SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

Brazil’s largest private lender Itau Unibanco Holdings SA reported stronger-than-expected Q4 earnings with recurring net income, ex one-off items, rising 32.9% YoY to BRL 7.16bn ($1.36bn), above Refinitiv consensus estimates of BRL 6.83bn ($1.30bn). The earnings beat was primarily on the back of strong performance in consumer lending and at its insurance unit. Recurring net income for the year 2021 stood at BRL 26.88bn ($5.12bn), up 45% compared to 2020. Recurring return on average equity for Q4 stood at 20.2%, up from 19.7% in Q3 and 16.1% in Q4 2020; it stood at 19.3% for 2021 vs. 14.5% in 2020. Its loan portfolio was up 6.7%, driven by a 9.5% growth in the individuals loan portfolio with credit cards growing 15.5%. Itau’s wide range of cards for each client profile led to record issuance of 4.8mn cards. Cost of credit however rose to BRL 6.2bn ($1.18bn) from BRL 5.2bn ($1bn) in Q3 and BRL 6.0bn in Q4 2020, driven by higher provision for loan losses in the Retail segment in Brazil given the increase in loan operations with higher origination in consumer credit products (non-collateralized). The bank guided for lower loan book growth of 9-12% in 2022 and higher provisions, setting aside BRL 25-29bn ($4.76-5.52bn) for bad loans. Its CET1 ratio stood at 11.3%, down 20bp vs. end-2020.

Itau’s 4.625% perp is currently trading at 92.76 yielding 7.33%.

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