Itau Unibanco Holding NYSE:ITUB SAO:ITUB3 is a highly diversified financial conglomerate formed in late 2008 through a merger of large and in many ways complementary companies, retail and commercial giant Banco Itau and corporate banking group Unibanco, Brazil's third largest private banking institution. Customers in Brazil, Western Europe, the USA, Japan and China are provided with regular, commercial and corporate banking services. Products offered include various loan types with most relating to lease financing, mortgages and personal as well as savings and other types of bank demand deposits. In Brazil where it controls 11% of the retail banking market it operates over 30,000 ATM's (the large ATM presence means the bank's personnel costs are relatively low). Although present in all five regions of Brazil it has wisely invested more heavily in the southeast region (where 67% (2637) of the branches are and a lot of its business growth comes from, Southeast Brazil has only 41% of the country's population but over 60% of its gdp). About 2 to 7 percent of branches specialize in providing specific products and services rather than being full service; they are known as Customer Site Branches. Customer Site Branches increase cost effectiveness by limiting services to those with a higher or growing demand (corporate or commercial), arrangements have also been made with other ATM operators to boost the company's presence in certain provinces. Some business lines (Personnalite, Itau BBAU capital markets) specialize in a specific type of service (private and corporate) while others serve the entire industry (commercial banking division). In March 2009 it entered into a strategic partnership with Mitsubishi and Suzuki car dealerships centered around vehicle lease financing (important since many Brazilian automobile dealers have arrangements with banks and other institutions, 5.8% of the 6 to 7 million vehicle contracts it has (leads all companies in Brazil) are for trucks (2009)). In late 2010 the company began integrating Unibanco full service and site branches (1200 in the first 9 months) into the Itau brand.
Abroad there are another 1500 to 2000 branches operated by international subsidiaries based in Latin America (Argentina, Uruguay, Paraguay, Chile), the Cayman Islands, Western Europe, and Japan. Business abroad is more product and service specific depending on the country or region; three of the bank's securities offices are in Asia/the Middle East while six of the eight main private banking offices are located in the America's, Europe's head office is in Portugal (Itau Europa).
2009 was its tenth year as a member of the Dow Jones Sustainability Index (only 316 other companies (6 from Brazil) were included). Major shareholders include Itausa N1 (SAO:ITSA3) which owns 36.6% of the banking group.
Itau Unibanco benefits from a number of strategic partnerships it has with other companies which gives it both vertical and horizontal integration. It is associated with Brazil's largest vehicle insurer Porto Seguro through joint ownership of Psiupar, a home and car insurer (over 3 million vehicles and 1 million homes), as well retailer Magazine Luiza through Luizacred a distributor and marketer of credit products. There are also others including one with mobile telephone carrier Vivo. The partnerships improve market penetration and thus give the bank an edge over more isolated competitors. Internationally it raised over 1 billion USD in Japan through equity fund, Rio Wind.
fx rate 2.008
The 3 main operational segments in order of size are Commercial Bank, Consumer Credit and Itaú BBA. Commercial Bank had R$37,473 billion of revenue in 2009 47.77% more than the year before (60.38% of Itau Unibanco's total, down from 62.98% the year before, fee and commission income represented an even small fraction of that 19.53% of the division's total down from 27.47% the year before). Consumer Credit is the second most important revenue generator, in 2009 it experienced the highest percentage growth of the three business segments at 93.88% (up to R$19.632 billion which was 31.63% of the company's total up from 25.15% the year before, fee and commission income nearly doubled in importance going from about 15% to 28.3% in 2009). Itaú BBA had a sluggish year posting a 3.62% increase in revenue (compared to 54.1% for the whole company) which was ironic since the division led the company in growth between 2007 and 2008 (124.1%), fee and commission income grew 55.4%.
Major subsidiaries abroad are Banco Itau (USA), Europa International, Europa Luxembourg, Europa Securities (Western Europe), BIE Bank (Bahamas), Unicorp Bank (Caymans). The following lists them by percent ownership (September 2010).
In 2009 60.1% of customer deposts were term deposits (114.7 billion reis), 25.26% were savings accounts (48.2 billion reis), 13.52% were cash deposits (25.8 billion reis). Trading assets (government securities in Brazil (40.8%) and other foreign countries (2.8%, 57% of them coming from the United States), corporate (3.1%) and marketable equity securities (0.7%), investment funds (36.8%), debt bonds (0.6%), derivative instruments (15.1%)) make up an increasingly important part of total assets (16.47% in 2008 compared to less than 15% in the previous two years, in 2008 it rose about 250% to over 10 billion reais).
In the third quarter of 2010 the credit portfolio reached 313 billion reais (175.746 billion USD based on an average exchange rate of 1.78098 reais per USD). Of that, personal credit lines amounted to 119 billion reais (66.817 billion USD). The bank posted 9.8 billion reais in net income over the 12 months leading to September 2010 (3.2 billionof that in the third quarter, 17.5% higher than the third quarter of 2009), over the period mortgages grew 53% (14% in the third quarter of 2010). Non performing loans were reduced by 6.52% (4.3 from 4.6). 406 million reais of expenses went towards branch migration, without that expenses were steady (1.1% change from the previous period).
|fx rate to USD millions reis|
|Change % (9M)||2007|
|Change % (9M)|
|non operating income||9,639|
|change in cash|
|net interest income reis||21,332|
In May 2010 Bank of America sold 5.36% of its interest in Itau Unibanco Holding for about $4.5 billion. The market reacted strongly to that and the news that Bank of America was going to sell the rest of its interest in the company, Itau Unibanco's shares were down as much as 6%.