Itaú Unibanco (ITUB) Q2 2026 earnings review
Clockwork Returns Mask a Sharp Downgrade in Fee Income
Itaú delivered another highly profitable quarter with a 24.3% consolidated ROE and BRL 12.4 billion in recurring net income (+7.8% YoY). Core lending is accelerating safely, driven by double-digit growth in mortgages and payroll loans. However, the top-line narrative took a hit: management abruptly slashed its 2026 growth guidance for Commissions & Insurance to 2.0%-5.0% (down from 5.0%-9.0%). The bank is deliberately sacrificing current account fees and throttling open-market credit card issuance to shed risk. While the bottom line remains intact thanks to a lower expected tax rate and stable credit costs, Itaú is pivoting hard from fee-based revenue toward secured balance-sheet growth.
🐂 Bull Case
The bank continues to out-earn peers with a 25.7% ROE in Brazil. Strong organic capital generation pushed the CET1 ratio up 30 bps sequentially to 12.3%, paving the way for potential extraordinary dividends.
Despite inflation and wage agreements, non-interest expenses grew just 3.1% YoY. Administrative and personnel costs actually shrank 0.5% YoY, improving the consolidated efficiency ratio to a stellar 37.4%.
🐻 Bear Case
The cross-sell narrative is facing friction. Current account fee revenue plummeted 21.2% YoY, forcing a massive downgrade in annual fee guidance that shifts the burden of earnings growth entirely onto the loan book.
After trending downward, SME 90-day NPLs mechanically increased from 1.9% to 2.0% as grace periods for government-backed programs expired. Management expects another 10 bps increase next quarter.
⚖️ Verdict: 🟢
Bullish. While the fee guidance cut is a clear negative, Itaú's ability to maintain a 24%+ ROE and 1.9% system-wide NPL in a highly restrictive macro environment proves its risk models are superior to peers.
Key Themes
Fee & Insurance Guidance Slashed
Decelerating. Management cut its 2026 growth outlook for Commissions & Insurance from 5-9% to just 2-5%. The data contradicts the 'Super App cross-sell' narrative: checking account fees collapsed 21.2% YoY, and total commissions grew a meager 2.3% YoY. The bank claims this is a deliberate strategy to reduce friction and increase lifetime value, but it removes a critical, capital-light growth engine for the year.
Mortgages Overtake Credit Cards
Accelerating. In a major milestone for its derisking strategy, Itaú's Mortgage portfolio grew 13.3% YoY to BRL 152.2 billion, officially surpassing the Credit Card portfolio (BRL 150.4 billion). Bolstered by an unmatched funding structure, Itaú now commands a 55% market share in private bank mortgage originations, locking in long-term, highly collateralized client reciprocity.
SME NPL Normalization
Reversing. After quarters of pristine credit quality, SME 90-day NPLs ticked up from 1.9% to 2.0% QoQ. Management noted this is a mechanical effect: the denominator is no longer artificially inflated by government-backed grace periods, which are now expiring. CEO Milton Maluhy Filho explicitly guided for this metric to hit 2.1% next quarter before stabilizing.
Ruthless Operating Efficiency
Stable. The bank continues to do more with less. Consolidated non-interest expenses rose just 3.1% YoY (to BRL 16.7B), trailing inflation and collective wage agreements. Commercial and administrative personnel expenses actually fell 0.5% YoY. This relentless cost control drove the Brazil efficiency ratio down to an impressive 35.2% for the first half of the year.
Restrictive Macro Environment Constrains Unsecured Lending
Stable. High household leverage and a restrictive SELIC rate are keeping Itaú in a highly defensive posture. Management openly stated they are ceding market share to irrational competitors in open-market unsecured consumer credit, preferring to focus exclusively on resilient, high-income segments and private payroll loans (which surged 14.3% QoQ).
GenAI and the Super App Ecosystem
Accelerating. The "One Itaú" digital transformation is yielding tangible results, with 15 million clients successfully migrated and checking account openings quadrupling. The bank introduced 'Itaú Intelligence', a GenAI assistant deployed to both customers and employees. This tech is actively reducing commercial friction, increasing first-call resolution, and driving a competitive digital NPS of 80.
Other KPIs
Stable. Up 30 basis points from 12.0% in 26Q1, driven by robust organic capital generation (+0.8%) that easily outpaced RWA growth (-0.1%) and dividend provisions (-0.3%). The bank's optimized capital stack limits AT1 inclusion to 1.5% due to regulatory caps (actual AT1 is 1.7%), leaving plenty of room for extraordinary dividend distributions.
Stable. Cost of credit rose just 1.9% QoQ, matching the expansion of the portfolio. Annualized, the cost of credit remains locked at exactly 2.7% of the total loan book—a level it has maintained perfectly for six consecutive quarters, proving the effectiveness of the bank's recent derisking cycle.
Accelerating. Up 13.6% from BRL 820 million in 26Q1. Despite facing elevated costs to hedge its capital index ratio amid local and global rate volatility, the treasury desk navigated the quarter cleanly, keeping Itaú well on pace to hit its BRL 3.0B - 5.0B annual guidance.
Guidance
Decelerating. A sharp downward revision from the initial 5.0%-9.0% range. Management blames the intentional elimination of checking account fees and slower credit card issuance. They maintain that this short-term revenue sacrifice will increase long-term customer lifetime value.
Stable. Maintained at the original range. With Q2 printing at 5.1% YoY, the bank expects NII to accelerate slightly in H2 26 due to higher volumes and seasonal wholesale structuring, compensating for the fee income shortfall.
Stable. The bank is currently tracking at the very top of this range (9.6% YoY growth in Q2). Growth is being heavily anchored by secured lines (Mortgages, Vehicles) and Private Payroll, offsetting deliberate pullbacks in unsecured retail lines.
Stable. Maintained at the initial range. Management signaled extreme comfort with this target, expecting to land near the midpoint as credit metrics remain fully controlled despite SME grace period expirations.
Key Questions
Replacing the Fee Engine
With checking account fees structurally declining and open-market credit card issuance intentionally throttled, what specific product lines will replace these high-margin, capital-light revenues in the 2027 budget?
SME Normalization Runway
You guided for SME 90-day NPLs to peak around 2.1% as Pronampe grace periods expire. If the SELIC rate remains restrictive longer than anticipated, how much buffer is built into that 2.1% peak assumption?
Tax Rate Sustainability
You noted that an effective tax rate near the bottom of the 28.5%-31.5% range will anchor the bottom line despite the fee downgrade. Given the shrinking pool of legacy DTAs across the industry, how sustainable is this tax advantage moving into 2027?