Itaú Unibanco Capital Ratio Slides Ahead of Brazil Tax Shift

Itaú Unibanco, a major Brazilian financial institution, experienced a decrease in its key capital ratio during the fourth quarter of 2025. The bank’s Common Equity Tier 1 (CET1) ratio fell by 1.2 percentage points, marking the largest quarterly decline since the first quarter of 2020.

Capital Ratio Decline

As of the end of 2025, Itaú Unibanco’s CET1 ratio stood at 12.3%, the lowest level in two and a half years. This ratio, a crucial measure of a bank’s financial strength, reflects its ability to absorb losses. The bank’s total CET1 capital decreased by 5.3% to BRL185.6 billion ($35.7 billion).

Rising Risk-Weighted Assets

Contributing to the decline was a 3.5% increase in risk-weighted assets (RWAs). RWAs are a measure of a bank’s exposure to risk, and an increase in these assets requires a corresponding increase in capital to maintain a stable capital ratio.

Did You Know? Itaú Unibanco’s largest quarterly drop in its CET1 ratio since Q1 2020 occurred in Q4 2025.

Expert Insight: A decrease in the CET1 ratio, coupled with rising risk-weighted assets, suggests Itaú Unibanco is navigating a period of increased risk exposure and potentially adjusting its capital allocation strategy.

The capital ratio decline comes as Brazil anticipates a shift in its tax structure. While the article does not detail the specifics of this tax shift, it suggests the timing of the capital ratio adjustment may be related to these anticipated changes.

Frequently Asked Questions

What is a CET1 ratio?

A Common Equity Tier 1 (CET1) ratio is a measure of a bank’s core capital expressed as a percentage of its risk-weighted assets. It’s a key indicator of a bank’s financial strength.

What are risk-weighted assets?

Risk-weighted assets (RWAs) represent a bank’s assets, weighted according to their risk level. Higher-risk assets require more capital to be held against them.

When did Itaú Unibanco’s CET1 ratio reach its lowest point?

Itaú Unibanco’s CET1 ratio reached 12.3% at the end of 2025, its lowest level in two and a half years.

How might these changes in Itaú Unibanco’s capital ratios affect its future investment and lending strategies?