Banco Santander Brasil SA (SANB3.SA) on Thursday posted a slump in fourth-quarter net profit as loan-loss provisions rose against a backdrop of higher interest rates and deteriorating credit conditions.
The local unit of Spain's Banco Santander SA (SAN.MC), which accounts for more than a quarter of group earnings, saw its quarterly bottom line drop by more than half year-on-year, falling short of expectations.
Santander Brasil was the first major lender in Latin America's largest economy to report results this season, with Bradesco (BBDC4.SA) and Itau Unibanco (ITUB4.SA) set to follow next week.
The bank's quarterly net profit reached 1.69 billion reais ($334.3 million), down 56% from the previous year, as provisions for bad credit nearly doubled amid higher interest rates.
Analysts polled by Refinitiv had forecast a 2.86 billion-real profit in the period.
He said net interest income came under pressure from changes in the product mix and higher interest rates, a trend set to persist throughout this year.
Santander Brasil's loan-loss provisions reached 7.36 billion reais, pressured by bad credit in loans to individuals, the bank said.
In the full year of 2022, its net profit dropped 21.1% from the previous year to 12.9 billion reais, while full-year provisions rose 72.7% and net interest income fell 6.8%.
Quarterly return on average equity (ROAE), a gauge of profitability, plummeted to 8.3% from 20% in the same period of 2021, while the loan portfolio rose 5.8% to 489.7 billion reais.
"We begin 2023 with a solid balance sheet and a portfolio of higher quality," Santodomingo said. "We will continue to grow sustainably".
