1 st quarter 2016 Earnings Review Conference Call

Transcription

1 st quarter 206 Earnings Review Conference Call Eduardo Mazzilli de Vassimon Executive Vice-President, CFO (Chief Financial Officer) and CRO (Chief Risk Officer) Marcelo Kopel Investor Relations Officer

2 Highlights Recurring Net Income Financial Margin with Clients: -4.4% (Q6/4Q5) and 5.2% (Q6/Q5) totaled R$4.8 billion in the quarter R$5.2 billion -9.3% (Q6/4Q5) -9.9% (Q6/Q5) Financial Margin with the Market: 36.9% (Q6/4Q5) and -7.% (Q6/Q5) totaled R$.7 billion in the quarter Recurring ROE (p.a.) Provision for Loan Losses: 8.2% (Q6/4Q5) and 3.% (Q6/Q5) reached R$7.2 billion in the quarter 9.9% -240 bps (Q6/4Q5) -460 bps (Q6/Q5) Fees and Result from Insurance : -5.7% (Q6/4Q5) and 4.5% (Q6/Q5) reached R$8.7 billion in the quarter 2-month ROE was 22.7% Credit Quality Non-Interest Expenses : -8.% (Q6/4Q5) and 3.4% (Q6/Q5) reached R$0.2 billion in the quarter 3.9% NPL 90 NPL 5-90: 3.% 40 bps (Q6/4Q5) 90 bps (Q6/Q5) 50 bps (Q6/4Q5) 20 bps (Q6/Q5) Efficiency Ratio : 250 bps (Q6/4Q5) and 20 bps (Q6/Q5) reached 43.0% in the quarter and Risk-Adjusted Efficiency Ratio reached 69.9% Credit Portfolio: -5.6% (Mar/6 Dec/5) and -4.8% (Mar/6 Mar/5) including private securities -5.3% (Mar/6 Dec/5) and 4.2% (Mar/6 Mar/5) ¹ Result from Insurance (-) Retained Claims (-) Insurance Selling Expenses Itaú Unibanco Holding S.A. 2

3 Recurring ROE / Recurring ROA 23.7% 22.8% 24.7% 24.7% 24.5% 24.8% 24.7% 24.4% 24.0% 23.6% 24.5% 24.0% 23.9% 22.3% 22.7% 9.9%.8%.9%.9%.9%.9%.9%.7%.6% 2Q4 3Q4 4Q4 Q5 2Q5 3Q5 4Q5 Q6 Recurring Return on Average Equity (trailing 2 months) Recurring Return on Average Equity (quarterly) Recurring Return on Average Assets Annualized Itaú Unibanco Holding S.A. 3

4 Results In R$ millions Q6 4Q5 change Q5 change Operating Revenues 25,867 26,680 (82) -3.0% 24, % Managerial Financial Margin 6,557 6,764 (207) -.2% 5, % Financial Margin with Clients 4,820 5,495 (675) -4.4% 4, % Financial Margin with the Market,737, %,87 (34) -7.% Commissions and Fees 7,69 7,645 (476) -6.2% 6, % Result from Insurance 2,4 2,27 (30) -5.7% 2,7 25.2% Result from Loan Losses (6,402) (4,634) (,768) 38.% (4,455) (,947) 43.7% Provision for Loan Losses (7,23) (6,6) (,5) 8.2% (5,55) (,76) 3.% Recovery of Loans Written Off as Losses 829,482 (652) -44.0%,060 (23) -2.8% Retained Claims (394) (406) 2-3.0% (368) (26) 7.0% Operating Margin 9,07 2,639 (2,568) -.9% 20,23 (,052) -5.2% Other Operating Income/(Expenses) (,926) (2,959), % (,602) (324) 2.8% Non-interest Expenses (0,25) (,9) % (9,88) (334) 3.4% Tax Expenses and Other 2 (,7) (,840) % (,72) 0-0.6% Income before Tax and Minority Interests 7,45 8,680 (,535) -7.7% 8,520 (,375) -6.% Income Tax and Social Contribution (,846) (2,85) % (2,607) % Minority Interests in Subsidiaries (64) (92) % (05) % Recurring Net Income 5,235 5,773 (538) -9.3% 5,808 (573) -9.9% Result from Insurance includes the Result from Insurance, Pension Plan and Premium Bonds Operations before Retained Claims and Selling Expenses. 2 Include Tax Expenses (ISS, PIS, COFINS and other) and Insurance Selling Expenses. Itaú Unibanco Holding S.A. 4

5 Results Brazil and Latin America In R$ millions Q6 4Q5 change Consolidated Brazil America Latin (ex-brazil) Consolidated Brazil America Latin (ex-brazil) Consolidated Brazil America Latin (ex-brazil) Operating Revenues 25,867 24,47,397 26,680 25,00, % -2.5% -.6% Managerial Financial Margin 6,557 5, ,764 5,76, % -0.6% -.0% Financial Margin with Clients 4,820 4, ,495 4, % -3.8% -3.3% Financial Margin with the Market,737,65 22,269, % 39.7% 7.8% Commissions and Fees 7,69 6, ,645 7, % -5.6% -4.8% Result from Insurance 2 2,4 2, ,27 2, % -6.% 22.4% Result from Loan Losses (6,402) (6,237) (65) (4,634) (4,523) (2) 38.% 37.9% 47.3% Provision for Loan Losses (7,23) (7,05) (80) (6,6) (5,983) (33) 8.2% 7.9% 35.5% Recovery of Loans Written Off as Losses ,482, % -44.3% -27.4% Retained Claims (394) (384) () (406) (396) () -3.0% -3.% -0.% Other Operating Expenses (,926) (0,982) (944) (2,959) (,953) (,006) -8.0% -8.% -6.% Non-interest Expenses (0,25) (9,294) (92) (,9) (0,53) (966) -8.% -8.5% -4.7% Tax Expenses and Other 3 (,7) (,688) (23) (,840) (,800) (40) -7.0% -6.3% -4.4% Income before Tax and Minority Interests 7,45 6, ,680 8, % -6.5% -38.6% Income Tax and Social Contribution (,846) (,776) (7) (2,85) (2,660) (55) -34.4% -33.2% -54.6% Minority Interests in Subsidiaries (64) (64) - (92) (92) % -30.4% 0.0% Recurring Net Income 5,235 5, ,773 5, % -8.2% -30.2% Regulatory Capital 06,647 98,265 8,382 06,462 99,062 7,40 Recurring ROE 9.9% 20.7%.8% 22.3% 22.8% 7.2% Includes units abroad ex-latin America. 2 Result from Insurance includes the Result from Insurance, Pension Plan and Premium Bonds Operations before Retained Claims and Selling Expenses. 3 Include Tax Expenses (ISS, PIS, COFINS and other) and Insurance Selling Expenses. Note: Latin America information is presented in nominal currency. Itaú Unibanco Holding S.A. 5

6 Business Expansion in Latin America Pro Forma Q6 Without CorpBanca With CorpBanca Increase In R$ millions (except where indicated) Chile Colombia Other Latin America (ex-brazil) Chile Colombia Other Latin America (ex-brazil) Chile Latin America (ex-brazil) Operating Revenues , ,263.8x.6x Managerial Financial Margin ,637.9x.8x Commissions and Fees x.4x Result from Insurance Result from Loan Losses (3) (5) (47) (65) (460) (229) (47) (736) 4.x 4.5x Non-interest Expenses (34) (23) (557) (92) (74) (276) (557) (,574) 2.2x.7x Loan Portfolio 42,333 3,434 9,398 65,64 92,766 30,730 9,398 42, x 2.2x Total Assets 54,828 3,569 35,86 94,259 27,897 45,733 35,86 209,49 2.3x 2.2x Number of Employees (#) 2, ,599 6,24 6,204 3,709 3,599 3,52 2.5x 2.2x Branches 2 (#) x 2.2x Result from Insurance includes the Result from Insurance, Pension Plan and Premium Bonds Operations before Retained Claims and Selling Expenses; 2 Includes CSB Client Service Branches. Note: Information is presented in nominal currency. Highlights of Itaú CorpBanca operation: On April st, 206, the merger between Banco Itaú Chile and CorpBanca operations was consummated ( Legal Day One ) Itaú Unibanco and CorpGroup appoint the majority of the members of the board of directors Pursuant to the Shareholders Agreement, the directors appointed by Itaú Unibanco and Corpgroup shall vote together as a single block according to Itaú Unibanco s recommendation The legal name of the merged entity is Itaú CorpBanca, notwithstanding the commercial brand is going to be Itaú The merged entity will benefit from stronger balance sheet structure and capital ratios to support its growth Itaú Unibanco Holding S.A. 6

7 Credit and Trading & Insurance and Services In R$ billions Consolidated Credit and Trading Q6 4Q5 change Insurance and Services Excess Capital Consolidated Credit and Trading Insurance and Services Operating Revenues % -0.% -7.0% - Managerial Financial Margin % 0.8% -7.9% - Commissions and Fees % -4.8% -6.9% - Result from Insurance % % - Result from Loan Losses (6.4) (6.4) - - (4.6) (4.6) % 38.% - - Retained Claims (0.4) - (0.4) - (0.4) - (0.4) % % - Excess Capital Consolidated Credit and Trading Insurance and Services Excess Capital Non-interest Expenses and Other Expenses (2.0) (5.7) (6.3) (0.0) (3.) (6.3) (6.7) - -8.% -9.8% -6.6% - Recurring Net Income % -24.2%.% - Regulatory Capital % -8.0%.9% 40.7% Recurring Return 9.9%.3% 37.2% 0.9% 22.3% 3.0% 40.9% n.d bps -70 bps -370 bps n.d. Note: As of Q6, we have adopted the Basel III rules in our managerial capital allocation model. Itaú Unibanco Holding S.A. 7

8 Credit Portfolio In R$ millions, end of period Q6 4Q5 change Q5 change Individuals 84,226 87, % 87, % Credit Card Loans 54,867 58, % 56,33-2.6% Personal Loans 29,59 28,96 0.7% 29, % Payroll Loans 46,742 45, % 44, % Vehicle Loans 8,05 9, % 26,33-3.2% Mortgage Loans 35,353 34,63 2.% 30,94 7.% Companies 264, ,393-8.% 293, % Corporate Loans () 99,273 29,48-9.2% 22, % Very Small, Small and Middle Market Loans () 65,622 68, % 72, % Latin America (2) 68,362 72,25-5.2% 62, % Total with Endorsements and Sureties 57, , % 543, % Corporate - Private Securities 36,768 37,43 -.8% 35, % Total with Endorsements, Sureties and Private Securities 554, , % 578, % Total with Endorsements, Sureties and Private Securities (ex-foreign exchange rate variation) 554, ,63-3.5% 586, % Corpbanca (3) 77,729 8, % 73,934 5.% () As of Q6, the Very Small, Small and Middle-market companies segment considers clients with sales up to R$200 million (previously up to R$300 million). For this reason, certain clients (those with sales above R$200 million) were reclassified to the Corporate segment and, for comparison purposes, previous periods were reclassified; (2) Excluding the effect of the foreign exchange variation, the growth of this portfolio would have been.4% compared to the previous quarter and the same 9.8% when compared to the previous year. (3) Source: SBIF (Superintendency of Banks and Financial Institutions of Chile) and CorpBanca s Investor Relations. Itaú Unibanco Holding S.A. 8

9 Financial Margin with Clients Breakdown Loan Portfolio Mix Change ¹ (%) Mar Dec Dec Dec Dec Corporate Very Small, Small and Middle Market Vehicles Credit Card Personal Loans Latin America Mortgage Loans Payroll Loans ¹ Does not include endorsements and sureties Financial Margin with Clients Breakdown (Quarter) In R$ millions 5,495 3 (43) (39) (244) 4,820 4Q5 Mix of products, clients and spreads Calendar days Balance of Spread- Sensitive Operations Working Capital and other Q6 ¹ The effect of foreign exchange rate variation is excluded from balance. Itaú Unibanco Holding S.A. 9

10 Financial Margin Annualized average rate 4.0% 4.% 4.% 3.% 2.% 0.8% 0.8% 0.5% 0.3% 0.4% 0.2%.% 0.5% 0.6% 0.4% 0.5% 0.8% 0.7% 0.9% 0.8%.0%.% 0.9% 0.9% 7.6% 7.6% 7.8% 7.4% 7.% 7.6% 7.0% 6.7% 7.4% 7.4% 7.5% 7.% 6.9% 7.% 6.% 2Q4 3Q4 4Q4 Q5 2Q5 3Q5 4Q5 Q6 5.5% Spread-sensitive operations Financial margin with clients Risk-adjusted spread-sensitive operations Risk-adjusted financial margin with clients CDI (annualized quarterly rate) ¹ After provision for loan losses, net of recoveries. Itaú Unibanco Holding S.A. 0

11 Financial Margin with the Market In R$ millions 2, ,039, ,083, ,87,23,56,383,682,744,269,737 -,7 2Q 4Q 2Q2 4Q2 2Q3 4Q3 Q4 2Q4 3Q4 4Q4 Q5 2Q5 3Q5 4Q5 Q6 Sale of Cetip/BM&FBovespa Shares Financial Margin with the Market -year moving average of Financial Margin with the Market (ex-sale of Shares) The quarterly average Financial Margin with the Market for the past 8 quarters was R$,462 million. Itaú Unibanco Holding S.A.

12 Credit Quality 5 to 90-day NPL Ratio % Dec-2 Mar-3 Dec-3 Mar-4 Jun-4 Sep-4 Dec-4 Mar-5 Jun-5 Sep-5 Dec-5 Mar-6 Individuals Total Corporate Very Small, Small and Middle Market Companies 90-day NPL Ratio % Individuals Total Corporate Very Small, Small and Middle Market Companies Dec-2 Mar-3 Dec-3 Mar-4 Jun-4 Sep-4 Dec-4 Mar-5 Jun-5 Sep-5 Dec-5 Mar-6 ¹ In the fourth quarter of 205, there were transfers of financial assets with no risk retention and with low probability of recovery in the short term, to affiliated company, related to operations of specific economic groups, with a negative effect of R$7 million on net income. Had we not transferred the financial assets, the 90-day NPL of the total portfolio would have reached 3.7% instead of 3.5% and the corporate portfolio ratio would have reached.7%. There was no effect on the 5 to 90-day NPL ratio. Itaú Unibanco Holding S.A. 2

13 Credit Quality 90-day NPL Ratio and 90-day NPL Ratio Excluding Fully Provisioned Credits (%) Jun-4 Sep-4 Dec-4 Mar-5 Jun-5 Sep-5 Dec-5 Mar-6 Individuals Individuals (ex-fully Provisioned Credits) Jun-4 Sep-4 Dec-4 Mar-5 Jun-5 Sep-5 Dec-5 Mar-6 Companies Companies (ex-fully Provisioned Credits) NPL creation and Write-off In R$ billion %.5%.5%.6%.7%.9% 2.0%.9% 0.4% 0.4% 0.5% 0.5% 0.6% 0.7% 0.4% 0.7% Jun-4 Sep-4 Dec-4 Mar-5 Jun-5 Sep-5 Dec-5 Mar-6 NPL Creation / Loan Portfolio² - Wholesale Banking NPL Creation / Loan Portfolio² - Retail Banking Total Write Off NPL Creation - Wholesale Banking NPL Creation - Retail Banking ¹ Excluding the effects of the financial assets transfer that occurred in June and December 205, the NPL Creation of the Wholesale Banking segment would have reached R$2.5 billion in Jun-5 and R$2.0 billion in Dec-5. ² Average balance of the loan portfolio considering the last two quarters. Itaú Unibanco Holding S.A. 3

14 Renegotiated Loan Operations Total Renegotiated Portfolio Breakdown by Days Overdue* (in R$ billion) Mar-3 Jun-3 Sep-3 Dec-3 Mar-4 Jun-4 Sep-4 Dec-4 Mar-5 Jun-5 Sep-5 Dec-5 Mar-6 * Measured at the moment of renegotiation. Days overdue: measured at the moment of renegotiation Write-off When over 90 days overdue When 3-90 days overdue When up to 30 days overdue When non-overdue Delinquency and 90-day NPL Coverage of Total Renegotiated Portfolio 62% 34% 38% 56% 84% 95% 87% 98% 87% 84% 3.2% 3.3% 32.6% 29.% 22.4% 8.8% 8.2% 6.3% 8.2% 20.4% Dec-0 Dec- Dec-2 Dec-3 Dec-4 Mar-5 Jun-5 Sep-5 Dec-5 Mar-6 90-day NPL Balance (R$ billion) 90-day NPL Coverage 90-day NPL Ratio Itaú Unibanco Holding S.A. 4

15 Provision for Loan Losses by Segment and Coverage Ratio (90-day NPL) In R$ million 93% 76% 8% 4,465 4,74 4,64 64,3,236 24% 200% 87% 5,55 5,520 5,747 2,05,773, % 20% 7,23 6,6 2,908,495 3,85 3,628 3,378 3,464 3,747 4,302 4,62 4,323 2Q4 3Q4 4Q4 Q5 2Q5 3Q5 4Q5 Q6 Retail Banking Wholesale Banking Coverage Ratio (90-day NPL) Itaú Unibanco Holding S.A. 5

16 Allowance for Loan Losses by Type of Risk Allocation of Allowance for Loan Losses by Type of Risk In R$ millions Regulatory Breakdown Potential Aggravated 26,948 0,684 5,968 34,078 5,080 7,633 36,036 5,78 8,340 Expected and/or Potential Loss Related to expected loss in Retail segment and potential loss in Wholesale segment Renegotiation and overdue loans Related to aggravated risk rating of overdue and renegotiated operations Wholesale Retail Wholesale,244,864 Retail,280 3,952 8,70 7,07 3,08 5,232 Non-Overdue / Aggravated Renegotiations 36,036 Complementary Allowance 0,985 Generic Allowance 8,722 Specific Allowance Overdue 0,295,366,95 Overdue operations according to the Brazilian Central Bank Related to minimum provision required for overdue operations according to CMN Resolution 2,682/999 Wholesale Retail 842,076,98 3,047 6,950 Fully Provisioned 9,998 6,329 Dec-4 Dec-5 Mar-6 Mar-6 Itaú Unibanco Holding S.A. 6

17 Commissions & Fees and Result from Insurance In R$ millions Q6 4Q5 change Q5 change Asset Management ¹ (3) -4.% % Current Account Services,607,623 (6) -.0%, % Credit Operations and Guarantees Provided (74) -8.8% 800 (35) -4.3% Collection Services () -2.8% % Credit Cards 2,998 3,204 (206) -6.4% 2, % Other (38) -6.4% 750 (48) -6.4% Commissions and Fees 7,69 7,645 (476) -6.2% 6, % Result from Insurance, Pension Plan and Premium Bonds,55,607 (55) -3.5%, % Total 8,720 9,25 (53) -5.7% 8, % (-) Result from Other Insurance Activities ² (47) -3.% % Total excluding Other Insurance Activities ² 8,66 9,099 (484) -5.3% 8, % Includes fund management fees and consortia management fees. 2 Other insurance activities include extended warranty, health insurance, other products and our stake in IRB. 7,775 8,093 8,27 8,349 8,45 8,645 9,25 In R$ millions 8, % 36.0% 36.0% 34.3% 34.2% 32.9% 35.6% 34.5% 2Q4 3Q4 4Q4 Q5 2Q5 3Q5 4Q5 Q6 Commissions and Fees and Result from Insurance Operations* (Commissions and Fees and Result from Insurance Operations*)/(Financial Margin + Commissions and Fees and Result from Insurance Operations*) * Insurance Operations include insurance, pension plan and premium bonds. Itaú Unibanco Holding S.A. 7

18 Non-Interest Expenses In R$ millions Q6 4Q5 change Q5 change Personnel Expenses (4,75) (4,899) % (4,54) (237) 5.2% Administrative Expenses (4,05) (4,558) % (3,927) (24) 3.2% Personnel and Administrative Expenses (8,802) (9,457) % (8,44) (36) 4.3% Operating Expenses () (,285) (,530) % (,274) () 0.8% Other Tax Expenses (2) (28) (3) 3-2.6% (65) % Total (0,25) (,9) % (9,88) (334) 3.4% ( - ) Operations Abroad (,80) (,239) % (,06) (64) 6.2% Total (ex-operations abroad) (9,035) (9,880) % (8,865) (70).9% ¹ Includes expenses from provisions for contingencies, credit card selling expenses, claims and other; 2 Includes IPTU, IPVA, IOF and other. Does not include PIS, Cofins and ISS Q4 3Q4 4Q4 Q5 2Q5 3Q5 4Q5 Q6 Quarterly Efficiency Ratio (%) Quarterly Risk-Adjusted Efficiency Ratio (%) Trailing 2-month Efficiency Ratio (%) Trailing 2-month Risk-Adjusted Efficiency Ratio (%) Itaú Unibanco Holding S.A. 8

19 Core Capital Ratio (Common Equity Tier I) Changes in the Core Capital Ratio in the Q6 4.0% -0.7% -0.4% 0.6% -0.% 0.5% 0.4% 4.3% Common Equity Tier I (CET I) Dec-5 Increase in deductions in accordance with Basel III schedule Distribution of interest on capital declared after December 205 Q6 Net Income Q6 Dividends and other changes in stockholders equity Decrease in Tax Credits RWA and Other Common Equity Tier I (CET I) Mar-6 Full application of Basel III rules March 3, % -.4% 2.9% -0.2% 2.7% -.%.6%.0% 2.6% Common Equity Tier I (CET I) Mar-6 Deductions Schedule Anticipation CET I with Full Deductions Risk-weighted Assets Rules Anticipation 2 CET I with Fully Loaded Basel III Rules CorpBanca Consolidation CET I with Fully Loaded Basel III Rules after CorpBanca Consolidation Use of Tax Credits Simulated CET I with Fully Loaded Basel III 4 Rules Includes deductions of Goodwill, Intangible Assets (generated before and after October 203), Tax Credits from Temporary Differences and Tax Loss, Pension Fund Assets, Equity Investments in Financial Institutions, Insurance and similar companies. 2 Includes the increase of the multiplier of the amounts of market risk, operational risk and certain credit risk accounts. This multiplier, which is at 0. nowadays, will be 2.5 in Estimated impact based on preliminary information. 4 Does not include any reversal of the complementary allowance for loan losses. Itaú Unibanco Holding S.A. 9 3

20 206 Forecast Our forecast for 206 was kept unchanged. Consolidated Brazil Total Credit Portfolio 2 from -0.5% to 4.5% from -.0% to 3.0% Financial Margin with Clients Growth of 2.0% to 5.0% Growth of.0% to 4.0% Provision for Loan Losses Net of Recovery of Loans Between R$22 billion and R$25 billion Between R$2 billion and R$24 billion Commissions and Fees 3 Growth of 6.0% to 9.0% Growth of 4.5% to 7.5% Non-Interest Expenses Growth of 5.0% to 7.5% Growth of 4.0% to 6.5% Includes units abroad ex-latin America; 2 Includes endorsements, sureties and private securities; 3 Service Fees (+) Income from Insurance, Pension Plan and Premium Bonds (-) Retained Claims (-) Selling Expenses with Insurance, Pension Plan and Premium Bonds. Note: The forecast does not include the effects of the CorpBanca s transaction. Itaú Unibanco Holding S.A. 20

21 Stock Market Performance Market Capitalization (in R$ billions) Net Dividend Yield 2.4% 2.2% 2.4% 3.0% 2.8% 3.0% 3.8% 3.7% Price/Earnings x.5 x 9.3 x 9.5 x 9. x 8.7 x 6.9 x 8.8 x Average Daily Trading Volume (in R$ millions) , Q6 BM&FBOVESPA (Non-voting + Common) NYSE (ADR) Dividends and Interest on Capital Distributed in the last 2 months of each period/average price of the non-voting shares on the first day of each period; 2 Source: Bloomberg (considered analysts expectations for the next 2 months, as of each date, and ITUB4 closing price). Itaú Unibanco Holding S.A. 2

22 st quarter 206 Earnings Review Conference Call Eduardo Mazzilli de Vassimon Executive Vice-President, CFO (Chief Financial Officer) and CRO (Chief Risk Officer) Marcelo Kopel Investor Relations Officer