Itaú Unibanco Management Discusses Q3 2010 Results - Earnings Call Transcript

Itaú Unibanco Holding S.A. (

ITUB

)

Q3 2010 Earnings Call

November 04, 2010 09:30 pm ET

Executives

Francisca Stella Fagá - Financial IR, Brazil

Alfredo Egydio Setubal - Head, IR

Analyst

Daniel Abut - Citi

Saul Martinez - JPMorgan

Tito LaBarta - Deutsche Bank

Victor Galliano - HSBC

Marcelo Telles - Credit Suisse

Jason Mollin - Goldman Sachs

Larry Vitale - Moore Capital

Victor Galliano - HSBC

Presentation

Operator

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Ladies and gentlemen, thank you for standing by. This is Itaú Unibanco Holding Conference Call. At this time, all lines are in a listen-only mode. Later, there will be a question-and-answer session and instructions to participate will be given at that time. (Operator Instructions). As a reminder, this conference is being recorded.

At this time, I would like to turn the conference over to Ms. Francisca Stella Fagá of Financial Investor Relations, Brazil. Please go ahead.

Francisca Stella Fagá

Good morning, and welcome to Itaú Unibanco Holding conference call on the third quarter 2010 earnings. This conference call is being broadcast live on www.itau-unibanco.com./ir. A slide presentation is also available on the 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 macroeconomic conditions, market risks, and other factors.

With us today in this conference call in São Paulo are Alfredo Egydio Setubal, Investor Relations Officer; Sérgio Ribeiro da Costa Werlang, Executive Vice President of Risk Control and Finance; Zacha Jorge, Executive Vice President of Insurance and Marketing; Caio Ibrahim David, Chief Financial Officer; Rogerio Calderon, Corporate Controller and Head of Investor Relations; Marco Antunes, Accounting Director; Rodolfo Henrique Fischer, Itaú BBA Vice President.

First, Mr. Alfredo Setubal will comment on the third quarter of 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 Setubal.

Alfredo Egydio Setubal

Good morning for those who are in the US Good afternoon for those who are in Europe. We are starting our conference call.

For those who are following through the Internet and through the slides, we are starting on slide number two with the highlight from the third quarter. I think the first highlight is important one, is that we finished the branch migration process in reality during this month of October, less than two years after the announcement of the merger between Itaú and Unibanco, one of the very important process.

During these two years, many things were done in terms of integration of ATM, integration of people, moving people from one building to another to stay together in different area. And we finished now the integration of the branch and we concluded in October 24 the process of integration of 1,200 Unibanco branches and customer site branches into the Itaú operational system and Itaú brand.

It was a huge effort from many areas inside the bank, many providers, and we were able to finish a little bit before schedule in this month of October. We still have some work to be done next year related to the systems and the deactivation of systems of Unibanco that we have to see what we have to keep for fiscal purposes, for customer needs and so on. So during the year of 2011, especially during the first semester of 2011, we’ll be finishing all these systems and then we can turn off all the systems of Unibanco related to the branch network and capture more synergies due to this integration.

The second highlight is the net income. We finished with R$3.2 billion, was a increase of 17.5%, the more recurrent numbers when we compare to nine months of last year, to 22.2 in terms of recurrent ROE. If we don’t consider the R$406 million in migration expenses that we had this third quarter, the net recurrent income would have reached 3.4 billion and ROE of 24.4. So in our view was a very strong result, a very strong numbers, especially when we analyze the numbers that we generate from the client, from the expansion of the credit portfolio and revenue from services and so on.

The third highlight is related to the growth of the credit portfolio. We reached R313 billion in the credit portfolio. It was a growth of 5.7% compared to June and 16.6 when we compare 12 months ago. So our growth was a little bit higher than the average of the financial system growth was 5.4.

The highlight continued to be companies, the growth was 6.7 last quarter. In this quarter, we had a growth in corporate companies that have been more stable in the last quarters. The growth for corporate loans was 5.8 and the highlight continued to be small and medium-sized companies, where the growth was almost 8% in the quarter. So we continue to focus on this segment, especially small and mid-market company.

In terms of individuals, the portfolio achieved R119 billion. The growth in the quarter was 4.1%. And we continue to grow the growth in terms of vehicles, financing and credit cards. Mortgage continues to grow at very strong pace. In the last 12 months, the growth was 53% and in this quarter almost 14%. So we achieved R$12 billion, a little bit more than 4% of our total credit portfolio. That is still small but growing very, very fast.

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