Itaú Unibanco Holding S.A Q2 2010 Earnings Call Transcript

Itaú Unibanco Holding S.A Q2 2010 Earnings Call Transcript
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Itaú Unibanco Holding S.A. (ITUB)

Q2 2010 Earnings Call

August 04, 2010 9:00 a.m. ET

Executives

Francisca Istella - Financial IR

Alfredo Egydio Setubal - IRO

Rogerio Calderon - Corporate Controller & Head, IR

Analysts

Daniel Abut - Citi

Mario Pierry - Deutsche Bank

Jon Prigoff - Equinox

Boris Molina - Santander

Saul Martinez - JPMorgan

Marcelo Telles - Credit Suisse

Jason Mollin - Goldman Sachs

Federico Rey - Raymond James

Presentation

Operator

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» Itaú Unibanco Holding S.A Q2 2010 Earnings Call Transcript

This is Itaú Unibanco Holding Conference Call. (Operator Instructions). As a reminder this conference is being recorded. At this time, I would like turn the conference over to Ms. Francisca Istella, of Financial Investor Relations, Brazil. Please go ahead.

Francisca Istella

Good morning and welcome to Itaú Unibanco Holding Conference Call regarding 2010 second quarter earnings. This conference call is being broadcast live on www.itau-unibanco.com/ir. 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 those anticipated in any forward-looking comments as a result of macro economic conditions, market risks and other factors.

With us today in this conference call in Sao Paolo are Alfredo Egydio Setubal, Investor Relations Officer; Sérgio Ribeiro da Costa Werlang, Executive Vice President of Risk Control and Finance; Caio Ibrahim David, Chief Financial Officer; Rogerio Calderon, Corporate Controller and Head of Investor Relations; Marco Antunes, Accounting Director; Gustavo Henrique Penha Tavares, Itau BBA Director.

First, Mr. Alfredo Egydio Setubal will comment on the second quarter 2010 earnings, afterwards management will be available for a question and answer session. It is now my pleasure to turn the call over to Mr. Alfredo Egydio Setubal.

Alfredo Egydio Setubal

Good morning. We are sorry for the delay we had some technical problem in the previous conference. In Portuguese we had to interrupt for almost a minute the main sector that we started later this English conference call.

For those who is following through the slide, turn to slide number 2, to highlight net income is the first income. The recurrent net income for the quarter at 3.3 billion R$ is increased 4.1 from the first quarter and that means ROE analyze it was 24.4.

The first semester if you consider the first semester, the recurrent net income achieved a 6.5 billion and with a growth of 29.6 when we compare to the first semester of 2009.

The second highlight is financial margin, with clients and the credit expansion that we showed. The growth of the margin was 6.7 and total 10 billion R$ in the second quarter. Especially because of the credit expansion 4.4% in the period this quarter and 11.4% when we compare to the first semester of 2009.

If we consider only the retail credit growth, this number is 18.8. So we showed a very good margin with the clients and a very solid operation of the bank with the clients that I think is the most important thing. This is what gives us strength and ability to our to results.

The third highlight is banking season and banking charts, a 4.4% growth when we compare to the first quarter, R$4.3 billion in the period, mainly because of the credit card operations increase in terms of volumes. Current account services also shows growth and investment banking also was a very active semester, active quarter for our Itau BBA investment banking operations.

This far I like the delinquency rate and the results from loan losses. 90 days delinquency rates reduced 30 basis points in this period and we finished with 4.6 in the quarter and we showed a reduction of 100 basis points during this year. We expect this number to remain relatively stable. We don't see much gains anymore in these delinquency rates and show some gains and most part of the gains already are reflected in these numbers.

This is because, mainly because we have a different mix. We increased our portfolio mainly with individuals and SMEs and it's a more risky business and we expect it, this delinquency ratio to remain around the same level that we are today.

Also in the first semester our provision for loan losses, net of recover of credit, that is more active this year was 16.8%, less than when we compared to the same period of first semester of last year. We remain with the same level of additional provision of R$6.1 billion in this quarter when we compared to the other quarters, were stable.

Non-interest expenses, the fifth highlight. We grew 4.4% in the quarter when we compare to the same, the semester sorry, when we compared to the same period of last year and this we exclude the expenses within Unibanco's branch immigration, new point of sale that we are opening special branches and a lot of forms to attend SMEs, Redecard and Porto Seguro expenses that we don't have control. We can see that when we compare to the first semester of 2009 nominal reduction of 0.6%.

So in the quarter the number is not so good, especially because we had a 2000 people in the period, we increase our marketing expenses especially because of the world cup of soccer and that's the main reason of the growth of our expansion in these quarter.

Going to the slide number 3, we had a recurrent net income of R$3.298 million in the period and we made provisions for contingencies related to the economic plans that happens in the past year in Brazil of 133 million that the reasons that our non-recurrent not our net income was R$3.165 billion that was released.

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