Tags: Santander | Brazil | bank | BSBR

Santander Rides Brazil Bank Boom

By    |   Monday, 14 Nov 2011 01:11 PM

Brazil, along with China, is now among the darlings of the global economies. Banco Santander Brasil (BSBR) is riding the South American giant’s latest boom to strong bank profits.

The bank is the smallest of the six that make up Brazil’s banking oligopoly and is majority-owned by Spain’s powerhouse biggest bank, Grupo Santander (STD). Santander Brasil benefits from its parent’s experience in managing growth and acquisitions.

As for Brazil, the joke has always been that it’s the country of the future and always will be. But finally the future is now. Last year the economy expanded 7.5 percent, its fastest rate in more than 20 years. While economists expect growth to slow to 3.6 percent this year, that’s still a performance most developed economies would kill for in the present environment.

The growth of the middle class is fueling the economy’s surge and creating plenty of customers for Santander Brasil. An estimated 35 million people joined the middle class between 2003 and 2009, and 20 million more are expected to make the grade by 2014. These people are just beginning to use banks.

Sitting pretty

Santander Brasil is in a great situation to exploit this growth. Its assets are underleveraged, as its equity base stands at an impressive almost 20 percent of assets, according to Morningstar data. That’s about twice the ratio of two of its main (and bigger) competitors, Itau Unibanco (ITB) and Banco Bradesco (BBD).

Santander Brasil’s strong balance sheet gives it great capability to construct new branches and build up its asset base without having to rely on hefty increases in equity.

The bank’s profit rose 9 percent to 6 billion reais ($3.4 billion) in the third quarter from 5.5 billion reais a year earlier. Revenue gained 10 percent to 26.9 billion reais

Among seven analysts tracked by Thomson/First Call, four rate Santander Brazil shares as hold, two as buy, and one as strong buy.

The company next reports Jan. 27

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Brazil, along with China, is now among the darlings of the global economies. Banco Santander Brasil (BSBR) is riding the South American giant s latest boom to strong bank profits. The bank is the smallest of the six that make up Brazil s banking oligopoly and is...
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2011-11-14
Monday, 14 Nov 2011 01:11 PM
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