Coverage: weekly note · Information to 24 February 2025
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TGB Weekly Research Note · 24 February 2025
Itaú and Banco do Brasil lifted 2024 earnings on loan growth and cost control, while central bank data showed Nubank passing Itaú to become Brazil's third-largest financial group by number of customers.
The desk view
Itaú Unibanco's recurring managerial result rose 18.2% to R$41.4 billion, with a 22.2% return on average equity. Banco do Brasil's adjusted net income rose 6.6% to R$37.9 billion, in the lower half of its guidance range, while its 90-day NPL ratio ended the year at 3.32%, mainly because of agribusiness. Banco Central do Brasil data for the fourth quarter put Nubank's customers at 100.8 million, ahead of Itaú's 98.5 million, and Nu said it had become the third-largest financial institution in Brazil by number of customers. Our reading is that incumbents still earn the profits, but the contest for the customer relationship has shifted.
Incumbents earned more, by different routes
Itaú's result was driven by a 15.5% rise in its expanded loan portfolio, to R$1,359.1 billion, which lifted the financial margin with clients by 7.1%. Credit quality improved: the 90-day NPL ratio fell to 2.4% in December 2024 from 2.8% a year earlier, and the cost of credit fell 6.6%. The bank said its efficiency ratio of 39.5% on a consolidated basis and 37.7% in Brazil was the lowest level of its historical series in a single year.
Banco do Brasil's profit growth was slower and its credit picture weaker. The 90-day NPL ratio ended December 2024 at 3.32%, mainly because of the agricultural segment, and loan loss allowances rose 16.9%.
Bradesco's recurring net income grew fastest, by 20.0%, but its fourth-quarter return on average equity was 12.7%, against 22.1% at Itaú in the same quarter.
Selected 2024 results of three large Brazilian banks
| Bank | Profit measure, R$bn | Change on 2023 | Return on equity | 90-day NPL ratio |
|---|---|---|---|---|
| Itaú Unibanco | 41.4 | 18.2% | 22.2% | 2.4% |
| Banco do Brasil | 37.9 | 6.6% | 21.4% | 3.32% |
| Bradesco | 19.6 | 20.0% | 12.7% (4Q24) | 4.0% |
Source: Itaú Unibanco Holding S.A. (Form 6-K furnished to the US SEC), Press release: Itaú Unibanco's profit increases 18.2% in 2024 and loan portfolio reaches R$1.4 trillion, 5 February 2025; Banco do Brasil S.A. (Investor Relations), Banco do Brasil S.A. – Press Release 4Q24, 19 February 2025; Banco Bradesco S.A. (Form 6-K furnished to the US SEC), Managerial Analysis of Results / Economic and Financial Analysis Report, 4Q24 (highlights 2024 | 4Q24), 7 February 2025.
Profit measures differ: recurring managerial result (Itaú, with 2023 excluding its Argentine operation), adjusted net income (Banco do Brasil) and recurring net income (Bradesco).
Nubank's scale now rivals the incumbents
In central bank data, Nubank had 97.6 million customers in the third quarter of 2024 to Itaú's 99.2 million; by the fourth quarter it had 100.8 million to Itaú's 98.5 million. Only Caixa Econômica Federal, with 154.2 million, and Bradesco, with 109.1 million, were larger, while Banco do Brasil had 78.1 million. The count covers all registered customers, not only active ones.
On its own count, Nu's base in Brazil grew 16% to 101.8 million, equal to 58% of the adult population, and 61% of monthly active customers use Nu as their primary banking account.
Profitability has followed scale. Nu's net income rose to US$1,972.1 million in 2024 from US$1,030.6 million in 2023, and the company reported an annualised return on equity of 28%.
Customers in Brazil by conglomerate, Q4 2024, millions
Tighter money tests both models in 2025
The Copom raised the Selic rate by 1.00 percentage point to 13.25% on 29 January 2025 and said it anticipated an adjustment of the same magnitude at its next meeting if its expected scenario is confirmed. Itaú's 2025 guidance already assumes slower credit growth, of 4.5% to 8.5%, and cost of credit of R$34.5 billion to R$38.5 billion. Tighter policy is likely to test asset quality first where delinquency was already rising, as in Banco do Brasil's agribusiness book.
What to watch
- Next Copom meeting: the committee has signalled another 1.00 percentage point Selic increase if its scenario is confirmed.
Primary sources: Itaú Unibanco Holding S.A. (Form 6-K furnished to the US SEC), Press release: Itaú Unibanco's profit increases 18.2% in 2024 and loan portfolio reaches R$1.4 trillion, 5 February 2025; Banco do Brasil S.A. (Investor Relations), Banco do Brasil S.A. – Press Release 4Q24, 19 February 2025; Banco Central do Brasil (Ranking de Reclamações), Ranking de Reclamações, 4º trimestre de 2024: Bancos e financeiras - Reclamações e quantidades de clientes por instituição financeira (CSV), 23 January 2025; Banco Central do Brasil (Ranking de Reclamações), Ranking de Reclamações, 3º trimestre de 2024: Bancos e financeiras - Reclamações e quantidades de clientes por instituição financeira (CSV), 24 October 2024; Nu Holdings Ltd. (Form 6-K furnished to the US SEC), Nu Holdings Ltd. Reports Fourth Quarter 2024 Financial Results, 20 February 2025; Banco Central do Brasil (Copom), Copom eleva a taxa Selic para 13,25% a.a. (268th meeting statement), 29 January 2025; Banco Bradesco S.A. (Form 6-K furnished to the US SEC), Managerial Analysis of Results / Economic and Financial Analysis Report, 4Q24 (highlights 2024 | 4Q24), 7 February 2025.