Itaú Unibanco (ITUB4) is one of the best-known stocks on the Brazilian stock market and is often considered by investors looking for a combination of profitability, scale and shareholder distributions.
However, there is an important distinction between a high-quality company and a stock trading at an attractive valuation.
This article examines Itaú’s fundamentals, credit quality, profitability, macroeconomic exposure and the main factors investors should consider before buying ITUB4.
What is Itaú Unibanco?
Itaú Unibanco is one of Latin America’s largest financial institutions. The current group was created through the merger of Itaú and Unibanco announced in 2008 and has since developed a diversified financial operation covering banking, credit, investments, insurance and other financial services.
According to the company’s investor-relations information, Itaú ended the second quarter of 2026 with approximately R$3.23 trillion in total assets and a credit portfolio of approximately R$1.52 trillion.
In the same quarter, recurring managerial income reached approximately R$12.4 billion, while recurring return on equity stood at 24.3%.
These figures help explain why Itaú is widely regarded as one of Brazil’s strongest banking franchises.
Profit Growth
Long-term investors should not focus only on the stock price.
The more important question is whether the company can consistently increase its earnings.
In the second quarter of 2026, Itaú’s recurring managerial result increased 7.8% year over year. For the first half of the year, recurring income reached approximately R$24.7 billion, up 9.1% from the same period of 2025.
This demonstrates the bank’s ability to generate strong earnings even in an economic environment characterized by relatively high interest rates and macroeconomic uncertainty.
ROE: One of the Most Important Banking Metrics
ROE, or return on equity, is one of the most important indicators when evaluating a bank.
Itaú reported recurring ROE of 24.3% in the second quarter of 2026.
In simple terms, ROE measures how efficiently the institution generates profits from shareholders’ equity.
A consistently high ROE can justify a bank trading above book value.
Therefore, investors should not look at the price-to-book ratio in isolation. P/B and ROE should be analyzed together.
Credit Quality and Delinquency
Banks make money by lending, but lending also creates credit risk.
For this reason, delinquency is an essential metric for Itaú investors.
In the second quarter of 2026, Itaú’s 90-day delinquency ratio was 1.9%, unchanged from both the previous quarter and the second quarter of 2025.
The stability of this indicator is encouraging because it suggests that credit growth had not, at that point, resulted in a significant deterioration in overall credit quality.
Credit Portfolio
Itaú’s credit portfolio is another important factor.
At the end of June 2026, total credit operations, including financial guarantees and private securities according to the company’s methodology, reached approximately R$1.52 trillion.
Credit growth can support bank revenues.
However, rapid credit expansion can also increase risk. Investors should therefore monitor the relationship between credit growth, delinquency and provisions for credit losses.
Price-to-Book Ratio
The price-to-book ratio (P/B) is particularly relevant when analyzing banks.
It compares the market value of the shares with the company’s book value.
A high P/B does not automatically mean that ITUB4 is expensive.
If a bank consistently generates high returns on equity, investors may reasonably be willing to pay a premium over book value.
The key question is:
Is the price investors are paying for Itaú justified by its ability to generate future earnings?
That is more useful than simply searching for the bank with the lowest P/B ratio.
Price-to-Earnings Ratio
The price-to-earnings ratio (P/E) is another useful valuation metric.
It indicates how much investors are paying for each unit of annual earnings.
However, P/E should not be used by itself.
A more complete analysis should consider:
- P/E;
- P/B;
- earnings growth;
- ROE;
- dividends;
- credit quality;
- delinquency;
- operating efficiency;
- regulatory capital;
- economic conditions.
Dividends and Interest on Equity
Itaú has a long history of distributing dividends and interest on equity to shareholders.
According to the company’s investor-relations information, Itaú makes monthly interest-on-equity payments and may also make additional distributions.
This can be attractive to investors seeking income.
However, investors should remember that dividends are not guaranteed. Future distributions depend on earnings, company decisions and regulatory and financial conditions.
Therefore, a high dividend yield alone should not be considered sufficient reason to buy ITUB4.
Why EV/EBITDA Is Less Useful for Banks
Investors who analyze industrial companies often rely on EV/EBITDA, EBITDA margins and net debt.
These metrics require more caution when applied to banks.
Deposits, funding and financial liabilities are part of the banking business itself. As a result, conventional corporate leverage metrics may not provide the same information they do for non-financial companies.
For ITUB4, investors should generally place greater emphasis on ROE, P/B, earnings, net interest income, credit costs, delinquency, efficiency, capital and liquidity.
Macroeconomic Factors Affecting ITUB4
Itaú’s performance is also closely connected to Brazil’s economic environment.
The main factors include:
Interest rates: influence borrowing costs, credit demand and financial results.
Inflation: persistent inflation can pressure household budgets and increase credit risk.
GDP growth: stronger economic activity can support demand for loans and financial services.
Employment and income: stronger labor-market conditions generally improve borrowers’ ability to repay debt.
Delinquency: deterioration in borrowers’ financial conditions can increase credit-loss provisions.
Fiscal policy: government finances can influence interest rates, inflation, exchange rates and risk premiums.
Exchange rates: changes in the Brazilian real can affect inflation and financial conditions.
Itaú BBA’s economic projections published in July 2026 estimated Brazilian GDP growth of 1.9% in 2026, IPCA inflation of 5.1% and a year-end Selic rate of 13.75%. These are forecasts rather than guaranteed outcomes and can change as economic conditions evolve.
Capital and Financial Strength
Regulatory capital is another important consideration when analyzing a bank.
In the second quarter of 2026, Itaú reported a 15.4% Basel ratio, while Common Equity Tier 1 capital stood at 12.3%. Its short-term liquidity coverage ratio was 202%.
These metrics provide additional information about the bank’s financial resilience and ability to absorb potential losses.
Is ITUB4 Cheap, Fairly Valued or Expensive?
There is no universally correct price for a stock.
Fair value depends on expected earnings growth, profitability, risk and the investor’s required return.
For educational purposes, one possible framework for ITUB4 would be:
Below R$38: potentially cheap, assuming the company’s fundamentals remain strong.
Between R$38 and R$46: a reasonable valuation range in which investors should compare expected returns with earnings growth and risks.
Above R$46: a range where investors should become more cautious, particularly if earnings growth does not keep pace with the stock’s valuation.
These ranges are illustrative and should not be interpreted as investment recommendations. They should be reassessed whenever new financial statements, interest-rate expectations or economic conditions change.
Is Itaú a Good Long-Term Investment?
Itaú has several characteristics that may appeal to long-term investors: significant scale, high profitability, strong earnings generation, a large customer base, shareholder distributions and controlled credit indicators in the second quarter of 2026.
However, investors should separate business quality from valuation.
A great company can still be a poor investment if purchased at an excessively high price.
Therefore, an ITUB4 investment thesis should combine business quality with valuation discipline.
For long-term investors, the most important indicators to monitor include ROE, P/B, earnings growth, delinquency, credit costs, loan growth, efficiency, Basel capital and shareholder distributions.
Conclusion
ITUB4 represents one of the most important ways to gain exposure to Brazil’s banking sector.
The latest results show a bank with strong profitability, recurring earnings of approximately R$12.4 billion, a credit portfolio above R$1.5 trillion and a 1.9% 90-day delinquency ratio.
But investors should ask two separate questions:
“Is Itaú a good company?”
And:
“Is ITUB4 trading at an attractive price?”
The first question looks favorable based on the company’s current operating performance. The second requires continuous monitoring of valuation and fundamentals.
This article is provided for educational and informational purposes only and does not constitute personalized investment advice or a recommendation to buy or sell securities. Investors should consider their own risk tolerance, investment horizon and diversification needs before making investment decisions.
Information updated using data available through August 2026. Market prices and financial indicators may change over time.
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