Itaú's Client Margin Growth Outpaces Guidance as Capital Ratio Slips
Itaú Unibanco's financial margin with clients grew 12.1% in 2025 to R$121.1 billion, beating the top of its own guided range even as the CET1 ratio fell 140 basis points to 12.3%.
Itaú Unibanco (ITUB) closed 2025 with financial margin with clients up 12.1% year over year to R$121.1 billion from R$108.0 billion, an acceleration from the 6.3% growth the largest private-sector bank in Brazil posted in 2024, when the same line rose to R$103.8 billion from R$97.7 billion. The gain was driven by higher loan volumes, wider liabilities margin and stronger remuneration on the bank's own working capital, and the figure landed above the top of Itaú's guided range of 8.5% to 11.0% for the metric.
The market side of net interest income moved the other way. Financial margin with the market fell 25.8% year over year to R$3.28 billion from R$4.42 billion, a decline tied to a higher cost of hedging its capital ratio. The divergence left the client-driven business carrying the full-year result, with the recurring managerial result rising 13.1% to R$46.8 billion from R$41.4 billion and consolidated recurring return on equity up 1.3 percentage points to 23.4%, or 24.6% in the Brazil operation.
Loan growth underpinned the margin story. The total credit portfolio, including financial guarantees and private securities, grew 6.0% year over year to R$1,490.8 billion at year-end 2025 from R$1,406.4 billion, within the bank's guided range of 5.5% to 8.5%. Within Brazil, individual loans rose 6.6%, with credit cards up 8.0% and mortgages up 12.8%, while loans to very small, small and middle-market businesses grew 8.7%. The pace was slower than 2024's 12.6% expansion to R$1,025.5 billion, pointing to a more measured lending stance even as client margin accelerated.
Fee income added a smaller but steady contribution. Commissions and fees plus insurance results rose 6.3% year over year, with fees alone up 3.9% to R$46.9 billion, driven by card issuing, asset management, payments and collections, and an 11.7% rise in acquiring transaction volumes. That growth trailed 2024's 12.1% increase in non-interest income to R$64.2 billion, a comparison flattered a year earlier by a one-off 106.5% jump in other income from the energy trading desk.
Credit quality held broadly steady. Cost of credit rose 6.1% to R$36.6 billion from R$34.5 billion, roughly tracking portfolio growth, and the cost-of-credit-to-portfolio ratio improved 0.1 percentage point to 2.6%. The 90-day non-performing loan ratio was flat at 1.9% consolidated, with Brazil steady at 2.0%, a reversal from 2024, when the same ratio improved 50 basis points to 2.6%.
Expenses grew faster than the year before. Non-interest expenses rose 7.5% to R$66.8 billion from R$62.1 billion, reflecting collective bargaining wage effects partly offset by efficiency measures, compared with a 4.0% rise in other operating expenses in 2024. Despite the steeper cost growth, the efficiency ratio improved 0.7 percentage point to 38.8% consolidated, with the Brazil ratio improving 0.9 percentage point to 36.9%, as revenue growth outpaced the expense increase.
Capital ratios compressed even as shareholder returns expanded. The CET1 ratio fell 140 basis points to 12.3% at year-end from 13.7%, with Tier I down to 13.8% from 15.0% and the total BIS ratio down to 15.2% from 16.5%. Dividends and interest on own capital, net of taxes, rose to R$23.6 billion from R$18.0 billion a year earlier, indicating the bank leaned on its capital buffer to fund a larger payout alongside continued balance-sheet growth.
Net income per share rose to R$1.08, or R$1.12 on a recurring basis, closing a year in which both headline growth targets — client margin expansion and total credit growth — finished within or above Itaú's own guided ranges. The combination of margin outperformance, thinner capital cushions and a steady credit-quality picture sets the terms for how much further loan growth the bank can fund without rebuilding its CET1 ratio.