Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Banco Santander (Brasil) SA (NYSE:BSBR) reported a strong net income of 3.9 billion, showing consistent growth quarter on quarter and year on year.
• The bank achieved a significant increase in its net interest income, with a growth of over 100% interannually, driven by strong asset and liability management.
• The cost of risk is decreasing, indicating improved credit quality and effective risk management strategies.
• Banco Santander (Brasil) SA (NYSE:BSBR) has made substantial progress in its digital transformation, with a new app in development to consolidate services and enhance customer experience.
• The bank's consumer finance segment, particularly in auto loans, showed robust growth with high-quality ratings, contributing positively to the overall portfolio.

Negative Points

• The macroeconomic environment is challenging, with potential impacts on credit growth and profitability.
• There is a noted increase in short-term delinquency among corporate clients, attributed to overdue payments and economic pressures.
• The bank's wholesale portfolio experienced a decline, partly due to strategic capital allocation decisions and market conditions.
• Banco Santander (Brasil) SA (NYSE:BSBR) faces potential challenges in adapting to new regulatory changes, such as Resolution 4,966, which could impact provisioning and capital requirements.
• The bank's efficiency ratio, while improving, still requires further reduction to meet long-term profitability goals.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Sign with BSBR.

Q: How has Banco Santander Brasil evolved its retail segment to prepare for a potentially adverse credit cycle? A: Mario Leao, CEO, explained that the bank has significantly evolved its retail segment by redesigning its high-income business and launching a new digital proposal in mass retail. This evolution includes offering credit cards with no cost and other benefits, which has attracted new and better-quality clients. The bank has also improved its credit models and systems, allowing for more selective and disciplined credit allocation, particularly in high-income and SME segments. This strategic focus positions the bank to better handle a challenging macroeconomic environment.

Q: What are the expectations for Banco Santander Brasil's "One App" and its impact on customer experience? A: Mario Leao, CEO, shared that the "One App" is a new digital platform being developed to consolidate all of the bank's services into a single app. It aims to enhance hyperpersonalization and provide a more conversational and seamless user experience. The app is expected to improve client interaction and transactionality, with a broader rollout planned for 2025. The bank anticipates that this will significantly enhance customer engagement and satisfaction.

Q: How does Banco Santander Brasil plan to manage its sensitivity to interest rate changes in 2025? A: Gustavo Vallejo, CFO, stated that the bank has initiated a strategy to hedge new production since September, aiming to reduce sensitivity to interest rate fluctuations. This involves a gradual adjustment of the bank's portfolio composition and funding strategies to mitigate the impact of interest rate changes. The bank is focused on maintaining a disciplined approach to pricing and portfolio management to ensure sustainable growth and profitability.

Q: What is the potential impact of the new private payroll loan model on Banco Santander Brasil's business? A: Mario Leao, CEO, highlighted that the new private payroll loan model, or "e-consignado," has significant potential to expand the market. Currently, private payroll loans account for a small portion of the bank's portfolio, but the new model could unlock substantial growth opportunities. The bank is optimistic about this development, which could lead to a four to fivefold increase in the market size over the next few years, enhancing competitiveness and reducing credit risk.

Q: How is Banco Santander Brasil addressing potential challenges in its loan portfolio quality amid economic uncertainties? A: Gustavo Vallejo, CFO, emphasized that the bank is actively managing its loan portfolio with a focus on maintaining quality. The bank has made adjustments to its credit criteria and portfolio composition in response to macroeconomic challenges, such as inflation and interest rate hikes. The bank remains vigilant and prepared to make further adjustments as needed to ensure the stability and resilience of its loan portfolio.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.