Itaú Unibanco Holding S.A. (NYSE:ITUB) Q3 2019 Earnings Conference Call Transcript

Nov 05, 2019 • 08:00 am ET

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Itaú Unibanco Holding S.A. (NYSE:ITUB) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning ladies and gentlemen. Welcome to Itau Unibanco Holdings Conference Call to discuss 2019 third quarter results. [Operator Instructions] As a reminder this conference is being recorded and broadcasted live on the Investors Relations site at www.itau.com.pr/investorsrelations. 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 Financial Director and Head of Investor Relations. First Mr. Candido Bracher will comment on 2019 third quarter results. Afterwards management will be available for our question-and-answer session.

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

Executive
Candido Botelho Bracher

Good morning everybody. Welcome to our third quarter 2019 earnings conference call. I will start the presentation on slide two where we show the main highlights of our performance for the quarter. The recurring net income was BRL 7.2 billion representing a 1.7% growth when compared to the previous quarter and resulting in a 23.5% ROE. The key drivers of this performance were the acceleration of our financial margin with clients as well as a stronger fee revenue generation. An expected higher cost of credit partially offsets these effects. Lastly our noninterest expenses grew only 1% despite the seasonal effects of the collective wage agreement which increased wages 1% above inflation. In the next slide we provide a more detailed view of the figures. On slide three we show the value creation for the period. In this quarter we created BRL 3.3 billion in economic value resulting from the difference between our ROE of 23.5% and the estimated cost of capital of 12.5%. Moving now to slide four. We show that our total credit portfolio in Brazil grew approximately 4.9% in the quarter and 11.7% over the last 12 months. The SMEs and Individuals portfolios led the growth as in previous quarters but we had an important change at our Corporate book group annually for the first time in more than three years.

Also important is the increase in corporate securities deals that we advised and structured for clients as more than half of the total committed growth in volume for the year was originated this quarter. Lastly the credit portfolio in Latin America increased around 3% in the third quarter boosted by the Chilean operation. Also worth mentioning credit origination continued strong in all segments as you see in the left part of the chart. On slide five now. On the bottom we show that the positive effect from the change in the credit portfolio mix continues to offset the impact of lower interest rates and spreads leading to a stable net interest