Itaú Unibanco Holding S.A. (NYSE:ITUB) Q4 2018 Earnings Conference Call Transcript

Feb 05, 2019 • 08:00 am ET

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Itaú Unibanco Holding S.A. (NYSE:ITUB) Q4 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, ladies and gentlemen. Welcome to Itau Unibanco Holding Conference Call to discuss 2018 Fourth Quarter results. (Operator Instructions) As a reminder, this conference is being recorded and broadcasted live on the Investor Relations website at www.itau.com.br/investor-relations. A slide presentation is also available on this site.

Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Actual performance could differ materially from that anticipated in any forward-looking comments as a result of macroeconomic conditions, market risks and other factors.

With us today in this conference call in Sao Paulo are Mr. Candido Bracher, President and CEO; Mr. Milton Maluhy Filho, Executive Vice President, CFO and CRO; and Mr. Alexsandro Broedel, Group Executive Finance Director and Head of Investor Relations. First, Mr. Candido Bracher will comment on 2018 fourth quarter results. Afterwards, management will be available for a question-and-answer session.

It is now my pleasure to turn the call over to Mr. Candido Bracher.

Executive
Candido Botelho Bracher

Hello. Good morning to all, and thanks for participating in our fourth quarter and 2018 full year earnings conference call. Starting the presentation on Slide 2. Here, we show the main highlights of our performance for the quarter. Recurring net income was BRL6.5 billion, which resulted in an ROE of 22.7% in Brazil and 21.8% in the consolidated figures. The results from commissions, fees and insurance performed particularly well this quarter, growing 6.2% over the preceding period. This performance was mainly driven by our asset management and investment banking units.

Our financial margins with clients or NII also increased over the last quarter, especially as a result of the growth of our individuals and SMEs credit portfolio. Despite this growth, our NPL ratio remained stable in the period. The increasing cost of credit this quarter was caused by higher impairment charges in corporate bonds.

Expenses in the fourth quarter are usually higher than in the third quarter, especially as a result of the full impact of the annual collective agreement with the bank employees' union and seasonally higher expenses related to commercial activities. In the fourth quarter, this increase was up 1.2%.

Lastly, our individuals and SMEs portfolio increased 5.7% and 4.9%, respectively, in the quarter, continuing the same trend seen throughout 2018. On the other hand, the negative ForEx variation on our Latin American portfolio and a decrease in the corporate book led to the stability of the total credit portfolio seen in the quarter.

Talking now about the full year 2018. On Page 4, before we proceed with a deeper analysis of our performance during this year, it's worth to mention that the Brazilian economy performed somewhat differently than what we had expected at the beginning of the year. GDP growth is likely to stay at 1.3% and not 3% as we originally forecasted. The truck drivers' strike was one of the main factors -- one of the many factors that contributed to this weak performance, which naturally results in a lower