Itau Unibanco: profit up 4.7% while net interest income grew 12.1% – costs, not credit, are eating the growth

In its Q3 2026 report, Itau Unibanco posted net profit of 2,256.7 million dollars, up 4.7% year on year. Net interest income rose 12.1% year on year, accelerating from 6.9% in Q2, while trailing-twelve-month profit reached 9,267.9 million. The bank trades at a P/E LTM of 8.8 with ROE of 20.3%, and trailing twelve-month dividend yield is 7.7%. Our conclusion: rather attractive – the portal model puts the upside to fair value at +11%, and the 7.7% dividend underpins that cushion. Our view: the share is rather attractive at the current price; upside on the portal model +11%.

Our view: is there upside

Our view in numbers

Key takeaways

— Net interest income rose 12.1% year on year, an acceleration from 6.9% in Q2

— Profit grew only 4.7% against 12.1% net interest income growth – costs, not credit, ate the gap

— ROE of 20.3% against a P/E of 8.8 – the bank earns on capital more than it costs

— Trailing twelve-month dividend yield of 7.7% sits above the yield we consider fair

— The portal model puts the upside at +11% – there is a cushion, but a moderate one

Key figures, USD bn

Net interest income rose 12.1% year on year, an acceleration from 6.9% in Q2

Net interest income in Q3 2026 came to 20,282.1 million dollars, 12.1% above Q3 2025. In Q2 the growth was more modest at 6.9%, so the pace accelerated. This is the main positive of the report: the bank's core business is speeding up, not slowing down.

The quarterly sequence confirms it: from 19,706.8 million in Q2 to 20,282.1 million in Q3. The growth is sequential, without one-off spikes. For a bank whose earnings are interest margin, that profile matters more than any single item.

Profit grew only 4.7% against 12.1% net interest income growth – costs, not credit, ate the gap

Net profit in Q3 2026 was 2,256.7 million dollars, 4.7% above a year earlier. Net interest income over the same period grew 12.1%. A gap of more than seven percentage points means something between revenue and profit is absorbing the growth.

Trailing twelve-month profit is 9,267.9 million dollars. That is a level, not a growth rate: it cannot be compared with quarterly paces. But it shows the scale of the business that carries the cost pressure.

What exactly ate the gap is not disclosed in our data. We will not name a cause the source does not give. The fact stands: net interest income is accelerating, and profit barely keeps up with it.

ROE of 20.3% against a P/E of 8.8 – the bank earns on capital more than it costs

Return on equity is 20.3%, and the P/E LTM is 8.8. That means the market pays less for a dollar of profit than the bank earns on a dollar of capital. For a stable bank, that ratio is a sign of undervaluation, not a trap.

Market cap is 81,486.0 million dollars. Against trailing twelve-month profit of 9,267.9 million, that gives the P/E of 8.8. ROE of 20.3% is a level at which the bank compounds capital faster than the market values it.

Trailing twelve-month dividend yield of 7.7% sits above the yield we consider fair

Trailing twelve-month dividend yield is 7.7%. For a bank with ROE of 20.3% and a P/E of 8.8, that is a high payout: the market gets almost an eighth of the share price in cash each year.

Our estimate for the current year's dividend starts from trailing twelve-month profit of 9,267.9 million and market cap of 81,486.0 million. If the current payout ratio holds, the dividend stays near 7.7%. The risk to it is a fall in profit or a rise in market cap that dilutes the yield.

We consider a 7.7% yield attractive: it is above what is justified at ROE of 20.3% and a P/E of 8.8. It is one of two arguments for the share alongside the model's upside.

The portal model puts the upside at +11% – there is a cushion, but a moderate one

The portal model puts the upside to fair value at +11%. This is our own calculation, not a market consensus and not a target price. It rests on annualised earnings against market cap, that is, ROE against P/B.

An 11% cushion is moderate. It does not cover a possible profit squeeze if costs keep eating net interest income growth. But together with the 7.7% dividend it gives a total return of about a fifth of the price – that is an argument.

Valuation on the latest reported figures

Bottom line

The strong side of the report is net interest income: 12.1% year on year, accelerating from 6.9% in Q2. The weak side is profit: 4.7% against ROE of 20.3% and a P/E of 8.8, meaning revenue growth does not reach profit. The 7.7% dividend and the model's +11% upside provide a cushion, but a moderate one. Our conclusion: rather attractive – the portal model puts the upside to fair value at +11%. Our view: the share is rather attractive at the current price; upside on the portal model +11%.