Analyst Note
| Michael Miller |No-moat-rated Itau Unibanco's first-quarter results were a modest disappointment, as the bank showed a small sequential decline in operating revenue and a stagnant loan book, mostly due to weakness in its business outside Brazil. On the other hand, the bank showed strong cost management and is poised to benefit from rising interest rates in Brazil. Itau reported recurring net income of BRL 7.4 billion, 15% higher than the year-prior quarter, which translates to a return on equity of 20.4%. As we incorporate these results in our model, we are maintaining our fair value estimate of $5 per ADR share.