(Recasts to add comments, share performance, background
By Guillermo Parra-Bernal and Aluísio Alves
SAO PAULO, April 26 Banco Santander Brasil SA's
profit will likely rise further in coming quarters as Brazil's
No. 4 listed bank sells more financial services, cuts loan-loss
provisions, and crowds out rivals in key markets despite a slow
Chief Executive Officer Sérgio Rial's efforts to improve
customer experience and reduce fundraising costs should help
bolster profitability metrics this year, executives said on
Wednesday, when Santander Brasil posted record first-quarter
profit that beat estimates.
Return on equity, a widely followed gauge of profitability,
hit a six-year high of 15.9 percent last quarter. The number
beat an estimate of 12.5 percent and topped a 2018 year-end goal
of 15.6 percent for the first time.
Recurring net income, or profit excluding one-time items,
came in at 2.28 billion reais ($725 million) in the first
quarter, up 15 percent from the prior three months. The number
beat a consensus estimate of 1.63 billion reais compiled by
The results show how Rial's strategy has born fruit despite
Brazil's harshest economic recession on record. Since taking the
helm of Santander Brasil in September 2015, he set as a top
priority cutting Santander Brasil's profitability gap with
rivals Itaú Unibanco Holding SA and Banco Bradesco SA
The latest improvement in the performance of Santander
Brasil, for years a laggard among Brazil's largest banks, also
propelled the results of parent Banco Santander SA.
Earlier in the day, the Spanish banking behemoth reported a
14 percent jump in first-quarter profit. Results at Santander
Brasil represented 26 percent of Santander's profit last
quarter, sharply up from 21 percent in the quarter before.
"Our ROE will get even closer to theirs in coming quarters,
without putting at risk our credit risk view," Rial said at an
event to discuss quarterly results, noting that he expects the
industry to lower loan-loss provisions in coming quarters.
His remarks suggest that lingering credit quality woes for
banks are taking the backseat. While it may take longer for
retail and job market indicators to revive after a three-year
slump, business confidence gauges and a central bank's
interest-rate cutting cycle should bolster a recovery,
Units, a blend of Santander Brasil's common and
preferred shares, rose up to 2.0 percent on Wednesday, bucking a
0.4 percent decline in an index tracking financial shares
trading in São Paulo.
Rial kept other targets unchanged, including a December 2018
goal of bringing default ratios in line with those of peers.
($1 = 3.1470 reais)
(Editing by Mark Potter)