Santander Brasil's net profit falls on higher provisions, pressured margin (updated)

Banco Santander Brasil SA

26/10/2022 11:59

(Adds details, context)
       SAO PAULO, Oct 26 (Reuters) - Banco Santander Brasil SA
 SANB3.SA  said on Wednesday that its third quarter net profit
dropped 23.5% from the previous quarter as loan loss provisions
increased amid higher interest rates, pressuring the lender's
market activities margin.
        The Brazilian unit of Spain's Banco Santander SA
 SAN.MC  said that net income reached 3.12 billion reais
($586.89 million) in the period, below expectations as analysts
polled by Refinitiv had forecast a 3.76 billion-real profit.
    Chief financial officer Angel Santodomingo said in a press
release that the bank is still going through a challenging
period for the loan loss allowance while the cost of credit
remains under pressure.
        Santander Brasil's loan loss provisions rose 8.1% from
the second quarter to 6.21 billion reais, helping net interest
income to drop 1.4% in the period, while its loan portfolio rose
3.4% to 484.25 billion reais.
  
        The firm's market activities margin, Santodomingo said,
is expected to remain pressured in the next year due to higher
interest rates - Brazil's benchmark rate currently stands at
13.75% after an aggressive monetary tightening aimed at curbing
high inflation.
  
        The South American country accounts for more than a
quarter of the Spanish group's earnings.
  
        Santodomingo said the quarterly results reflected
capital and liquidity at comfortable levels for the company as
he reaffirmed an ongoing pursuit of cost control.
  
        Even so, Santander Brasil's return on average equity
(ROAE), a gauge of profitability, came in at 15.6%, a steep drop
of 5.2 percentage points from the previous three months.
  
        Its Spain-based parent had also 
    reported quarterly results
     earlier in the day, with higher loan loss provisions in
some key markets - including Brasil and the United States - and
a rise in costs overshadowing better than expected earnings.
  
($1 = 5.3162 reais)
 (Reporting by Gabriel Araujo; Editing by Steven Grattan)
 ((Gabriel.Araujo2@thomsonreuters.com; +55 11 5644 7745;))