Santander Basil’s Profit Falls in 4Q Due to Legal Issues
2023.02.02 13:28
Santander Basil’s Profit Falls in 4Q Due to Legal Issues
By Kristina Sobol
Budrigannews.com – (BME:) Banco Santander In light of rising interest rates and deteriorating credit conditions, Brasil SA reported a significant fourth-quarter net loss on Thursday. This could set a negative tone for the industry early in the earnings season.
On Thursday, Santander Brasil shares, which had fallen by 5.5 percent in the previous session, experienced volatile trading, rising by 3.3 percent after initially falling by 2.6 percent.
The Spanish subsidiary of Banco Santander SA (NYSE:), which falls short of expectations and accounts for more than a quarter of group earnings, saw its quarterly bottom line drop by more than half year-over-year.
Provisions for bad credit nearly doubled in tandem with higher interest rates, resulting in a 56% decrease in the bank’s quarterly net profit to 1.69 billion reais ($334.3 million) compared to the previous year.
Refinitiv surveyed a number of analysts and predicted a real profit of 2.86 billion during that time.
Santander was the first major lender in the largest economy in Latin America to report this season, followed by Bradesco and Itau Unibanco next week.
Analysts at JPMorgan (NYSE🙂 claim that “Santander Brasil posted a very low quality quarter, again.” added that the outcomes were “setting a negative tone for the sector.”
According to Angel Santodomingo, Santander’s chief financial officer, the results came as the bank continued to push for an “operational adjustment” begun last year, when it became “more selective” in lending as credit conditions deteriorated.
He stated that higher interest rates and shifts in the product mix put pressure on net interest income, a pattern that is expected to continue throughout the year.
The bad credit in individual loans caused Santander Brasil’s loan-loss provisions to reach 7.36 billion reais, the bank stated.
Its net profit decreased by 21.1% to 12.9 billion reais for the full year 2022, while its net interest income increased by 72.7% and fell by 6.8%.
In a note to clients, Credit Suisse analyst Marcelo Telles referred to weaker-than-anticipated core performance in net interest margin, operational expenditure, and fees as “a big miss.”
He estimated that the provisions resulting from Americanas SA’s bankruptcy earlier this year totaled 1.1 billion reais, or about 30% of Santander Brasil’s previously reported exposure to the retailer. These provisions also had an impact on the results.
While the loan portfolio increased by 5.8% to 489.7 billion reais, the return on average equity (ROAE), a measure of profitability, decreased to 8.3% from 20% during the same time period in 2021.
Santodomingo stated:
“We begin 2023 with a solid balance sheet and a portfolio of higher quality.” We will maintain our sustainable growth.”
More:
Telenor’s shares soared like hypersonic rocket amid Earnings Report
Adani shares fall faster than a stone and lost 100 billion amid investor flight
