Fee Guidance Trim Uncovers Itaú's Quiet Re-Pivot Into Payroll and Mortgages
Brazil's most profitable bank cuts commission expectations yet holds 24% ROE, leaning on private payroll loans and a mortgage book that just overtook credit cards
ITUB · Earnings Call · 2026-08-05
Fee Guidance Trim Uncovers Itaú's Quiet Re-Pivot Into Payroll and Mortgages
A rare course correction on fees
On the surface, it was another steady quarter from Itaú Unibanco. As CEO Milton Maluhy Filho opened the call, “we delivered a strong quarter with consistent results, high profitability and excellent credit quality indicators” — Milton Maluhy Filho · 2026-08-05 — recurring net income of BRL 12.4 billion, up 7.8% year-over-year, a consolidated ROE of 24.3% (25.1% adjusted to an 11.5% CET1), and a CET1 ratio up 30 basis points to 12.3%. Yet the headline was the one piece of guidance the bank actually moved. Management revised full-year expectations for commissions, fees and results from insurance to 2–5% growth, down from the 5–9% range set at the start of the year: “We revised the expected growth range to between 2% and 5%, whereas at the beginning of the year, we expected growth between 5% and 9%.” — Milton Maluhy Filho · 2026-08-05 For a bank analysts consistently praise for predictability, the trim is unusual — and it is mostly a story of deliberate revenue-mix change, not weakness. Maluhy pointed to the derisking of the credit-card book toward higher-income clients, the repackaging of checking accounts, and a conscious reduction in the cost of service to lift customer lifetime value. Card-issuance revenue is the line being walked down; the bank now discloses it separately precisely "to demonstrate that this is the direction we expect."The credit engine re-rebalances
The more interesting story sits on the balance sheet. Itaú's mortgage book hit BRL 152 billion after growing 13.3% year-over-year and 3.9% in the quarter — surpassing the credit-card book (roughly BRL 150 billion) for the first time. With BRL 36 billion of originations in the last twelve months and a 55% market share among private banks, mortgages have become the core loan-relationship engine, funded by the largest private savings-deposit base in the country. Alongside it, the bank is steering individual borrowers toward private payroll loans — the new "Consignado CLT" product — and away from unsecured personal credit, given its pricing advantage and the priority of its repayment structure. The overall payroll portfolio grew 3.5% in the quarter and 11.7% year-over-year; the private slice expanded 14.3% quarter-over-quarter and 9.1% year-over-year. Maluhy stresses they are growing into a resilient public while keeping delinquency near “about half of the indicator of the delays of the system” — Milton Maluhy Filho · 2026-08-05. This is a purely domestic credit-cycle story — a sharp contrast with where the global transcript tape is focused. The #1 market-wide keyword this quarter is Batch Zero, the ERCOT interconnect queue for data-center power; the tape's top movers are AI-infrastructure, high-bandwidth-memory and co-packaged-optics names. Itaú never appears in that theme. Its keywords instead are the messy, idiosyncratic mechanics of Brazilian balance sheets: the cycle of credit, structured operations, and the mechanical effect of government-program grace periods expiring.Resilience that looks mechanical
That "mechanical" framing is the crux of the credit-quality message. Short-term NPLs (15–90 days) were stable, individuals held at roughly 3.0%, and long-term delinquency was flat in Brazil. The slightly higher SME indicator (1.9% to 2.0%) is explained entirely by grace periods on government-backed programs rolling off — the same denominator/numerator math that had pushed the indicator up earlier. Management expects one more ~10-basis-point increase to roughly 2.1% and then stability, a level still "well below" the readings of September 2024. Cost of credit stayed at a remarkable 2.7% of the portfolio, and the impact of the government's debt-relief ("Desenrola") program was called immaterial: just BRL 60 million during the quarter and 2 basis points on delinquency. The same logic covers stage-mix noise — when wholesale clients migrate from Stage 2 to Stage 3, coverage falls for purely mechanical reasons, "with no cause for concern." On capital and cost, the story is compounding efficiency: a Brazilian efficiency ratio of 35.5% (37.4% consolidated), the best first half on record. The tax credit / DTA question also drew attention when HSBC's Carlos Gomez-Lopez asked whether the industry's high effective tax rates could invite policy pressure; Maluhy answered that DTAs represent taxes already paid, and that banks will manage IOC and payouts to protect the capital base — part of why Itaú remains among the system's higher effective taxpayers. The consistent thread is discipline, and Maluhy is unapologetic about giving up share rather than returns:A 24%-plus ROE is not new — a year ago Maluhy told analysts “I don't foresee today any reason why we shouldn't have a vision of the ROI in this threshold that is implicit in the guidance” — Milton Maluhy Filho, CEO · 2026-02-06, and he said in mid-2025 that “this level of profitability so far is sustainable.” — Milton Maluhy Filho, CEO · 2025-08-06 What is new is the composition beneath it: a fee line shrinking by design, a credit book leaning ever harder on guaranteed and collateralized portfolios, and a quiet re-allocation that ultimately leaves the implied bottom-line guidance unchanged, thanks to a lower effective tax-rate assumption. With CET1 at 12.3% and strong capital generation, the next "traditional discussion" on additional dividends looms in early 2027. For investors, the question is no longer whether Itaú can keep printing 24% returns — it is whether the deliberate giveaway of fee and unsecured-credit share pays off in lifetime value before the cycle turns.When we see the market growing rationally, we always need to make a decision. We lose the market share or if we are going to lose market share or money, we'd rather lose market share.