Itau Unibanco Holding S.A.
Itau Unibanco Holding S.A. (ITUB) is Brazil’s largest bank by market cap. It has been a component of the Dow Jones Sustainability World Index for 13 straight years and is one of the best-operated banks on the planet. Founded in 1924, the bank is now controlled by two prominent Brazilian families with public investors owning the rest. In fact, only 38% of the company’s public investors are from Brazil; the remaining 62% come from foreign markets.
Itau Unibanco makes money from four segments: Commercial banking, investment banking, consumer credit and miscellaneous corporate investments. More than half the company’s revenue come from commercial banking. In its second quarter earnings release, the company noted that although it expects to see slower loan growth in 2013 than originally expected, it also forecasts much lower loan delinquencies over the next few quarters.
While Itau was beating analyst estimates in the quarter — rival Banco Bradesco (BBD) was missing them. Itau is clearly the strongest of the Brazilian banks. With the middle class continuing to grow in Brazil and elsewhere in Latin America, Itau has an opportunity to secure the lion’s share of the business. Regardless of the economy slowing down, the future is slowly getting brighter in Brazil and that’s good news for shareholders.
If you believe in Latin America — as I certainly do — this is the bank to have at the top of your list.
As of this writing, Will Ashworth did not own a position in any of the aforementioned securities.