Published on 4 Jan 2024 on Zacks via Yahoo Finance
Strategic Buyouts Aid Itau Unibanco (ITUB), High Costs Ail
Itau Unibanco Holding S.A. ITUB benefits from a strong network franchise and buyouts. Growth in commissions and fees, resulting from insurance operations and efforts to have a healthy credit portfolio, are other positives. However, increasing expenses limit bottom-line growth. Weak credit quality and intense competition are added concerns.
Itau Unibanco, a premier banking brand in Brazil, has a large branch network in geographic areas with high economic activities. As part of its internationalization strategy, the company has consolidated its presence in other countries of the Southern Cone. It also expanded its presence in Colombia and Panama, followed by the merger between Banco Itaú Chile and CorpBanca in April 2016.
Expanding operations in Brazil and abroad on the back of strategic buyouts in 2022, the company acquired an 11.4% equity stake in XP Inc. for R$8 billion. Further, it inked a deal for purchasing Ideal Holding to bolster its investment ecosystem and completed the first phase of the deal on Mar 31, 2023. Such an inorganic effort to diversify its product mix is expected to support ITUB’s top line in the upcoming quarters.