Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Banco Santander (Brasil) SA (BSBR, Financial) reported a 10% quarter-on-quarter growth, reaching BRL3.3 billion, indicating consistent portfolio growth and results delivery.
- The company's profitability increased year-on-year to 15.5%, an improvement from the previous quarter's 14.1%, showcasing a positive trend in return on equity.
- Net interest income (NII) grew by 11% year-on-year, reflecting successful strategic execution in both client and market NII.
- The bank's loan portfolio grew by 8% year-on-year, with positive evolution across all segments, particularly in credit cards and payroll loans.
- Banco Santander (Brasil) SA (BSBR) achieved a record origination quarter in agribusiness, with a portfolio growth of almost 20% over two years, demonstrating strong performance in this sector.
Negative Points
- The bank experienced an increase in delinquency rates in the SME segment, particularly among very small companies, which could pose a risk to future performance.
- Market NII saw a reduction in the quarter due to lower results in treasury operations, attributed to market volatility.
- Despite overall growth, the bank's ALL (Allowance for Loan Losses) remains stable at almost BRL6 billion, indicating ongoing challenges in managing credit risk.
- The company's focus on reducing renegotiated portfolios may impact short-term NII, as these portfolios are being de-risked.
- The bank's strategic shift towards a more balanced credit mix may result in lower nominal spreads, potentially affecting short-term profitability.
Q & A Highlights
Q: Why did we see an increase in SME delinquency this quarter, and how does it relate to your strategy and risk management?
A: Our strategy aims to double our SME business in the coming years, focusing on sound growth. The increase in delinquency is linked to our more restrictive renegotiation policies, which have improved portfolio health. Our risk management has improved with experts across Brazil managing client relationships more effectively. (Mario Roberto Opice Leao, CEO)
Q: How do you see the behavior of your spreads given your focus on mass and high-income segments?
A: We focus on net profitability rather than just spread. Our strategy involves a balanced portfolio with credit cards as a key element, supported by collateralized products. We aim for a mix that enhances profitability, even if it means accepting lower nominal spreads. (Mario Roberto Opice Leao, CEO)
Q: What factors contributed to the decline in market NII this quarter, and what is the outlook?
A: The decline was due to market volatility affecting treasury operations. Our ALCO portfolio has been repriced, and we expect positive progression in the coming quarters. Market making, which is harder to predict, also impacted results. Overall, we are optimistic about future market NII. (Gustavo Alejo Viviani, CFO)
Q: Can you explain the significant increase in fees and commissions this quarter?
A: The growth is due to our diversified revenue strategy, with increases in cards, insurance, and current accounts. We are bringing in new clients and adjusting for inflation, which has positively impacted fees. We aim for continued growth in transactionality and client profitability. (Mario Roberto Opice Leao, CEO)
Q: How do you view the current credit cycle in Brazil, and how is Santander positioned?
A: We focus on sustainable growth with a balanced portfolio. While we aim to grow in line with the market, our strategic businesses will see higher growth. We are cautious with credit supply, especially for low-income clients, and prioritize profitability over market share. (Mario Roberto Opice Leao, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
