is the result Read more

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