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 (ROE) reached 17.5% in 1H24, up 2.6 percentage points year-over-year.

• 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.

• AAA national credit rating reaffirmed in July 2024.

Financial highlights

• 1H24 net income: R$7.24 billion (+13.2% YoY); recurring net income: R$7.22 billion (+29.7% YoY).

• Dividend yield reached 8.6%, with R$1.9 billion in dividends declared and R$8.7 billion distributed in the last 12 months.

• Net debt reduced by 70% year-over-year to R$833 million, with average debt maturity extended to 7 years.

• Interest coverage ratio improved to 12.4x from 3.5x a year earlier.

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

Outlook and guidance

• Management expects continued value creation through portfolio strength, active liability management, and efficient capital allocation.

• No principal debt amortization until 2028, with a focus on deleveraging and maintaining a robust dividend policy.

• Dividend distribution policy to continue, with potential for higher payouts as non-financial subsidiaries mature.

• Brazilian GDP growth forecast at 2–2.5% for 2024, with high interest rates and controlled inflation.