Overall Bank of the Year and Bank of the Year – Brazil 2017: Itaú Unibanco
November 7, 2017 |
In a transitional year for Itaú, the bank has positioned itself at the forefront of Brazil’s economic turnaround.
Around this time last year, Itaú Unibanco was preparing for a pivotal year in its history. After 22 years on the job, Roberto Setúbal had reached the age limit to serve as CEO and handed the reins to Candido Bracher, a longtime executive at the bank who also had stints at the investment banking division, Itaú BBA, and its predecessor BBA Creditanstalt.
Bracher formally took over in April. Since then, Brazil’s largest private sector bank agreed to spend 6.3 billion reais ($1.9 billion) for 49.9% of the local brokerage firm XP Investimentos and extend its reach in asset management and the local capital markets.
“[The acquisition] represents Itaú’s recognition of the growth potential of a business model that is different from what the bank can pursue directly,” Bracher tells LatinFinance in an email. XP’s business also allows Itaú to draw revenues that are not directly linked to credit risk, he says.
As the Brazilian economy sputters back to life in 2017, Itaú has turned in impressive financial results, logging 6 billion reais in net income in the second quarter and keeping the return on equity above 20% over the past three quarters.
The bank’s steady performance in a recovering market, coupled with its commitment to growing the local capital markets, make it LatinFinance’s selection for Bank of the Year. Itaú BBA, in turn, is the winner of the award for Investment Bank of the Year in Brazil.
In 2015 and 2016, as a prolonged recession gripped Brazil, compounded by the fallout from the Lava Jato bribery investigations, Itaú recorded a rise in non-performing loans in its corporate loan book, while the demand for financing for new investments fell precipitously. “The past few years were especially difficult for the loan business, but we faced the obstacles,” Bracher says.
But over the course of 2017, the bank’s non-performing loan ratio has declined, and as the Brazilian economy shows renewed signs of life, more companies are looking to borrow again. “We imagine that this trend will spread to 2018 and that the credit portfolio will start growing again,” he says.
Itaú sees a similar recovery in personal loans and expects its retail portfolio to gain steam in 2018, corresponding to Brazil’s economic rebirth, Bracher says.
Beyond 2018, Itaú is developing a wider digital platform to offer services to clients on their smartphones. The bank launched a simpler version of its mobile app in April, called Light, and it has used artificial intelligence to answer customer questions about credit cards on its websites and in its apps.
“Smartphones allow us to accompany our clients throughout the day and insert ourselves into their lives in a much more organic way. Banking today is no longer a place where you go, but something that you do,” Bracher says.
Now big data and artificial intelligence are gradually becoming key components of the banking industry, he says.
“People and companies will continue saving, getting loans, charging for products and services, paying and receiving salaries, making foreign trade exchanges, etc. Our clients, however, immersed in a digital society, have raised their expectations,” Bracher says. LF