By Aluísio Alves
SAO PAULO Jan 30 Banco Santander Brasil SA
aims to increase lending at a faster rate than its
private-sector peers this year as credit markets return to
normal, margins recover and loan defaults decline, Chief
Executive Officer Jesús Zabalza said on Thursday.
Zabalza said at an event in São Paulo after release of the
bank's fourth-quarter results that the lending gap between
Brazil's state-run and private-sector banks will shrink this
year, as the former put the brakes on lending and the latter
seek more loans.
Last year, state banks increased lending almost five times
as fast as private sector banks did. Santander Brasil, the
Brazilian unit of Spain's Banco Santander SA, is the
largest foreign lender in Brazil and the third-biggest
The bank, which beat profit estimates in the fourth quarter
after ramping up auto, credit card and corporate real estate
lending, aims to "expand credit faster than the average of our
rivals in the private sector," Zabalza said, adding he sees
strong potential for growth in agribusiness loans.
The bank's recurring net income, which excludes one-off
items, was 1.41 billion reais ($577 million) in the quarter, up
0.1 percent from the previous three months, but down 12.3
percent on an annual basis, according to a securities filing. A
Thomson Reuters poll of eight analysts had predicted recurring
profit of 1.329 billion reais.
Santander Brasil undertook a more aggressive loan strategy
in the quarter, and implemented strict expense controls, while
reducing loan loss provisions sharply.
That contrasted with a more conservative stance at Banco
Bradesco SA, Brazil's No. 2 private-sector bank,
which also released quarterly results on Thursday and issued
cautious guidance for credit growth this year.
Santander Brasil's loan book rose 2.4 percent in the
quarter, reaching 227.48 billion reais at the end of December.
Credit growth was 7.3 percent last year.
The bank cut loan-loss provisions by 9.2 percent on a
quarter-on-quarter basis as 90-day loan defaults fell to 3.7
percent of outstanding loans from 4.5 percent in the previous
Provisions could fall further this year, alongside the
bank's default ratio, which has room to decline slightly,
Sales, administrative and expenses rose 4.2 percent in the
quarter and 5.2 percent in the year, below the nation's
inflation rate for 2013.
Return on equity fell slightly in the quarter on a
sequential basis. ROE ended December at 10.5 percent, compared
with 10.6 percent in the third quarter and 12.8 percent in the
fourth quarter of 2012.
According to Zabalza, Santander Brasil's ROE will trend
toward that of the banking system - currently at around 16
percent - this year.
Still, net interest income, or revenue from lending-related
transactions, dropped 4.1 percent to 7.21 billion reais, chiefly
because of a 0.1 percentage point compression in lending
spreads. Spreads are the different between the rate at which
banks lend money and the one at which they remunerate their
deposits and other sources of funding.
Parent company Banco Santander SA also released
results on Thursday. The Madrid-based lender nearly doubled
annual profit in 2013 due to diminishing charges against bad
real estate loans, and signaled earnings would keep growing
thanks to a turnaround in Spain and Brazil