Itaú: Brazil's biggest private bank still grows profit 18.9% a year

ITUB4Itaú Unibanco

BankFormula: Peter Lynch · Price R$ 38.69 (Friday close)

Peter Lynch asked for a score of 1.5. Itaú, Brazil's largest private bank, scores 2.9: profit up 18.9% a year for five years, a 7.5% yield and a P/E of 9.1.

The thesis

Big, mature banks are not supposed to grow 18.9% a year. Itaú did, for five years, with revenue up 17.4% a year and ROE never below 17.4% (21.5% in the last 12 months). Lynch's test adds growth to the dividend yield and divides by the P/E; 1.5 passes. With a 7.5% trailing yield and a P/E of 9.1, Itaú scores 2.9.

What the company does

Itaú Unibanco is Brazil's largest private bank: lending to people and companies, cards, investments and insurance, with operations in other Latin American countries. Management has said it does not want to sit on excess capital, and in December 2025 it paid a R$ 20 billion extraordinary dividend.

Lynch ratio2.9(Growth + yield) ÷ P/E. 1.5 passes; 2 or more is what Lynch looked for

Profit growth, 5-yr CAGR18.9%Profit grew about 18.9% a year over 5 years

Dividend yield, last 12 months7.5%Cash paid in the last 12 months, as a share of the price

P/E9.1The price equals about 9.1 years of current profit

Why the formula picked it

Revenue and profit both grew more than 10% a year without the kind of jump the 40% cap screens out, with profit every year and ROE of 21.5%. Only four companies passed. Cemig actually ranked first, at 3.8, but it went to Bazin earlier in the order, so Itaú takes Lynch's slot.

Bear case

The 7.5% trailing yield leans on that one-off December payout, made before the 2026 dividend tax; the five-year average is 2.84%. Even on that lower yield the ratio would still clear 1.5, just with less room. At 1.96× book value, Itaú is the priciest of this week's four on that measure. And a bank's profit turns with the credit cycle: high rates show up in bad loans sooner or later.

What would break the story

Revenue or profit growth falling under 10% a year, ROE under 12%, or the Lynch ratio slipping under 1.5, which a lower yield or a higher P/E would both cause.

Since the screen picked it

Start: October 30, 2026 · R$ 38.69

	ITUB4	Ibovespa	Difference
So far	First update on the next Saturday
3 months	On January 30, 2027
6 months	On April 30, 2027
9 months	On July 30, 2027
12 months	On October 30, 2027

Price change only: dividends are not included, in the stocks or in the benchmark. The Ibovespa is measured through BOVA11, the ETF that tracks it. Prices: B3 end of day. Updated every Saturday. Past results do not predict future ones.

All the numbers

PriceR$ 38.69

Lynch ratio2.9

Profit growth, 5-yr CAGR18.9%

Revenue growth, 5-yr CAGR17.4%

Dividend yield, last 12 months7.5%

P/E9.1

ROE, last 12 months21.5%

Also passed: PSSA3, TOTS3

Sources for the company facts

Financial numbers: B3 closing prices (Friday) and CVM filings, computed by our screen.

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