Itaúsa (ITSA4) Q2 2024 earnings summary

Executive summary

• Achieved record recurring net income of R$7.22 billion in 1H24, up 29.7% year-over-year, with strong portfolio performance and effective liability management despite a challenging macroeconomic environment.

• Return on equity reached 17.5% in 1H24, up 2.6 p.p. from 1H23, and portfolio market value rose to R$128.6 billion, a 12% increase from June 2023.

• Shares outperformed Ibovespa, rising 17.1% over 12 months, but still trade at a significant discount to fair value.

• Liability management reduced debt costs, extended maturities, and improved liquidity, with net debt down 70% year-over-year to R$833 million.

• AAA national credit rating reaffirmed by S&P in July 2024.

Financial highlights

• 1H24 recurring net income: R$7.22 billion (+29.7% YoY); 2Q24 recurring net income: R$3.64 billion (+22% YoY).

• Dividend yield: 8.6%, with R$1.9 billion in dividends declared in 1H24 and R$1.4 billion in interest on capital declared in 2024.

• Net debt reduced by 86% since Sep/22; no principal amortization until 2028; average debt term extended to 7 years.

• Financial expenses reduced by 65% year-over-year due to liability management.

• Total assets: R$92.3 billion (+4.4% YoY); shareholders' equity: R$83.6 billion (+8.7% YoY).

Outlook and guidance

• Management remains confident in long-term value creation, focusing on sustainable growth, efficient capital allocation, and continued liability management.

• Dividend distribution policy to continue, with potential for higher payouts if non-financial subsidiaries increase distributions.

• No major new investment cycle anticipated unless market conditions improve; focus remains on deleveraging and value creation.

• Expect continued high interest rates and low growth in Brazil, with GDP growth forecast at 2–2.5% for 2024.