Emerging market share with dividend

I would like to introduce you to a perhaps somewhat unusual share $ITUB (+0%)

🏦 Company

Itau Unibanco is the largest private bank in Latin America and originates from Brazil.

The bank was formed in 2008 through the merger of Banco Itaú and Unibanco.

It is headquartered in São Paulo and is now one of Brazil's systemically important financial institutions.

🌎 Business model

Itau is a traditional universal bank that serves both private and corporate customers, but has become highly digitalized in recent years.

Main segments:

1. retail banking - private customers, credit cards, consumer loans

2. corporate & investment banking - corporate loans, bonds, M&A

3. wealth & asset management - funds, asset management

4. international business - primarily in Chile, Paraguay, Uruguay, Colombia and Argentina, as well as smaller units in the USA and Europe

💰 Financial position (as at 2025 Q2)

(the new Q3 figures on November 4, 2025)

Key figure Value (Q2 2025) Trend

Sales approx. BRL 39 bn stable

Net profit approx. BRL 9.4 bn slightly increasing

Return on equity (ROE) ~21% very strong

Credit growth +7 % YoY moderate

Non-performing loans (NPL) ~2.8 % low by Brazilian standards

P/E ratio (ADR, USD) around 8-9 favorably valued

📈 Share structure

In Brazil, it is listed on the B3 (Bolsa de Valores de São Paulo) as ITUB4.

The ADR (American Depositary Receipt, ISIN US4655621062) is traded on the NYSE and represents 1 ordinary share.

💵 Dividend

Itau distributes monthly "Interest on Capital" (Juros sobre Capital Próprio, JCP) - a tax-optimized form of dividend in Brazil.

The amounts are small (usually R$ 0.015 per month), but regular.

A dividend yield of around 5.7% is attractive, particularly in the banking and emerging market environment.

The bank occasionally pays special dividends when profits are strong.

⚙️ Strengths

✅ Market leader in South America

✅ Very high return on equity (over 20%)

✅ Good risk management, low loan defaults

✅ Strong digitalization, own fintech solutions

✅ Stable growth even in times of high interest rates

⚠️ Risks

⚠️ Dependence on the Brazilian market & real exchange rate

⚠️ Political risks (Brazil)

⚠️ Inflation / interest rate changes have a strong impact on demand for credit

⚠️ High competition from Nubank & Banco Inter in the digital sector

📊 Conclusion

Itau Unibanco is a solid, profitably managed major bank with a low valuation, high yield and a steady payout.

For long-term investors with some risk tolerance (emerging market exposure), it is an interesting value stock with dividend stability - but not a classic high-yielder.

Brief interpretation

A P/E of approx. 10× or forward P/E of ~8.6× is comparatively low, which may indicate a favorable valuation - provided no major risks are overlooked.

The P/B of ~1.9× shows that the share costs just under twice its book value - in many cases a moderate valuation for a bank.

With an ROE of around 20.8%, the company is very profitable - which speaks for a strong operating performance.

A dividend yield of around 5.7% is attractive, especially in the banking and emerging market environment.