BSBR

Image source: The Motley Fool. Wednesday, July 29, 2026 at 8:00 a.m. ET Investor Relations - Camila Toledo Chief Financial Officer - Carlos Muniz Camila Toledo: Good morning, everyone, and thank you for joining us for our second quarter 2026 earnings conference call. We are broadcasting live from our headquarters in Sao Paulo, and we will be dividing this event into 2 parts. First, our CFO, Carlos Muniz, will provide a detailed analysis of our performance and our strategic direction for the coming periods. Next, we'll have Q&A session. Today's presentation is already available for download in our IR website. And now I'll turn the floor over to Carlos to begin the presentation. Carlos Muniz: Thank you, Camila. Good morning, everyone, unfortunately we don't happen to have any button or translation into Spanish so I'll try to use my best Portuguese. And then during the Q&A, you can ask your questions. I will start with a summary of the best results for the quarter. We ended the quarter with recurring net income of BRL 3 billion and ROAE of 12.5%. This result reflects a more challenging macroeconomic environment, particularly due to the rise in the cost of risk. It also reflects the decisions we made in managing our balance sheet. We are rebalancing our product and customer mix, always striving to achieve a better risk/return ratio. This shift may have short-term impact on revenue, but it is essential for building a more balanced, resilient and predictable operation. Our focus remains clear, to grow with quality and sustain consistent profitability over the medium and long term. Now moving on to the next slide, we present the evolution of our customer base and the initiatives to deepen our relationship with customers. We ended the second quarter of with 76.2 million clients, a 6% increase over the past 12 months. As you may recall, we discussed in the first quarter the launch of Santander Rewards. The first cohorts already show increased engagement, particularly in the growth of card spending. To date, 15% of the eligible customer base has enrolled in the program. We also posted a 30% increase in the number of registered PIX keys. The rewards program combined with the use of artificial intelligence should expand our ability to create value with every interaction. As a result, we are strengthening customer engagement, customer primacy and long-term relationships with our clients. Now we will move into the numbers. As we have highlighted in recent quarters, we continue to grow our loan portfolio selectively. This progress reflects our dynamic portfolio management and our ongoing focus on risk-adjusted profitability. We maintain strict lending criteria. And as a result, we see varying growth rates across products and segments. In all cases, we prioritize quality, pricing discipline, customer loyalty and transaction volume. On a year-over-year basis, I would like to highlight growth of 13% in cards, 15% in customer finance and 11.5% in small and midsized enterprises in retail banking for individuals. We remain attentive to the portfolio's composition. We have reduced our exposure to higher risk profiles, especially among customers with monthly income below BRL 4,000. The portfolio of this segment has declined by approximately 30% over the past 12 months. In mortgage, the highlight is home equity with 40% growth over a 12-month period. Consumer finance also remained significant, supported by a higher quality mix and a greater share of new and electric vehicles. In corporate, we maintained positive growth concentrated in the corporate segment and supported by disciplined pricing. Overall, the portfolio reflects the choices we made to improve its composition and strengthen the risk/return profile. Next, we see that client NII has remained virtually flat for the year despite the decline seen in the quarter. There are 3 main reasons behind this trend. The first is the increased impact of deferred expenses related to banking correspondents. The second is the lower funding result due to the lower average CDI. And the third is the selectivity in loan origination, which we discussed in the previous slide. Combined, the effect of the deferral and the lower CDI impacted the spread by approximately 10 basis points. NII also reflects the shift in the customer mix toward the high income segment. This segment has a lower structural spread approximately half that of the low-income segment. Therefore, its increased share is consistent with the portfolio rebalancing. As for market NII, we saw a slight improvement in financial management results, partially offset by weaker performance in the market-making activity. in funding, we continue to expand the retail share of funding. This strategy reinforces customer loyalty and increases transactional volume. Transactional deposits grew 18% over the past 12 months. This progress reinforces the growth of primacy and better funding composition. Talking about commissions and as a result of this trend, fees and commissions were also impacted by strict stricter credit standards. Nevertheless, we maintained strong performance in credit cards and consortiums both on a quarterly and annual basis. In credit cards, we continue to grow within our existing customer base, driven by increased transaction volume. In insurance, we saw improved performance in noncredit-related businesses. In credit-linked lines, however, the trend was influenced by selectivity in origination and by the higher share of new vehicles in our customer -- consumer finance in checking accounts, increase in transaction volume has expanded the benefits and waivers granted to customers. this trend helps explain the performance of this line item. And at the same time, highlights the growth in client primacy. Now turning to provisions. The quarter was impacted by a couple of significant factors. Among them are specific wholesale banking cases and the inventory adjustment resulting from the new methodology for writing off transactions, together, the factors totaled BRL 700 million. We also continue to see pressure on the portfolios of smaller companies in the Agribusiness segment and among low income individual clients. This scenario required a higher level of provisioning. Part of this trend also stems from the more restrictive stance that we are adopting in renegotiations. We have been requiring additional collateral or cash to formalize the agreements. This discipline may create pressure in the short term, but it will improve the quality of renegotiated loans. Regarding delinquency, we observed a favorable trend in the short-term indicator. The long-term ratio also improved. However, part of this change is related to the adjustment in the classification of nonperforming loans, which had an effect of approximately 29 basis points on the total indicator. We continue to monitor these portfolios closely, carefully and with discipline. Moving on to the next topic. Let's review the evolution of expenses. During the quarter, Personnel and administrative expenses remained well under control, favorable behavior. Their growth was significantly below inflation, reflecting our continued discipline in cost management. Lower revenue generation put pressure on the efficiency ratio, which closed the period at 39.3%. It is important to note that this performance was primarily driven by revenue dynamics. There has been no change in our spending discipline. We continue to invest in business expansion and technology. Today, 100% of our employees have access to AI-powered tools that support both our efficiency initiatives and our growth agenda. At the same time, we continue to reduce our cost to serve. In the low-income segment, this indicator has already declined by more than 30% over the past 2 years. In addition, the broader adoption of global platforms is expected to further increase our operating leverage and accelerate this efficiency journey. To conclude, we see here our income statement. We ended the quarter with recurring net income of BRL 3 billion and a 12.5% ROE. The decline in net income and profitability reflects a more challenging macroeconomic environment. Revenue growth was lower, and the cost of risk increased with the latter being partially affected by one-off items, as I mentioned. Even so, our portfolio continues to show an increasingly attractive risk return profile. We also maintain a well-balanced funding mix across funding instruments, client segments and pricing. This quarter reinforces an important take-home message. Discipline in balance sheet management may have short-term impact yet. However, it also leaves us better positioned to navigate periods of volatility and sustain a stronger trajectory of growth and profitability over the medium and long term. We continue to make progress in key areas, such as client primacy, while improving portfolio composition, funding efficiency and technology. We are building an increasingly balanced, resilient and predictable franchise. Thank you very much. And now let's start the Q&A with Camila. Camila Toledo: The first question comes from Pedro Leduc with Itau BBA. Pedro Leduc: My question is related to revenue. I would just like to get a better understanding because when we look at NII and fees and services, there may be some detractors or also some positive things. Could you please help me understand about the offenders like changes in mix or whatever went against it. but maybe you can help me explain what would be a favorable wind. And at the end, maybe you could help me understand when do you think that revenue will resume growth maybe year-over-year or month-over-month, that would be great. Carlos Muniz: Okay, Pedro. There are some aspects that we can control and some other aspects that escape our control like CDI is something that we have no control over, and we have no idea how we will perform in the future. We have an idea, but not any certainty. The adjustment of the correspondence is something that we know, that's something that will happen. We know that things will not be any worse in the future. And then, we usually say that we -- it's not a matter of following, believing or not believing, but we focus on quality, quality, quality. We are not concern with market share in the short run, we are more concerned with macro returns being certain that every origination we do has to be a profitable origination 1 that makes us comfortable. And this is what's leading us to make tough choices. I wish I could have like overwhelming revenue. But with all of the things we have in the macro return, I would like to focus in a more safe path, but then what happens is that we are putting on the side of the most profitable products. We are decreasing our presence in all products that have very, very large margins and rather focusing our attention and secured operations, government guarantees, pronoun, CD plus, real estate guarantees or mortgage guarantees I don't know whether I've heard it from you or other analysts, but our consumer finance is growing. We are growing in new vehicles, electric vehicles with a very strong down payment at the beginning. And in the older vehicles, we just focus on the audience with lower risks. And so this is linked to many of credit operations, fortunate or unfortunately, the more risky customers, maybe we have the possibility of getting more fees. But we are putting that on the side just to other areas that we have more opportunities. And this is why we are stepping back a little bit in our fees. We are expanding in other lines like consortium, insurance and others, but we also saw some drop in those that were more linked to credit in the lower brackets of the population. So we are very optimistic in terms of growing our revenue. I think we will have a good performance, but the purpose is now not to grow this line, but just make sure that we are not going to make bets or investments because then we don't want to have to put the bill in the future, okay? So we are still in the process of low single digits in the year. Camila Toledo: Pedro, I will only add here something related to client NII. If we look at the spread, Carlos quickly mentioned the impacts we have in terms of funding margin and with a lower CDI in the quarter and also impacts with the higher expenses of banking correspondents quarter-on-quarter, and this has a 10 basis point impact. And in the year, almost 20 bps or basis points. So this impact should be fading out over time. So we hope that by the end of the year, we will get back to our regime in terms of expenses. And as for the mix, this is what is putting pressure on credit. And there, I would highlight 2 aspects. One, we are growing more with secured loans. As you said, in SMEs, we have more than 40% of the portfolio. that is secured. And in terms of individuals, I would like to highlight 8% growth in the Select segment, whereas in the lower income, there was a drop of 10% in the year. So as far as this puts pressure on the result, we impact revenue, but there's still the counterpart of loan loss provisions. But at the end of the day, we hope to reap the benefits. Now we move to our next question from Ricardo Buchpiguel from BTG Pactual. And now we have -- sorry, it's Schroden, Gustavo Schroden from Citi. Gustavo Schroden: I will speak about not necessarily about revenue, as Leduc mentioned, but a combination of revenue, loan loss provisions and credit quality. I think it's very clear through your comments that the bank's intention is to be more conservative to focus on mid and high income, but the counterpart is not there yet, which would be a lower loan loss provisions. And we understand that there will be some one-off cases, there was 1 very specific case and the change in the write-off policy, BRL 700 million should be, therefore, understood like a one-off in loan loss provisions increase. But we see a higher over 90 NPL in all lines. Therefore, what could we imagine in terms of asset quality and loan loss provisions throughout the year? Or if you could also give us not a very specific date, but when do you think we would be able to see NII after loan loss provisions improving. Do you think it's more towards 2027? Or maybe by the end of the year, we would see an improvement in this risk-adjusted line. Carlos Muniz: Well, thank you for the question, Gustavo. I think I already said that, personally, I'm not very optimistic. So if I had to put this date, maybe the state would be closer to 2027 and I don't know whether Camila would agree with me. We are still waiting for this change, not only improvements in loan loss provisions, but we still have operations following the 4,966 section. So every year, we have to incorporate a new macro scenario. And this macro scenario, I wasn't here when it was done last year, but I think -- what we will have to incorporate this year will be worse when compared to what we have currently in our models. So I do not expect a big change because probably, we will have this impact, and we will have to factor that in, in the next quarter if I'm not mistaken. The important thing for me is that what we started to see is the actual performance of the portfolios, and we see some more positive scenarios. I don't know whether this will be able to compensate this entire impact. And you noticed that loan loss provisions now it's better in the portfolio, even though it's not exactly in line with everything you mentioned, but we are doing the right move. And at some point, this will have to stop. Camila Toledo: I think that the mix adjustments we've done is not yet apparent in that line. And as Carlos said, in the past quarters, we've had impact both coming from the wholesale and agribusiness. We already talked about this reduction, but this still represents about 40% of our individuals portfolio. But with time, this will be diluted and then we will do more with models and also macro deterioration. The main lines, as Carlos said, but we see more pressure in low income, agro -- we lost sound -- okay. That's great. So lower agro and SMEs. Gustavo Schroden: How much of that higher LLP refers to review of models 4,966? And how much of that reflects the deterioration of the portfolios? Carlos Muniz: In terms of LLP, we've seen it, as Camila said, only individuals of low income and in the lower segments of companies. The remaining portfolios are flat, or even improving, I would say. The model -- for the model, I don't have a number yet. I wish I could share it with you, but we haven't yet made a calculation with the current scenarios. We're still -- that's still work-in-progress. We know that this country will have elections right around the corner. And I come from a country where things didn't change every week like they do here. So I don't know exactly what is the macro scenario that we have to assume for 2027. So I think for the next regulation, we will have more clarity about how much that bill will be. But I think we will see the worsening of a scenario. Camila Toledo: So as a reference, Carlos highlighted during the presentation. But if you look at loan loss provision expenses, this first quarter was BRL 7.7 billion. And now we mentioned this as being more one-off impacts. There were some things related to wholesale banking and also the deployment of the new write-off policy, especially for unsecured loans. So both things consider we had BRL 700 million. So there is a percentage of recurring. And so as Carlos said, when we update the macro scenario, we will probably have more demand in some more specific lines. All right. And now with Ricardo Buchpiguel with BTG Pactual. Unidentified Analyst: In the quarter, we saw that DTAs have increased, putting pressure on the tangible capital of the bank, given the importance that this part of capital has on ROE and dealing with high interest, do you see room to increase the tangible cash of your balance sheet? What initiatives can you have to accelerate this process? Carlos Muniz: Well, if you have the question for that question, please do share it with us -- but unfortunately, the uses to generate revenue and revenue that will not entail loan loss provisions. The moment of the country is not helping. We are focusing on risk-free revenues on 1 hand and to improve the cost of risk that we are having. You will remember that in parallel to the solution, which is this -- we're making an effort to simplify the organizational structure. This is happening in the possible speed. We are including organizations outside the perimeter of the bank. We did the last 1 in Q2. And this has to improve. And this will improve the consumption of DTAs, but these are the levers we have in mind, integration of other organizations to improve the tax base of the bank, improve the results which unfortunately is moving forward more slowly than we would have liked. Unidentified Analyst: Clear. And do we have any visibility of the timing for these processes to be completed? I don't know if you can know. Carlos Muniz: Well, we have told you that we thought that we would start having a turnaround of those tax credits, DTAs between 2027 and '28 I have got plan for the next 3 years yet. For '27, '28 -- '27, '28, '29, but it shouldn't change much. Camila Toledo: Now we have a question from Daniel Vaz with Safra. Daniel Vaz: Carlos I actually would like to go back to the point of revenues and risk-adjusted NII. I think that the big miss in market forecast, was not the provision, but rather NII, particularly NII in the spread seems to have a greater carryover for you to recover. As Carlos mentioned, we need revenue. And this gap that will take longer to recover post provision NII seems to be playing against your ROE for longer. So with this ROE level around 12%, 13% -- between 12% and 15%, how long will that take about a year? And does this have an implication for the payment of IOC, you're paying BRL 2 billion, by half year, do you have comfort to continue to distribute the same level of IOC given the lower level of ROE? Carlos Muniz: That's a good question, Daniel. Let's try to answer it in 2 parts. IOC and pressure on profitability. I think I spoke about the mix and that we are convinced that we are making the right choices in terms of the mix. The spreads we captured in high-income clients in mortgage or [indiscernible] this mix. The growth we have in mortgage is not helping us post a strong growth on that end of the equation. Without -- even with the policy of renegotiations and doing things well, playing safe, I should say, this is not helping us have a booming growth in the top line, but this will improve in the mid to long term. Will this impact the payout? No, we'll maintain our payout policy of 50%. Of course, this will depend on the budget and on what we think we can achieve in terms of results next year. But the payout policy is not planned to change. We have committed to 50% in this quarter was a little over that within EBITDA under more pressure, it ends up being over 50%. We have had periods where during the year, this was a little bit higher, a little bit lower, but I think that 50% is kind of a benchmark for the long term in terms of our payout policy. Daniel Vaz: It's clear. And a comment on the ROE, I asked whether you have visibility of how long it should stay kind of lower in that lower range from 12% to 15%? Any estimate of duration? Camila Toledo: I believe that by next year, we will be returning ROE to more reasonable levels. The market will put pressure on us to get there. And in truth, I cannot really show you, but what we came in the latest origination cohorts, it's making me feel more comfortable that we will achieve better levels. What I do not control is the speed of what we've had in the past. But if we had a possibility of having a write-off of the whole bank, at once this would show you the results of the last 12 to 18 months I think that you would have a bank that you would approve much more. Next question is from Mario Pierry from Bank of America. I think his screen is frozen. Mario, can you hear us? Well, let's go to the next question, and then we go back to Mario. So next question from Thiago Batista with UBS. Thiago Bovolenta Batista: Can you hear me well? Camila Toledo: Yes. Loud and clear. Thiago Bovolenta Batista: I just have a follow-up on Vaz question. Because Carlos, you said that Spain will be demanding a view better profitability, and they are very vocal saying that especially when interest rates become more normal, we should see tangible equity or better returns in tangible equity approach by 20%. What about today's ROE, not even the days? I mean, even before the last quarters, what would be the main levers of this ROE goes from 16 to 20 or something close to 20. What does it take? Carlos Muniz: Well, it's very simple. On my side, we have to continue making progress with non-credit linked revenues and the second has to be ceded with the group. We have to capture all of the investments we are doing in global platforms. And the third aspect is normalization of the loss provisions, which reflects the choices -- choices we made in the past. So the combination of the 3, I don't know whether they will all happen at the same time or they will happen in sequence. But that's what will help us go up to levels close to 20%, as you mentioned. Just to give you a little bit more details. nonbinding credit revenues, some of them have a higher wait when you are accelerating the portfolio, but there is also funding. There was an impact due to lower Selic rate, but we are working hard in the funding Selic to reduce the cost of deposits, while at the same time, having additional revenues coming from that same line. I think, Camila, we also talked about market NII we have a legacy portfolio, a legacy portfolio. that we inherited from the past. But with time this will be and hence, this will improve as we've been saying to you, we are expecting some improvement on this side. And this should also help improve profitability. And then I would say this is positive on the NII line, even if we pursue the same strategy of credit origination. Camila Toledo: So let's try to go back to Mario Pierry. Mario, can you hear us? Mario Pierry: Yes, I just had some technical problems. I would like to focus on the mass market segment that still accounts for 40% of your portfolio. And this is a segment that is going through a lot of pressures given the macro landscape. We have high interest rate, interest rates high household debt level. So what would be the ideal level? I mean, how much would you like to decline the exposure to this segment. And I also noticed that you made changes to credit cards in lower income. Does this have to do with loss of primacy or not? Carlos Muniz: Well, you need to have the answers from many banks before I can answer that question. In our case, it's not a problem of client primacy, but it's a structural problem that affects the entire country. High interest rates put pressure on households. I would say that I mean, I don't know what could happen in the future or what will happen after the elections. I don't know whether the parent levels of support we have from the government to the population will be maintained after the elections are in the future. And whether the level of employment I mean, that's historical figures ever. I don't know whether they will be maintained. Given the speed of the economy or whether the economy improves, probably our feeling regarding the more vulnerable sectors may change. So we don't know what may happen. And in regards to the wealthier segments, we'll have audiences that are cohorts that are not so profitable to us. And -- these are segments that we cannot monetize as much. We have people who earn less than BRL 4,000, and there are banks that can operate with this segment much better than we do. So the speed of the portfolio reduction will involve a mix of our operations and origination. We are still doing origination with payroll deductible loans, 400, 500, and I think we may end the year with levels of origination higher than that. I think it's more -- what is more difficult to control for us is the fall or the drop of the portfolio that we have because then that depends on our payment capacity or how negotiations will be happening. And I mentioned that during my presentation, that we do not want to do just smoky renegotiations or things that fade out in the air, we want to be able to deliver discounts to those who have the firm intention to repay their debt after the renegotiation is in place. Camila Toledo: Well, I would add 1 more point, Mario. We've been doing strong work cost of to this specific segment. So I mean, Carlos just said that there was a reduction of 30%. Part of the monetization of this group is LLP. That's the main part. That's where the pressure is. And the other part has to do with cost to serve. And we are working in that segment as well. So we want to be profitable in the Board that at the moment is not profitable, but we believe that in the near future, it will become an interesting business for the bank. Mario Pierry: If I can come up with a follow-up question because you talked about the renegotiation. What was the impact of the Desenrola program in the quarter for you? Carlos Muniz: It was very low. And in January, it was low. Mario, as I said before, we already had our own recovery policy. I don't know whether the word is aggressive. We offered big discounts to those clients that had a firm intention of paying their debt. And so Desenrola didn't expanded those opportunities. I mean it's not that the rates were better in the program, but it didn't move the needle for us very much. I don't have the numbers right off the bat, but I think Camila can help me I think, I mean, just hundreds of millions. And in terms of individuals, maybe it was a bit better, but it didn't change the level much in terms of recoveries. Camila Toledo: Okay. It was slightly higher than the Desenrola program. But what we noticed is that there is very little adoption from the people in debt. So -- it was the same thing in the original program. As Carlo said before, Desenrola, we already provided interesting conditions for this renegotiation. So we didn't see any significant increase with the Desenrola program. Now a question with Yuri Fernandes with JPMorgan. Yuri Fernandes: I'd like to go back to NII. I think that this has been asked, but I will ask differently. I think Camila mentioned that of the 40 basis points about 30 came from funding and the impact of banking correspondents. Actually 10% and 30% is the mix related to derisking. So my question is, you will continue to rest the portfolio, right? That's what I understood from Carlos. But will the spreads continue to drop because the risk continues, or 2, no, there was an impact of write-offs. We had more write-offs. We got a renegotiated portfolio. and that included perhaps the renegotiated portfolio. And personal credit, personal loans and perhaps this has influenced a greater drop than the 30 basis points. I just want to know whether there is another factor because a derisking trend is new with Santander. You've been reducing the mass retail. And why did it drop a lot? And if the derisking continues, it will drop even further. And the other question regarding fiscal DTAs, provocation is to recapitalize dividend. You have -- you see have the tax fiscal to call back the capital. It's not easy. The problem continues, but it's just a provocation. It is 1 way of consuming DTAs over time. Carlos Muniz: I like the provocation, Yuri, a conversation we had internally and haven't decided yet. We have to support Gilson and the rest of the management to see what we're going to do, but we will communicate the market when we make a decision in that regard. Now going back to your question about the mix, which is a good question. We did have greater impact that impacted the drop in NII and the loss of these basis points that you mentioned the derisk trending is kind of old, but I would say that it's becoming more aggressive in recent months. I think that government programs or are there all the time. in the conditions of these programs put even more pressure on margins. Renegotiation conditions are kind of newer at the bank, and we will continue with discipline. And this has a cost -- NII paying a price. And I spoke about riskier products, I get surprised when I look at the level of interest rates that we have in revolving credit and others. So that we -- we shouldn't just focus on charging interest because we've seen some indications by the government in the past, putting caps on these products. So I don't want this to get in the way of our business model, which is highly dependent on these audiences and interest rates that we don't think that they are sustainable in political terms. Camila Toledo: I think that there is the impact that you mentioned, a slow portfolio pulling down the spread. There are some securities that we carry and then we put available to clients, but the bulk of it is the mix, as Carlo mentioned. As we reduce, as we said, the spread of special versus select. In Select, what is growing is mortgages, real estate loans gaining almost 100 basis points. In the last year, these are portfolios with lower spreads, and we are betting on them for the mid- to long run when that line item would be adjusted to the cost of risk in the consumer finance. We had an origination of new vehicles of 7%. And now we are at levels of 22%. So these are choices. We are deepening the strategy because the macroeconomic environment is not helping us to be more optimistic. So again, I prefer to play safe. in my first communication with the market, I prefer to have a bank that is safer. They won't give us to positive surprises, but not negative surprises either. Now we have a question of Marcelo Mizrahi with BBI. Marcelo Mizrahi: My question is related to derisking, could you share with us any information to help us try to measure the size of portfolio adjustment. If we think that we have about billion in consumer credit, SME is about 60-odd being the credit card portfolio with more billion. So Thinking about the portfolios individually or about the whole portfolio, this is how much is not the target portfolio anymore in the portfolios that are undergoing derisking the low-income mass retail portfolios that are not providing us with the desirable profitability. Carlos Muniz: Well, Camila can help me. We haven't got any problems. We have actually appetite to continue to grow in the wholesale segment of larger corporates or second level companies and SMEs. That's the more concerning group. We have a reasonable behavior in the government program to give us an opportunity to generate credit that we are comfortable with. Now as for individuals, Camila was very clear. We have a clear in our head the select group and the mid select. These audiences that make us comfortable but with half the spread. And for mass retail is mass retail untouchable? No. we can work on it, but this is to be done selectively. I think that people earning less than BRL 4,000, we will not be able to compete with other incumbents, and we are not going to go for that above that income level, we'll always look for operation with kind of collateral, either in consumer finance, with high-quality cars, no motorcycles. And in payroll deductible loans. But we won't -- but the unsecured loans that will be complicated for us, leading with lower income groups. Well, if Santander is not leaded sharing the leadership in the vehicles in auto loans in Brazil, Santander has an important card portfolio. So we are talking about -- you mentioned 7% 8%, increasing to about 15 or 20 EVs, electric vehicles. Marcelo Mizrahi: But I have the impression that this portfolio classified those mass market is still very large compared to the whole portfolio. So order of magnitude, this is corresponding to half the portfolio. I mean, this portfolio that the bank is more cautious about. Is it 1/3 of the whole portfolio? Or how much of the portfolio will shrink. And it will be gradually replaced by a more defensive portfolio. Camila Toledo: My goal here is to try to do a simulation of impact on revenue. Well, in individual's portfolio, about 40% is classified as low income, which is not -- let below BRL 7,000 monthly income in SME is 20% of the portfolio corresponds to smaller companies that are more under pressure. As Carlos mentioned, it does not mean that we will exclude this 40% of this 20%. There are products that we attracted to. So for SMEs, we have been trying to grow them in [indiscernible] for this segment, we are increasing the share of this over the recent quarters. And for individuals, there is a great participation in consumer finance. They have a great churn in credit cards, and this is what we are reducing. And what we have to accelerate over time is private payroll, deductible loans. We made an adjustment with more repressed loan granting, but it is a product where we see an opportunity to grow even in low income. And given that we are strong in payrolls, this gives us a better visibility of our clients. Now next question from Tiago Binsfeld with Goldman Sachs. Tiago Binsfeld: Expenses. The bank has been going to a significant process in terms of branches and personnel. So do you think that this process will be over in 2026? Or you still think that this will go beyond this year? In terms of cost to serve, how do you see the adoption of AI in the bank, and whether you could accelerate the process of efficiency gains in the bank. Carlos Muniz: I think Camila already said that 1 of the main concerns we have if the bank is cost to serve because cost to serve for us is the leverage that could help us monetize in some audiences that we cannot serve as we hope to. Therefore, this debate about what would be the correct footprint is an ongoing debate. In fact, this is a conversation that is constant in the bank, and I would love to hear the opinion about the number of points we have and the format of all of our POS. I mean how many stores we have and also the size and the service that each branch serve the each bank renders to the clients in the market. Now about AI, I think I already talked about AI. I mean, everyone in the bank uses some sort of AI. One of the advantages of belonging to a large group is that the bank provides very powerful AI tools that we are beginning to deploy with good results. I don't know whether you heard what I said. But on the side of cost, I mean, everybody uses AI as a leverage to do the same thing at a lower cost or more at the same cost. But not only that, but AI tools are allowing us to come up with offerings that impact revenue. I mean something more customized is a lot more bespoken. And in our cost agenda at Santander Bank, I think I've been with the bank 22 years. So it's not just 1 single year that we go without talking about cost, but we talk about it every year. But now with the new tools available to us in the market, we will certainly, the market will be more competitive. And Brazil is a very competitive market. Here, we know that there are many opportunities and this cost to serve can be reduced. Therefore, we keep focusing on finding the best levers to improve further. Camila Toledo: We have a question now from Matheus Guimaraes with XP. Matheus Guimarães: Congrats on your results. I think we already talked a lot about revenue and costs. but I would like to learn more about your high income focus. We've seen competition increasing in the segment of mid- to high income. And you are stepping on the brakes a bit when it comes to mass market. And I think competition is becoming fare in this segment. What do you see going forward? And what would be your offering differential to continue on that course. Camila mentioned 8% growth in the Select segment. what, in your view, is your differential? And how can we see that going forward, especially considering the whole consolidated scenario of the bank? Carlos Muniz: You're mentioning a very relevant point. How can we distinguish ourselves vis-a-vis the competition. We talked about the launch of Santander Rewards. I was firmly convinced that the program would bear fruits. And in fact, now the numbers are proving that we made the right choice, because it brought a significant improvement. We are bringing the group of people that already subscribed to the programming, those that have not yet subscribe to the program, and there was a significant change in more than 10 points in the satisfaction levels. And this will be 1 of the main levers that we have in this scenario. The other things are stories from the past that are also bringing good results, not only our advisory teams that are working much closer with investors and insurance is another area that is proving that we are on the right track. It's a complex task very complicated, as you said, but the group is helping us to identify how to do that work well. So I'm very certain that we will be successful. And this has been proven by recent numbers. Revenue is growing. Client engagement is growing. And by and primacy is also growing. So I remain very optimistic. Camila Toledo: I think Matheus, if I can add cards with cars, we are increasing client share of wallets, spending is increasing, and it's been so in the past year. So Carlos mentioned client primacy is something that we are measuring in this segment. And mortgage or real estate we even gained market share in the past few months. And we have a good offering, and this is a segment that is 80% high income. This is that is then aligned with our proposition for high income. And on the service side, as Carlos said, we have this AAA offering in the Investment segment. So we are -- we have a very good net funding in the Select segment. And with Santander Rewards, we can now award clients. In the past, we were using -- we were looking at credit card spending, the benefits and how they were using the mileage. But now we are having a more holistic view of our clients. And the first results are very encouraging, even though it's been around for a very short period of time. With this, we are ending our Q&A session. I would like to thank you all for joining us this morning. After this video conference, I and the entire Santander Brasil Investor Relations team will be available to answer any further questions you may have. Thank you very much. Have a great day. Thank you. Before you buy stock in Banco Santander (Brasil), consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Banco Santander (Brasil) wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $386,727!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,232,139!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 3, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Santander Brasil (BSBR) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Image source: The Motley Fool. Wednesday, July 29, 2026 at 8:00 a.m. ET Investor Relations - Camila Toledo Chief Financial Officer - Carlos Muniz Camila Toledo: Good morning, everyone, and thank you for joining us for our second quarter 2026 earnings conference call. We are broadcasting live from our headquarters in Sao Paulo, and we will be dividing this event into 2 parts. First, our CFO, Carlos Muniz, will provide a detailed analysis of our performance and our strategic direction for the coming periods. Next, we'll have Q&A session. Today's presentation is already available for download in our IR website. And now I'll turn the floor over to Carlos to begin the presentation. Carlos Muniz: Thank you, Camila. Good morning, everyone, unfortunately we don't happen to have any button or translation into Spanish so I'll try to use my best Portuguese. And then during the Q&A, you can ask your questions. I will start with a summary of the best results for the quarter. We ended the quarter with recurring net income of BRL 3 billion and ROAE of 12.5%. This result reflects a more challenging macroeconomic environment, particularly due to the rise in the cost of risk. It also reflects the decisions we made in managing our balance sheet. We are rebalancing our product and customer mix, always striving to achieve a better risk/return ratio. This shift may have short-term impact on revenue, but it is essential for building a more balanced, resilient and predictable operation. Our focus remains clear, to grow with quality and sustain consistent profitability over the medium and long term. Now moving on to the next slide, we present the evolution of our customer base and the initiatives to deepen our relationship with customers. We ended the second quarter of with 76.2 million clients, a 6% increase over the past 12 months. As you may recall, we discussed in the first quarter the launch of Santander Rewards. The first cohorts already show increased engagement, particularly in the growth of card spending. To date, 15% of the eligible customer base has enrolled in the program. We also posted a 30% increase in the number of registered PIX keys. The rewards program combined with the use of artificial intelligence should expand our ability to create value with every interaction. As a result, we are strengthening customer engagement, customer primacy and long-term relationships with our clients. Now we will move into the numbers. As we have highlighted in recent quarters, we continue to grow our loan portfolio selectively. This progress reflects our dynamic portfolio management and our ongoing focus on risk-adjusted profitability. We maintain strict lending criteria. And as a result, we see varying growth rates across products and segments. In all cases, we prioritize quality, pricing discipline, customer loyalty and transaction volume. On a year-over-year basis, I would like to highlight growth of 13% in cards, 15% in customer finance and 11.5% in small and midsized enterprises in retail banking for individuals. We remain attentive to the portfolio's composition. We have reduced our exposure to higher risk profiles, especially among customers with monthly income below BRL 4,000. The portfolio of this segment has declined by approximately 30% over the past 12 months. In mortgage, the highlight is home equity with 40% growth over a 12-month period. Consumer finance also remained significant, supported by a higher quality mix and a greater share of new and electric vehicles. In corporate, we maintained positive growth concentrated in the corporate segment and supported by disciplined pricing. Overall, the portfolio reflects the choices we made to improve its composition and strengthen the risk/return profile. Next, we see that client NII has remained virtually flat for the year despite the decline seen in the quarter. There are 3 main reasons behind this trend. The first is the increased impact of deferred expenses related to banking correspondents. The second is the lower funding result due to the lower average CDI. And the third is the selectivity in loan origination, which we discussed in the previous slide. Combined, the effect of the deferral and the lower CDI impacted the spread by approximately 10 basis points. NII also reflects the shift in the customer mix toward the high income segment. This segment has a lower structural spread approximately half that of the low-income segment. Therefore, its increased share is consistent with the portfolio rebalancing. As for market NII, we saw a slight improvement in financial management results, partially offset by weaker performance in the market-making activity. in funding, we continue to expand the retail share of funding. This strategy reinforces customer loyalty and increases transactional volume. Transactional deposits grew 18% over the past 12 months. This progress reinforces the growth of primacy and better funding composition. Talking about commissions and as a result of this trend, fees and commissions were also impacted by strict stricter credit standards. Nevertheless, we maintained strong performance in credit cards and consortiums both on a quarterly and annual basis. In credit cards, we continue to grow within our existing customer base, driven by increased transaction volume. In insurance, we saw improved performance in noncredit-related businesses. In credit-linked lines, however, the trend was influenced by selectivity in origination and by the higher share of new vehicles in our customer -- consumer finance in checking accounts, increase in transaction volume has expanded the benefits and waivers granted to customers. this trend helps explain the performance of this line item. And at the same time, highlights the growth in client primacy. Now turning to provisions. The quarter was impacted by a couple of significant factors. Among them are specific wholesale banking cases and the inventory adjustment resulting from the new methodology for writing off transactions, together, the factors totaled BRL 700 million. We also continue to see pressure on the portfolios of smaller companies in the Agribusiness segment and among low income individual clients. This scenario required a higher level of provisioning. Part of this trend also stems from the more restrictive stance that we are adopting in renegotiations. We have been requiring additional collateral or cash to formalize the agreements. This discipline may create pressure in the short term, but it will improve the quality of renegotiated loans. Regarding delinquency, we observed a favorable trend in the short-term indicator. The long-term ratio also improved. However, part of this change is related to the adjustment in the classification of nonperforming loans, which had an effect of approximately 29 basis points on the total indicator. We continue to monitor these portfolios closely, carefully and with discipline. Moving on to the next topic. Let's review the evolution of expenses. During the quarter, Personnel and administrative expenses remained well under control, favorable behavior. Their growth was significantly below inflation, reflecting our continued discipline in cost management. Lower revenue generation put pressure on the efficiency ratio, which closed the period at 39.3%. It is important to note that this performance was primarily driven by revenue dynamics. There has been no change in our spending discipline. We continue to invest in business expansion and technology. Today, 100% of our employees have access to AI-powered tools that support both our efficiency initiatives and our growth agenda. At the same time, we continue to reduce our cost to serve. In the low-income segment, this indicator has already declined by more than 30% over the past 2 years. In addition, the broader adoption of global platforms is expected to further increase our operating leverage and accelerate this efficiency journey. To conclude, we see here our income statement. We ended the quarter with recurring net income of BRL 3 billion and a 12.5% ROE. The decline in net income and profitability reflects a more challenging macroeconomic environment. Revenue growth was lower, and the cost of risk increased with the latter being partially affected by one-off items, as I mentioned. Even so, our portfolio continues to show an increasingly attractive risk return profile. We also maintain a well-balanced funding mix across funding instruments, client segments and pricing. This quarter reinforces an important take-home message. Discipline in balance sheet management may have short-term impact yet. However, it also leaves us better positioned to navigate periods of volatility and sustain a stronger trajectory of growth and profitability over the medium and long term. We continue to make progress in key areas, such as client primacy, while improving portfolio composition, funding efficiency and technology. We are building an increasingly balanced, resilient and predictable franchise. Thank you very much. And now let's start the Q&A with Camila. Camila Toledo: The first question comes from Pedro Leduc with Itau BBA. Pedro Leduc: My question is related to revenue. I would just like to get a better understanding because when we look at NII and fees and services, there may be some detractors or also some positive things. Could you please help me understand about the offenders like changes in mix or whatever went against it. but maybe you can help me explain what would be a favorable wind. And at the end, maybe you could help me understand when do you think that revenue will resume growth maybe year-over-year or month-over-month, that would be great. Carlos Muniz: Okay, Pedro. There are some aspects that we can control and some other aspects that escape our control like CDI is something that we have no control over, and we have no idea how we will perform in the future. We have an idea, but not any certainty. The adjustment of the correspondence is something that we know, that's something that will happen. We know that things will not be any worse in the future. And then, we usually say that we -- it's not a matter of following, believing or not believing, but we focus on quality, quality, quality. We are not concern with market share in the short run, we are more concerned with macro returns being certain that every origination we do has to be a profitable origination 1 that makes us comfortable. And this is what's leading us to make tough choices. I wish I could have like overwhelming revenue. But with all of the things we have in the macro return, I would like to focus in a more safe path, but then what happens is that we are putting on the side of the most profitable products. We are decreasing our presence in all products that have very, very large margins and rather focusing our attention and secured operations, government guarantees, pronoun, CD plus, real estate guarantees or mortgage guarantees I don't know whether I've heard it from you or other analysts, but our consumer finance is growing. We are growing in new vehicles, electric vehicles with a very strong down payment at the beginning. And in the older vehicles, we just focus on the audience with lower risks. And so this is linked to many of credit operations, fortunate or unfortunately, the more risky customers, maybe we have the possibility of getting more fees. But we are putting that on the side just to other areas that we have more opportunities. And this is why we are stepping back a little bit in our fees. We are expanding in other lines like consortium, insurance and others, but we also saw some drop in those that were more linked to credit in the lower brackets of the population. So we are very optimistic in terms of growing our revenue. I think we will have a good performance, but the purpose is now not to grow this line, but just make sure that we are not going to make bets or investments because then we don't want to have to put the bill in the future, okay? So we are still in the process of low single digits in the year. Camila Toledo: Pedro, I will only add here something related to client NII. If we look at the spread, Carlos quickly mentioned the impacts we have in terms of funding margin and with a lower CDI in the quarter and also impacts with the higher expenses of banking correspondents quarter-on-quarter, and this has a 10 basis point impact. And in the year, almost 20 bps or basis points. So this impact should be fading out over time. So we hope that by the end of the year, we will get back to our regime in terms of expenses. And as for the mix, this is what is putting pressure on credit. And there, I would highlight 2 aspects. One, we are growing more with secured loans. As you said, in SMEs, we have more than 40% of the portfolio. that is secured. And in terms of individuals, I would like to highlight 8% growth in the Select segment, whereas in the lower income, there was a drop of 10% in the year. So as far as this puts pressure on the result, we impact revenue, but there's still the counterpart of loan loss provisions. But at the end of the day, we hope to reap the benefits. Now we move to our next question from Ricardo Buchpiguel from BTG Pactual. And now we have -- sorry, it's Schroden, Gustavo Schroden from Citi. Gustavo Schroden: I will speak about not necessarily about revenue, as Leduc mentioned, but a combination of revenue, loan loss provisions and credit quality. I think it's very clear through your comments that the bank's intention is to be more conservative to focus on mid and high income, but the counterpart is not there yet, which would be a lower loan loss provisions. And we understand that there will be some one-off cases, there was 1 very specific case and the change in the write-off policy, BRL 700 million should be, therefore, understood like a one-off in loan loss provisions increase. But we see a higher over 90 NPL in all lines. Therefore, what could we imagine in terms of asset quality and loan loss provisions throughout the year? Or if you could also give us not a very specific date, but when do you think we would be able to see NII after loan loss provisions improving. Do you think it's more towards 2027? Or maybe by the end of the year, we would see an improvement in this risk-adjusted line. Carlos Muniz: Well, thank you for the question, Gustavo. I think I already said that, personally, I'm not very optimistic. So if I had to put this date, maybe the state would be closer to 2027 and I don't know whether Camila would agree with me. We are still waiting for this change, not only improvements in loan loss provisions, but we still have operations following the 4,966 section. So every year, we have to incorporate a new macro scenario. And this macro scenario, I wasn't here when it was done last year, but I think -- what we will have to incorporate this year will be worse when compared to what we have currently in our models. So I do not expect a big change because probably, we will have this impact, and we will have to factor that in, in the next quarter if I'm not mistaken. The important thing for me is that what we started to see is the actual performance of the portfolios, and we see some more positive scenarios. I don't know whether this will be able to compensate this entire impact. And you noticed that loan loss provisions now it's better in the portfolio, even though it's not exactly in line with everything you mentioned, but we are doing the right move. And at some point, this will have to stop. Camila Toledo: I think that the mix adjustments we've done is not yet apparent in that line. And as Carlos said, in the past quarters, we've had impact both coming from the wholesale and agribusiness. We already talked about this reduction, but this still represents about 40% of our individuals portfolio. But with time, this will be diluted and then we will do more with models and also macro deterioration. The main lines, as Carlos said, but we see more pressure in low income, agro -- we lost sound -- okay. That's great. So lower agro and SMEs. Gustavo Schroden: How much of that higher LLP refers to review of models 4,966? And how much of that reflects the deterioration of the portfolios? Carlos Muniz: In terms of LLP, we've seen it, as Camila said, only individuals of low income and in the lower segments of companies. The remaining portfolios are flat, or even improving, I would say. The model -- for the model, I don't have a number yet. I wish I could share it with you, but we haven't yet made a calculation with the current scenarios. We're still -- that's still work-in-progress. We know that this country will have elections right around the corner. And I come from a country where things didn't change every week like they do here. So I don't know exactly what is the macro scenario that we have to assume for 2027. So I think for the next regulation, we will have more clarity about how much that bill will be. But I think we will see the worsening of a scenario. Camila Toledo: So as a reference, Carlos highlighted during the presentation. But if you look at loan loss provision expenses, this first quarter was BRL 7.7 billion. And now we mentioned this as being more one-off impacts. There were some things related to wholesale banking and also the deployment of the new write-off policy, especially for unsecured loans. So both things consider we had BRL 700 million. So there is a percentage of recurring. And so as Carlos said, when we update the macro scenario, we will probably have more demand in some more specific lines. All right. And now with Ricardo Buchpiguel with BTG Pactual. Unidentified Analyst: In the quarter, we saw that DTAs have increased, putting pressure on the tangible capital of the bank, given the importance that this part of capital has on ROE and dealing with high interest, do you see room to increase the tangible cash of your balance sheet? What initiatives can you have to accelerate this process? Carlos Muniz: Well, if you have the question for that question, please do share it with us -- but unfortunately, the uses to generate revenue and revenue that will not entail loan loss provisions. The moment of the country is not helping. We are focusing on risk-free revenues on 1 hand and to improve the cost of risk that we are having. You will remember that in parallel to the solution, which is this -- we're making an effort to simplify the organizational structure. This is happening in the possible speed. We are including organizations outside the perimeter of the bank. We did the last 1 in Q2. And this has to improve. And this will improve the consumption of DTAs, but these are the levers we have in mind, integration of other organizations to improve the tax base of the bank, improve the results which unfortunately is moving forward more slowly than we would have liked. Unidentified Analyst: Clear. And do we have any visibility of the timing for these processes to be completed? I don't know if you can know. Carlos Muniz: Well, we have told you that we thought that we would start having a turnaround of those tax credits, DTAs between 2027 and '28 I have got plan for the next 3 years yet. For '27, '28 -- '27, '28, '29, but it shouldn't change much. Camila Toledo: Now we have a question from Daniel Vaz with Safra. Daniel Vaz: Carlos I actually would like to go back to the point of revenues and risk-adjusted NII. I think that the big miss in market forecast, was not the provision, but rather NII, particularly NII in the spread seems to have a greater carryover for you to recover. As Carlos mentioned, we need revenue. And this gap that will take longer to recover post provision NII seems to be playing against your ROE for longer. So with this ROE level around 12%, 13% -- between 12% and 15%, how long will that take about a year? And does this have an implication for the payment of IOC, you're paying BRL 2 billion, by half year, do you have comfort to continue to distribute the same level of IOC given the lower level of ROE? Carlos Muniz: That's a good question, Daniel. Let's try to answer it in 2 parts. IOC and pressure on profitability. I think I spoke about the mix and that we are convinced that we are making the right choices in terms of the mix. The spreads we captured in high-income clients in mortgage or [indiscernible] this mix. The growth we have in mortgage is not helping us post a strong growth on that end of the equation. Without -- even with the policy of renegotiations and doing things well, playing safe, I should say, this is not helping us have a booming growth in the top line, but this will improve in the mid to long term. Will this impact the payout? No, we'll maintain our payout policy of 50%. Of course, this will depend on the budget and on what we think we can achieve in terms of results next year. But the payout policy is not planned to change. We have committed to 50% in this quarter was a little over that within EBITDA under more pressure, it ends up being over 50%. We have had periods where during the year, this was a little bit higher, a little bit lower, but I think that 50% is kind of a benchmark for the long term in terms of our payout policy. Daniel Vaz: It's clear. And a comment on the ROE, I asked whether you have visibility of how long it should stay kind of lower in that lower range from 12% to 15%? Any estimate of duration? Camila Toledo: I believe that by next year, we will be returning ROE to more reasonable levels. The market will put pressure on us to get there. And in truth, I cannot really show you, but what we came in the latest origination cohorts, it's making me feel more comfortable that we will achieve better levels. What I do not control is the speed of what we've had in the past. But if we had a possibility of having a write-off of the whole bank, at once this would show you the results of the last 12 to 18 months I think that you would have a bank that you would approve much more. Next question is from Mario Pierry from Bank of America. I think his screen is frozen. Mario, can you hear us? Well, let's go to the next question, and then we go back to Mario. So next question from Thiago Batista with UBS. Thiago Bovolenta Batista: Can you hear me well? Camila Toledo: Yes. Loud and clear. Thiago Bovolenta Batista: I just have a follow-up on Vaz question. Because Carlos, you said that Spain will be demanding a view better profitability, and they are very vocal saying that especially when interest rates become more normal, we should see tangible equity or better returns in tangible equity approach by 20%. What about today's ROE, not even the days? I mean, even before the last quarters, what would be the main levers of this ROE goes from 16 to 20 or something close to 20. What does it take? Carlos Muniz: Well, it's very simple. On my side, we have to continue making progress with non-credit linked revenues and the second has to be ceded with the group. We have to capture all of the investments we are doing in global platforms. And the third aspect is normalization of the loss provisions, which reflects the choices -- choices we made in the past. So the combination of the 3, I don't know whether they will all happen at the same time or they will happen in sequence. But that's what will help us go up to levels close to 20%, as you mentioned. Just to give you a little bit more details. nonbinding credit revenues, some of them have a higher wait when you are accelerating the portfolio, but there is also funding. There was an impact due to lower Selic rate, but we are working hard in the funding Selic to reduce the cost of deposits, while at the same time, having additional revenues coming from that same line. I think, Camila, we also talked about market NII we have a legacy portfolio, a legacy portfolio. that we inherited from the past. But with time this will be and hence, this will improve as we've been saying to you, we are expecting some improvement on this side. And this should also help improve profitability. And then I would say this is positive on the NII line, even if we pursue the same strategy of credit origination. Camila Toledo: So let's try to go back to Mario Pierry. Mario, can you hear us? Mario Pierry: Yes, I just had some technical problems. I would like to focus on the mass market segment that still accounts for 40% of your portfolio. And this is a segment that is going through a lot of pressures given the macro landscape. We have high interest rate, interest rates high household debt level. So what would be the ideal level? I mean, how much would you like to decline the exposure to this segment. And I also noticed that you made changes to credit cards in lower income. Does this have to do with loss of primacy or not? Carlos Muniz: Well, you need to have the answers from many banks before I can answer that question. In our case, it's not a problem of client primacy, but it's a structural problem that affects the entire country. High interest rates put pressure on households. I would say that I mean, I don't know what could happen in the future or what will happen after the elections. I don't know whether the parent levels of support we have from the government to the population will be maintained after the elections are in the future. And whether the level of employment I mean, that's historical figures ever. I don't know whether they will be maintained. Given the speed of the economy or whether the economy improves, probably our feeling regarding the more vulnerable sectors may change. So we don't know what may happen. And in regards to the wealthier segments, we'll have audiences that are cohorts that are not so profitable to us. And -- these are segments that we cannot monetize as much. We have people who earn less than BRL 4,000, and there are banks that can operate with this segment much better than we do. So the speed of the portfolio reduction will involve a mix of our operations and origination. We are still doing origination with payroll deductible loans, 400, 500, and I think we may end the year with levels of origination higher than that. I think it's more -- what is more difficult to control for us is the fall or the drop of the portfolio that we have because then that depends on our payment capacity or how negotiations will be happening. And I mentioned that during my presentation, that we do not want to do just smoky renegotiations or things that fade out in the air, we want to be able to deliver discounts to those who have the firm intention to repay their debt after the renegotiation is in place. Camila Toledo: Well, I would add 1 more point, Mario. We've been doing strong work cost of to this specific segment. So I mean, Carlos just said that there was a reduction of 30%. Part of the monetization of this group is LLP. That's the main part. That's where the pressure is. And the other part has to do with cost to serve. And we are working in that segment as well. So we want to be profitable in the Board that at the moment is not profitable, but we believe that in the near future, it will become an interesting business for the bank. Mario Pierry: If I can come up with a follow-up question because you talked about the renegotiation. What was the impact of the Desenrola program in the quarter for you? Carlos Muniz: It was very low. And in January, it was low. Mario, as I said before, we already had our own recovery policy. I don't know whether the word is aggressive. We offered big discounts to those clients that had a firm intention of paying their debt. And so Desenrola didn't expanded those opportunities. I mean it's not that the rates were better in the program, but it didn't move the needle for us very much. I don't have the numbers right off the bat, but I think Camila can help me I think, I mean, just hundreds of millions. And in terms of individuals, maybe it was a bit better, but it didn't change the level much in terms of recoveries. Camila Toledo: Okay. It was slightly higher than the Desenrola program. But what we noticed is that there is very little adoption from the people in debt. So -- it was the same thing in the original program. As Carlo said before, Desenrola, we already provided interesting conditions for this renegotiation. So we didn't see any significant increase with the Desenrola program. Now a question with Yuri Fernandes with JPMorgan. Yuri Fernandes: I'd like to go back to NII. I think that this has been asked, but I will ask differently. I think Camila mentioned that of the 40 basis points about 30 came from funding and the impact of banking correspondents. Actually 10% and 30% is the mix related to derisking. So my question is, you will continue to rest the portfolio, right? That's what I understood from Carlos. But will the spreads continue to drop because the risk continues, or 2, no, there was an impact of write-offs. We had more write-offs. We got a renegotiated portfolio. and that included perhaps the renegotiated portfolio. And personal credit, personal loans and perhaps this has influenced a greater drop than the 30 basis points. I just want to know whether there is another factor because a derisking trend is new with Santander. You've been reducing the mass retail. And why did it drop a lot? And if the derisking continues, it will drop even further. And the other question regarding fiscal DTAs, provocation is to recapitalize dividend. You have -- you see have the tax fiscal to call back the capital. It's not easy. The problem continues, but it's just a provocation. It is 1 way of consuming DTAs over time. Carlos Muniz: I like the provocation, Yuri, a conversation we had internally and haven't decided yet. We have to support Gilson and the rest of the management to see what we're going to do, but we will communicate the market when we make a decision in that regard. Now going back to your question about the mix, which is a good question. We did have greater impact that impacted the drop in NII and the loss of these basis points that you mentioned the derisk trending is kind of old, but I would say that it's becoming more aggressive in recent months. I think that government programs or are there all the time. in the conditions of these programs put even more pressure on margins. Renegotiation conditions are kind of newer at the bank, and we will continue with discipline. And this has a cost -- NII paying a price. And I spoke about riskier products, I get surprised when I look at the level of interest rates that we have in revolving credit and others. So that we -- we shouldn't just focus on charging interest because we've seen some indications by the government in the past, putting caps on these products. So I don't want this to get in the way of our business model, which is highly dependent on these audiences and interest rates that we don't think that they are sustainable in political terms. Camila Toledo: I think that there is the impact that you mentioned, a slow portfolio pulling down the spread. There are some securities that we carry and then we put available to clients, but the bulk of it is the mix, as Carlo mentioned. As we reduce, as we said, the spread of special versus select. In Select, what is growing is mortgages, real estate loans gaining almost 100 basis points. In the last year, these are portfolios with lower spreads, and we are betting on them for the mid- to long run when that line item would be adjusted to the cost of risk in the consumer finance. We had an origination of new vehicles of 7%. And now we are at levels of 22%. So these are choices. We are deepening the strategy because the macroeconomic environment is not helping us to be more optimistic. So again, I prefer to play safe. in my first communication with the market, I prefer to have a bank that is safer. They won't give us to positive surprises, but not negative surprises either. Now we have a question of Marcelo Mizrahi with BBI. Marcelo Mizrahi: My question is related to derisking, could you share with us any information to help us try to measure the size of portfolio adjustment. If we think that we have about billion in consumer credit, SME is about 60-odd being the credit card portfolio with more billion. So Thinking about the portfolios individually or about the whole portfolio, this is how much is not the target portfolio anymore in the portfolios that are undergoing derisking the low-income mass retail portfolios that are not providing us with the desirable profitability. Carlos Muniz: Well, Camila can help me. We haven't got any problems. We have actually appetite to continue to grow in the wholesale segment of larger corporates or second level companies and SMEs. That's the more concerning group. We have a reasonable behavior in the government program to give us an opportunity to generate credit that we are comfortable with. Now as for individuals, Camila was very clear. We have a clear in our head the select group and the mid select. These audiences that make us comfortable but with half the spread. And for mass retail is mass retail untouchable? No. we can work on it, but this is to be done selectively. I think that people earning less than BRL 4,000, we will not be able to compete with other incumbents, and we are not going to go for that above that income level, we'll always look for operation with kind of collateral, either in consumer finance, with high-quality cars, no motorcycles. And in payroll deductible loans. But we won't -- but the unsecured loans that will be complicated for us, leading with lower income groups. Well, if Santander is not leaded sharing the leadership in the vehicles in auto loans in Brazil, Santander has an important card portfolio. So we are talking about -- you mentioned 7% 8%, increasing to about 15 or 20 EVs, electric vehicles. Marcelo Mizrahi: But I have the impression that this portfolio classified those mass market is still very large compared to the whole portfolio. So order of magnitude, this is corresponding to half the portfolio. I mean, this portfolio that the bank is more cautious about. Is it 1/3 of the whole portfolio? Or how much of the portfolio will shrink. And it will be gradually replaced by a more defensive portfolio. Camila Toledo: My goal here is to try to do a simulation of impact on revenue. Well, in individual's portfolio, about 40% is classified as low income, which is not -- let below BRL 7,000 monthly income in SME is 20% of the portfolio corresponds to smaller companies that are more under pressure. As Carlos mentioned, it does not mean that we will exclude this 40% of this 20%. There are products that we attracted to. So for SMEs, we have been trying to grow them in [indiscernible] for this segment, we are increasing the share of this over the recent quarters. And for individuals, there is a great participation in consumer finance. They have a great churn in credit cards, and this is what we are reducing. And what we have to accelerate over time is private payroll, deductible loans. We made an adjustment with more repressed loan granting, but it is a product where we see an opportunity to grow even in low income. And given that we are strong in payrolls, this gives us a better visibility of our clients. Now next question from Tiago Binsfeld with Goldman Sachs. Tiago Binsfeld: Expenses. The bank has been going to a significant process in terms of branches and personnel. So do you think that this process will be over in 2026? Or you still think that this will go beyond this year? In terms of cost to serve, how do you see the adoption of AI in the bank, and whether you could accelerate the process of efficiency gains in the bank. Carlos Muniz: I think Camila already said that 1 of the main concerns we have if the bank is cost to serve because cost to serve for us is the leverage that could help us monetize in some audiences that we cannot serve as we hope to. Therefore, this debate about what would be the correct footprint is an ongoing debate. In fact, this is a conversation that is constant in the bank, and I would love to hear the opinion about the number of points we have and the format of all of our POS. I mean how many stores we have and also the size and the service that each branch serve the each bank renders to the clients in the market. Now about AI, I think I already talked about AI. I mean, everyone in the bank uses some sort of AI. One of the advantages of belonging to a large group is that the bank provides very powerful AI tools that we are beginning to deploy with good results. I don't know whether you heard what I said. But on the side of cost, I mean, everybody uses AI as a leverage to do the same thing at a lower cost or more at the same cost. But not only that, but AI tools are allowing us to come up with offerings that impact revenue. I mean something more customized is a lot more bespoken. And in our cost agenda at Santander Bank, I think I've been with the bank 22 years. So it's not just 1 single year that we go without talking about cost, but we talk about it every year. But now with the new tools available to us in the market, we will certainly, the market will be more competitive. And Brazil is a very competitive market. Here, we know that there are many opportunities and this cost to serve can be reduced. Therefore, we keep focusing on finding the best levers to improve further. Camila Toledo: We have a question now from Matheus Guimaraes with XP. Matheus Guimarães: Congrats on your results. I think we already talked a lot about revenue and costs. but I would like to learn more about your high income focus. We've seen competition increasing in the segment of mid- to high income. And you are stepping on the brakes a bit when it comes to mass market. And I think competition is becoming fare in this segment. What do you see going forward? And what would be your offering differential to continue on that course. Camila mentioned 8% growth in the Select segment. what, in your view, is your differential? And how can we see that going forward, especially considering the whole consolidated scenario of the bank? Carlos Muniz: You're mentioning a very relevant point. How can we distinguish ourselves vis-a-vis the competition. We talked about the launch of Santander Rewards. I was firmly convinced that the program would bear fruits. And in fact, now the numbers are proving that we made the right choice, because it brought a significant improvement. We are bringing the group of people that already subscribed to the programming, those that have not yet subscribe to the program, and there was a significant change in more than 10 points in the satisfaction levels. And this will be 1 of the main levers that we have in this scenario. The other things are stories from the past that are also bringing good results, not only our advisory teams that are working much closer with investors and insurance is another area that is proving that we are on the right track. It's a complex task very complicated, as you said, but the group is helping us to identify how to do that work well. So I'm very certain that we will be successful. And this has been proven by recent numbers. Revenue is growing. Client engagement is growing. And by and primacy is also growing. So I remain very optimistic. Camila Toledo: I think Matheus, if I can add cards with cars, we are increasing client share of wallets, spending is increasing, and it's been so in the past year. So Carlos mentioned client primacy is something that we are measuring in this segment. And mortgage or real estate we even gained market share in the past few months. And we have a good offering, and this is a segment that is 80% high income. This is that is then aligned with our proposition for high income. And on the service side, as Carlos said, we have this AAA offering in the Investment segment. So we are -- we have a very good net funding in the Select segment. And with Santander Rewards, we can now award clients. In the past, we were using -- we were looking at credit card spending, the benefits and how they were using the mileage. But now we are having a more holistic view of our clients. And the first results are very encouraging, even though it's been around for a very short period of time. With this, we are ending our Q&A session. I would like to thank you all for joining us this morning. After this video conference, I and the entire Santander Brasil Investor Relations team will be available to answer any further questions you may have. Thank you very much. Have a great day. Thank you. Before you buy stock in Banco Santander (Brasil), consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Banco Santander (Brasil) wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $390,394!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,209,184!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of July 29, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Santander Brasil (BSBR) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Release Date: July 29, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Banco Santander (Brasil) SA (NYSE:BSBR) reported a recurring net income of BRL 3 billion with a ROAE of 12.5%, indicating a stable financial performance despite challenging conditions. The customer base grew by 6% over the past 12 months, reaching 76.2 million clients, demonstrating successful customer acquisition strategies. The Santander Rewards program has shown positive results, with increased customer engagement and card spending, enhancing customer loyalty. The bank has maintained strict lending criteria, resulting in selective growth in loan portfolios, with notable increases in cards (13%), customer finance (15%), and small and mid-sized enterprises (11.5%). Personnel and administrative expenses were well-controlled, with growth significantly below inflation, reflecting effective cost management strategies. The macroeconomic environment remains challenging, with increased cost of risk impacting financial results. Revenue growth was lower than expected, and the cost of risk increased, partly due to one-off items, affecting overall profitability. The bank's focus on rebalancing its product and customer mix may have short-term impacts on revenue. There is pressure on the portfolios of smaller companies in the agribusiness segment and among low-income individual clients, requiring higher provisioning levels. The efficiency ratio closed at 39.3%, under pressure from lower revenue generation, indicating room for improvement in operational efficiency. Warning! GuruFocus has detected 3 Warning Sign with BSBR. Is BSBR fairly valued? Test your thesis with our free DCF calculator. Q: Could you explain the factors affecting revenue, particularly NII and fees, and whether you expect revenue growth to resume? A: Carlos Muniz, CFO: Revenue is influenced by factors within and beyond our control, such as CDI rates. We focus on quality and profitability over market share, prioritizing secured operations over high-margin products. We expect revenue growth, but our focus remains on safe, profitable operations. Q: How do you foresee asset quality and loan loss provisions evolving, and when might we see improvements in risk-adjusted NII? A: Carlos Muniz, CFO: Improvements may take until 2027 due to macroeconomic factors and ongoing adjustments. We are seeing positive portfolio performance, but macro scenario updates may impact provisions. We expect gradual improvement as our strategic adjustments take effect. Q: With increased DTAs affecting tangible capital, what initiatives are in place to improve this situation? A: Carlos Muniz, CFO: Revenue generation without increasing loan loss provisions is key. We are simplifying our organizational structure and integrating external organizations to improve tax base and results, aiming for a turnaround between 2027 and 2028. Q: How does the focus on high-income segments affect your strategy, and what differentiates your offerings in this competitive area? A: Carlos Muniz, CFO: We focus on client engagement and satisfaction through programs like Santander Rewards, which have shown positive results. Our advisory teams and insurance offerings are also key differentiators, contributing to growth in client engagement and revenue. Q: What are the main levers to improve ROE from current levels to closer to 20%? A: Carlos Muniz, CFO: Key levers include increasing non-credit linked revenues, capturing investments in global platforms, and normalizing loan loss provisions. These factors, combined, will help us achieve higher ROE levels. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Banco Santander Brasil SA? Here are five stocks we like better. Profitability weakened in Q2 2026: Recurring net income was BRL 3 billion and return on average equity was 12.5%, pressured by higher credit costs, slower revenue growth and a more conservative balance-sheet strategy. Santander Brasil is prioritizing credit quality over market share: The bank expanded lending in cards, consumer finance, SMEs and secured products while reducing exposure to lower-income, higher-risk retail borrowers and tightening unsecured-loan standards. Near-term credit-cost relief remains limited: Provisions rose by BRL 700 million due to specific wholesale cases and a write-off methodology adjustment, while management said meaningful improvement may not arrive until closer to 2027. The bank maintained its long-term 50% payout policy. Banco Santander Brasil (NYSE:BSBR) reported recurring net income of BRL 3 billion for the second quarter of 2026, with return on average equity of 12.5%, as higher credit costs and slower revenue growth weighed on profitability. Chief Financial Officer and Investor Relations Officer Carlos Muñiz said the results reflected a more difficult macroeconomic environment, particularly a rise in the cost of risk, as well as management decisions to shift the bank’s balance sheet toward a more conservative risk-return profile. → This Tiny AI Supplier Could Be More Important Than the Chipmakers “We are rebalancing our product and customer mix, always striving to achieve a better risk-return ratio,” Muñiz said. “This shift may have short-term impacts on revenue, but it is essential for building a more balanced, resilient, and predictable operation.” Santander Brasil ended the quarter with 76.2 million customers, up 6% from a year earlier. The bank said 15% of eligible customers had enrolled in its recently launched Santander Rewards program, with early cohorts showing increased card spending. The number of registered Pix keys rose 30% over the prior 12 months. → Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? The bank continued to expand lending selectively, reporting annual growth of 13% in cards, 15% in consumer finance and 11.5% in small and medium-sized enterprises. Mortgage lending was led by home-equity products, which grew 40% over 12 months. At the same time, Santander Brasil reduced exposure to higher-risk retail borrowers. Its portfolio for customers earning less than BRL 4,000 per month declined about 30% over the past year, according to Muñiz. The bank is emphasizing secured products, including mortgage-backed lending, government-guaranteed credit and vehicle financing with stronger down payments. → Innovative ETF Strategies That Are Paying Off This Summer Management said lower-income customers accounted for roughly 40% of the individual loan portfolio, while smaller companies under greater pressure represented about 20% of the SME portfolio. The bank does not intend to exit those segments entirely, but said it would be more selective in unsecured lending. “We are not concerned with market share in the short run,” Muñiz said. “We are more concerned with macro returns, being certain that every origination we do has to be a profitable origination.” Client net interest income was broadly flat year to date despite declining during the second quarter. Management attributed the pressure to increased deferred expenses related to banking correspondents, lower funding results stemming from a lower average CDI rate, and selective loan origination. The deferred-expense and lower-CDI effects reduced spreads by about 10 basis points during the quarter, the bank said. An operator on the call added that the effects amounted to nearly 20 basis points year to date and were expected to fade over time, with banking-correspondent expenses anticipated to return to a more normal level by year-end. Santander Brasil’s move toward higher-income clients also reduced spreads, as the high-income segment has a structural spread of about half that of the low-income segment, Muñiz said. The bank is also growing in lower-spread secured products, including mortgages and newer electric vehicles. Transactional deposits increased 18% year over year as Santander Brasil sought to increase the retail portion of its funding base. Fees and commissions were affected by stricter credit standards, though the bank cited continued strength in credit cards and consortium products, as well as improved non-credit-related insurance performance. Muñiz said management remained optimistic about revenue growth over time but emphasized that the bank would not sacrifice credit quality for a near-term expansion in market share. He said the bank was still targeting low-single-digit growth for the year. Loan-loss provisions increased during the quarter, driven by specific wholesale banking cases and an inventory adjustment arising from a new methodology for writing off transactions. Those two factors totaled BRL 700 million, management said. The bank also cited continued pressure among smaller agribusiness companies and low-income individual customers. Santander Brasil has adopted a more restrictive approach to renegotiating delinquent debt, requiring additional collateral or cash contributions to formalize agreements. Short-term delinquency indicators improved, and the long-term ratio also declined. However, the long-term figure benefited from an adjustment to the classification of non-performing loans that reduced the overall indicator by approximately 29 basis points. Muñiz said he did not expect a major near-term improvement in provisions, noting that the bank will need to incorporate an updated macroeconomic scenario into its credit models. He said the timing for a more meaningful improvement could be closer to 2027, although recent loan-origination cohorts have made management more comfortable about future performance. The bank said the Desenrola debt-renegotiation program had little effect on recoveries during the quarter, amounting to only hundreds of millions of Brazilian reais. Management said Santander Brasil already offered debtors significant discounts through its own recovery policies. Personnel and administrative expense growth remained well below inflation in the quarter, management said, though weaker revenue pushed the efficiency ratio to 39.3%. Santander Brasil said all employees now have access to artificial intelligence-powered tools, which it expects to support both cost efficiency and revenue initiatives. The cost to serve lower-income clients has fallen more than 30% over the past two years, according to the bank. In response to questions about capital and deferred tax assets, Muñiz said the principal levers were improving revenue without creating additional loan-loss provisions, simplifying the organizational structure and integrating businesses outside the bank’s perimeter to improve the tax base. He said the bank still expected a turnaround in deferred tax asset consumption between 2027 and 2029. Muñiz also said Santander Brasil did not plan to change its long-term payout policy of 50%, despite the lower profitability level. He said management expects return on equity to move toward more “reasonable levels” next year, with further gains dependent on non-credit revenue growth, broader use of global platforms and normalization of credit costs. Banco Santander Brasil SA is the Brazilian unit of Spain-based Grupo Santander and one of the country's major commercial banks. Headquartered in São Paulo, the bank serves a broad client base across Brazil through an integrated network of branches, ATMs and digital channels. Its shares are represented abroad via American Depositary Shares listed on the New York Stock Exchange under the ticker BSBR. The bank offers a full range of financial products and services for retail, small and medium-sized enterprises, and corporate clients. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Banco Santander Brasil Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Pre-tax earnings rose 5.4% QoQ even as reported net income fell versus the prior quarter and was marginally lower YoY; efficiency improved by 110 bps, ROE was 16% with a longer-term 20% target, and capital remained solid (Basel 15.2%, CET1 11.2%) while the bank plans to maintain its distribution policy. De-risking and secured-lending focus — management is reducing low‑income exposure and emphasizing secured products (home equity origination nearing EUR 400 million monthly) and a shift toward new/EV auto loans, while write-off timing changes may lift reported 90+ day NPLs without indicating underlying credit deterioration. Santander Rewards and franchise growth — the bank launched a relationship‑wide rewards program, customer base grew 6% YoY, and although fees were seasonally down 5.5% QoQ, card turnover rose nearly 20% and asset management revenue was up 20.9% YoY. Interested in Banco Santander Brasil SA? Here are five stocks we like better. Banco Santander Brasil (NYSE:BSBR) reported first-quarter 2026 results marked by lower net income versus the prior quarter and marginally lower net income year-over-year, while management emphasized continued improvement in pre-tax profitability and balance sheet discipline. Chief Executive Officer Mario Leão said earnings before tax rose 5.4% quarter-on-quarter, which he described as evidence that “the organic operation of the bank is growing in the direction that we intend it to.” He added that the bank is paying more taxes compared with the prior quarter, a dynamic he said investors had been focused on, as Santander Brasil works to concentrate profitability within the bank itself and “absorb” deferred tax assets (DTAs) over time. → Palantir Is Down 30%: Noise? Or a Signal to Accumulate? Leão noted net interest income (NII) increased 3.1% quarter-on-quarter, though he said the composition skewed toward market NII rather than client NII, with client NII down 4%. He attributed part of the quarter’s market NII performance to asset-liability management actions, including what he described as a “marginal hedge of provision” initiated in September 2024 that dynamically hedges 50%–60% and targets an average hedge of 75% over nine months, aimed at reducing volatility from short-term rates. Return on equity (ROE) was 16%, which Leão characterized as “not an structural number, it’s an accounting number,” citing balance sheet math effects. He reiterated a longer-term goal of reaching 20% ROE, saying it remains part of management’s target for the coming year. → Did Qualcomm Just Put Apple in Check? On costs, Leão said the bank delivered “practically zero growth in expenses” in the quarter and reported a 0.7% quarter-on-quarter reduction when separating general expenses from depreciation and amortization. He also cited continued headcount reduction alongside technology investment. Efficiency improved by 110 basis points in the quarter, which he tied to controlled costs and operating leverage. Management again highlighted customer centricity as a foundation of strategy. Leão said the bank’s customer base grew 6% year-over-year and emphasized the importance of increasing “principality” and engagement among active customers. → Corning Beats Q1 Estimates but Drops 9% on Guidance Miss Leão also pointed to the launch of “Santander Rewards” as a major initiative. He described it as a shift from a credit card-centric rewards model to one that considers the “customer relationship as a whole,” rewarding broader engagement with the bank through points, benefits, and a “gamification” approach. He said the campaign would begin that Saturday and called it “one of the most important deliveries” during his tenure. Leão said Santander Brasil continues to pursue growth “with quality,” focusing on risk-adjusted profitability at origination and ongoing backtesting of cohorts. He described a planned reduction in low-income exposure, noting the individual portfolio declined partly due to the ongoing runoff. Leão said the de-risking process is expected to continue through 2026 and into part of 2027 given portfolio duration. He highlighted pockets of growth, including credit cards and real estate credit, and said home equity is an area where Santander holds leadership. Leão said home equity origination has been increasing relative to prior periods, with monthly origination approaching what he described as “close to EUR 400 million,” nearly double past levels. In small and mid-sized companies (SMEs), Leão acknowledged the bank was more cautious in the quarter given the macroeconomic backdrop, particularly among very small companies where he said the “credit challenge is even higher.” Still, he reiterated that SMEs and high-income individuals are two areas where the bank aims to grow at “2+ digits” during the year and gain share, while maintaining margin discipline. In large corporate, Leão pointed to foreign exchange impacts on a trade portfolio denominated in dollars and euros, describing the quarter’s effect as an FX translation issue rather than a change in appetite. Fees fell 5.5% quarter-on-quarter, which Leão said partly reflected normal seasonality from the fourth quarter into the first. He said cards experienced seasonal pressure sequentially, but year-on-year growth was “practically” double digits, which he attributed to portfolio quality and profitability in revolving and installment products. Leão said insurance fees were broadly stable sequentially despite typical first-quarter seasonality and showed “clear 2-digit growth” year-on-year, with strength in open insurance not tied to credit. He also said current account services declined but less than the market, as the industry faces pressure from “free accounts with no commissions.” Other fee-related highlights he cited included: Nearly 20% growth in credit card turnover. Strong performance in securities brokerage and capital markets, which he described as one of the strongest quarters. Growth in consórcio, supported by fixed bid and reduced installments, though he said he expects faster sequential growth. Asset management up 20.9% year-over-year, which he said underscores potential to further expand the franchise. Leão said cost of risk declined by “some basis points” in the quarter and that non-performing loans were “practically flat,” adding that the bank is not concerned with the overall NPL trajectory at current levels. He attributed higher provisions largely to lower recoveries and fewer portfolio sales. He also flagged continued pressure in segments including agribusiness, low income, SMEs, and very small enterprises. Discussing early-stage delinquencies, Leão said 15–90 day NPLs declined in companies, partly linked to government programs that do not necessarily translate into losses. In individuals, he cited a slight increase related to consumer finance and mortgages, but said the rollover into 90+ day NPLs is contained and that the bank expects a reversal in the second quarter. He also described a “technical review” initiated in the fourth quarter that changed write-off timing by product. For cards, he said Santander is bringing forward write-offs based on analysis of prior cohorts, while in auto loans and some other products, recoveries can extend longer and the bank is adjusting write-off treatment accordingly. Leão said these changes may push reported 90+ day NPL higher than last year’s average, but he did not frame it as a deterioration in underlying credit quality. In response to questions on SMEs, Leão said 25%–30% of the SME portfolio is tied to government lines, where “most of the delays occur,” and he acknowledged macro sensitivity in the segment. He said it is possible delinquency could rise depending on economic conditions, while noting the government may also support programs such as Pronampe and FGI. On consumer finance and auto loans, Leão said Santander’s broad origination visibility allows it to be highly selective. He said the bank has shifted away from used cars and motorcycles toward new vehicles and electric vehicles (EVs), citing better credit performance and higher-income borrowers. Leão said Santander funds “out of every two e-vehicles, one,” and in some brands the bank’s share is close to 70%. Leão said Santander does not expect the cost of risk to deteriorate materially this year, while cautioning that macro conditions remain uncertain. He said the bank expects a “flat order of magnitude” with some basis-point variation and argued de-risking and improved origination should support lower cost of risk in 2027 and 2028. Leão closed by pointing to capital strength, reporting a 15.2% Basel ratio and 11.2% CET1 ratio, and said the bank plans to maintain its distribution policy, adding that distributions should rise as profits grow. During the Q&A, Leão also said the call was his last earnings presentation. CFO Carlos Muñiz, introduced as the new CFO, joined Leão during the Q&A session, though Leão said he would address the questions. Banco Santander Brasil SA is the Brazilian unit of Spain-based Grupo Santander and one of the country's major commercial banks. Headquartered in São Paulo, the bank serves a broad client base across Brazil through an integrated network of branches, ATMs and digital channels. Its shares are represented abroad via American Depositary Shares listed on the New York Stock Exchange under the ticker BSBR. The bank offers a full range of financial products and services for retail, small and medium-sized enterprises, and corporate clients. The article "Banco Santander Brasil Q1 Earnings Call Highlights" was originally published by MarketBeat.

This article first appeared on GuruFocus. Release Date: February 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Banco Santander (Brasil) SA (NYSE:BSBR) reported a net income of 4.1 billion, reflecting a 6% year-on-year increase, showcasing strong profitability. The bank's customer base grew to over 74 million clients, indicating successful customer acquisition and retention strategies. Consumer finance posted a record year with significant growth in portfolio, top-line, and bottom-line, highlighting the strength of this segment. The bank's focus on hyper-personalization and AI has led to 60% of client interactions being personalized, enhancing customer experience. Expense management was effective, with expenses growing below inflation, demonstrating strong cost control measures. Market NII showed a negative trend quarter-on-quarter, indicating challenges in market conditions affecting interest income. There was increased pressure on the delinquency rates for SMEs, particularly in smaller enterprises, due to high interest rates. The bank's efficiency ratio was impacted by seasonal effects and collective bargaining agreements, affecting short-term financial metrics. The low-income segment continues to be a detractor in terms of profitability, requiring further cost reductions to become viable. Provisions for loan losses may increase due to the carry effect of the portfolio, indicating potential future financial strain. Warning! GuruFocus has detected 8 Warning Signs with BSBR. Is BSBR fairly valued? Test your thesis with our free DCF calculator. Q: What is causing the increase in delinquency rates among small and medium-sized enterprises (SMEs), and how is Banco Santander (Brasil) SA addressing this issue? A: Gustavo Alejo, CFO, explained that the pressure in SME delinquency is primarily seen in smaller companies rather than specific industries. The bank is focusing on improving profitability and maintaining a disciplined approach to growth in this segment, acknowledging the macroeconomic challenges such as high interest rates affecting smaller enterprises more significantly. Q: How does Banco Santander (Brasil) SA view the role of physical branches in serving the mass and low-income segments, and what are the plans for branch optimization? A: Mario, CEO, stated that branches still play a relevant role but need to be fewer and serve different customer bases. The bank is reducing the number of branches to align with changing customer dynamics, focusing on modern, experience-oriented branches that cater to both low and mass-income segments while enhancing digital and AI-driven services. Q: What is Banco Santander (Brasil) SA's strategy for technology investment, and how is AI being utilized in credit models? A: Mario highlighted that technology investment is crucial for expansion and transformation, with a focus on modernizing legacy systems and enhancing AI capabilities. AI is being used to improve efficiency and credit models, with ongoing efforts to integrate AI into risk management and operational processes to support credit growth and reduce delinquency. Q: How is Banco Santander (Brasil) SA addressing the challenges in the low-income segment, and what are the plans for improving profitability in this area? A: Mario emphasized the need to reduce the cost to serve in the low-income segment by another 30% to make it viable. The bank is focusing on improving operational efficiency and transactionality while managing risk and profitability through a disciplined approach to portfolio management. Q: What are the main levers for Banco Santander (Brasil) SA to achieve its target ROE of 20%, and how does the bank plan to balance growth and risk? A: Mario explained that the bank aims to achieve its ROE target by growing credit in high-profitability segments, optimizing the funding mix, and maintaining disciplined expense management. The focus is on sustainable growth through a balanced approach to risk and return, leveraging operational efficiencies and strategic investments. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Q4 net income was BRL 4.1 billion (≈+6% YoY) with a 17.6% ROE described as an “intermediary step” toward a >20% target, and the bank finished 2025 with a CET1 ratio of 11.6% and full-year profit growth of 12.6%. Management is pushing to become customers’ primary bank through hyper-personalization (60% of interactions; ~1,400 campaigns in 2025), AI tools for efficiency and growth (e.g., “Pitch Maker”), and migration to a unified One App platform. Credit quality is under pressure in SMEs and low‑income segments—90‑day NPLs rose partly from write-offs and guaranteed operations—so the bank is de‑risking, keeping a restrictive renegotiation stance, and expects possible additional stress into 1H 2026. Interested in Banco Santander Brasil SA? Here are five stocks we like better. Banco Santander Brasil (NYSE:BSBR) reported fourth-quarter 2025 net income of BRL 4.1 billion, up nearly 6% year over year and 1.9% sequentially, as management emphasized continued progress on a multi-year plan to lift profitability above a 20% return on equity (ROE) over time. The bank closed the quarter with ROE of 17.6% and said the current level represents an “intermediary step” on that trajectory. Chief Executive Officer Mário Leão said the bank ended the period with more than 74 million clients, describing customer growth and deeper engagement as central to its strategy. Management highlighted initiatives focused on becoming customers’ primary bank by driving higher transactionality, expanding personalized interactions, and applying artificial intelligence (AI) to both efficiency and growth objectives. → AMD’s Post-Earnings Dip Looks Like the Buying Window Bulls Wanted Leão said 60% of customer interactions across channels are now “hyper-personalized,” supported by a customer interaction platform that functions as an expanded CRM integrating client and market information. He said the bank ran more than 1,400 hyper-personalized campaigns during 2025 through notifications, banners and product offers. On AI, Leão described two main applications: “AI for efficiency,” including use cases in the ombudsman function and fraud where scale matters, and “AI for growth,” aimed at improving advisory and client engagement. As an example, he cited “Pitch Maker,” a tool launched in mid-2025 for the bank’s AAA and investment advisory teams and later extended to the Select segment. He said the tool can generate a personalized pitch in about 30 seconds, replacing a process that previously took significantly longer. → The New Defense Prime: Ondas Buys the Kill Chain Leão also highlighted ongoing technology modernization, including work with Brazil’s central bank on the “Gravity project,” a broader effort to move processing away from mainframe infrastructure to a more modern platform model. He said the bank’s credit card platform is already fully implemented for credit. The bank also reported more than 15 million customers migrated to its “One App,” with new versions expected to be deployed during 2026 following an early-2026 app refurbishment. Chief Financial Officer Gustavo Alejo said results reflected “dynamic portfolio management” and a cautious credit stance, with selective growth prioritizing higher risk-adjusted profitability, client loyalty and transactionality. He highlighted year-over-year growth in key portfolios: Cards: up 13.4% year over year Consumer finance: up 13% year over year Small and medium-sized enterprises (SMEs): up 13% year over year → Palantir’s Perfect 10: Blowout Earnings Spark a New Bull Case Alejo said the mix shift increased the relative shares of SMEs, consumer finance and high-income individuals in the bank’s local portfolio, which he characterized as important for profitability. In retail banking, he said the bank continues to prioritize product mix and segmentation while reducing exposure to higher-risk profiles. He added that the bank still sees room to accelerate growth in the high-income segment. In large corporates, Alejo said the bank continues to evolve positively while maintaining price discipline. Leão separately emphasized a growth ambition in “Santander Empresas,” saying the bank wants to build a business that is “proportionally bigger” than today, even if growth is not linear due to macro conditions. Alejo said client net interest income (NII) rose 1.6% quarter over quarter, mainly due to higher average credit volumes offsetting fewer business days. He noted that, over 12 months, NII growth outpaced credit volume growth, which he said demonstrated pricing discipline and ongoing mix optimization in assets and liabilities. He added that spreads increased over 12 months aided by a more favorable mix and a higher CDI. He said quarterly spreads were pressured by three factors that together accounted for more than 80% of the spread variation in the quarter: fewer business days, a larger share of the non-interest bearing card portfolio, and increasing expenses tied to banking correspondents. In market-related NII, Alejo pointed to a slight improvement in asset management, partially offset by weaker market making quarter over quarter. Fees were described as more positive in the quarter due to seasonality, with cards and insurance standing out. Alejo said card fees benefited from increased transactionality, while insurance results were supported by seasonal renewal of a significant policy, a strong commercial focus, and new products. In securities, brokerage and placement, he said the quarter saw a slight decline but significant growth in the second half of the year, helped by stronger performance in debt issuance. On costs, management said fourth-quarter expenses rose sequentially due to the full effect of a new collective bargaining agreement and typical seasonality, with Leão also citing marketing and timing effects. Alejo said the quarter’s expense increase affected the efficiency ratio but described it as seasonal rather than structural. He added that for full-year 2025, expense growth remained below inflation due to cost management, and the bank improved its efficiency ratio by 100 basis points compared with 2024. During the Q&A, analysts focused on worsening delinquency trends in SMEs and lower-income portfolios. Alejo said provisions improved quarter over quarter, helped by lower write-offs and the absence of significant one-off wholesale effects. He reiterated that the bank anticipated write-offs in lower-recovery-expectation operations, noting that write-offs in the first half of 2025 were 55% higher than in the second half, which influenced non-performing loans (NPLs) over 90 days in the second half of the year. He said that in the fourth quarter, 25 basis points of the increase in 90-day NPLs was explained by this write-off dynamic. Beyond write-offs, Alejo said higher 90-day NPLs also reflected pressures in lower-income segments, agribusiness, and SME operations guaranteed by government funds. He said these guaranteed operations structurally carry lower provisioning, contributing to a rise in Stage 2 portfolio volume but with lower coverage because the migrated credits had better quality. Despite the increase in 90-day NPLs, he said short-term delinquencies remained “more well-behaved” and NPL formation showed slight improvement. Asked specifically about SME delinquency, Alejo and Leão said the pressure is concentrated in smaller enterprises rather than specific industries, while medium-sized companies were described as performing well. Leão said the bank will calibrate its risk appetite and focus on subclusters to keep the segment’s average profitability well above the 20% threshold he has cited as a strategic aim. On the low-income segment, management said the bank is in a de-risking process and maintaining a restrictive renegotiation stance. Leão said profitability in mass/low income remains a drag and that improving it will take time due to the longer duration of the legacy portfolio. He added that 2026 should mark an “important step” toward recovering profitability in the segment, but reaching desired levels could take two to three years. Management also acknowledged that quality indicators could face additional pressure in the first half of 2026, even after adjustments to underperforming portfolios, but said the bank views the trend as consistent with the cycle and is addressing it in a disciplined way. Alejo said the bank ended 2025 with profit growth of 12.6% and a CET1 ratio of 11.6%. Leão reiterated that management is aiming for operating leverage through top-line growth, fee expansion, disciplined expense management, and a portfolio mix that supports profitability without proportionate increases in provisions. Other discussion topics included payroll-deductible lending, where Leão said the bank is allocating capital based on profitability and cross-selling potential and cited lower marginal profitability under current pricing ceilings in certain lines. Management also addressed possible replenishment of Brazil’s Credit Guarantee Fund (FGC), saying the process would be determined in coordination with regulators and that the fund likely needs to be replenished in the short term, though specific mechanics were still being finalized. Finally, Leão said mergers and acquisitions are “always an option” to accelerate growth in targeted segments but described a large domestic M&A deal as unlikely, arguing the bank’s existing franchise is mature enough to pursue its plans organically. Banco Santander Brasil SA is the Brazilian unit of Spain-based Grupo Santander and one of the country's major commercial banks. Headquartered in São Paulo, the bank serves a broad client base across Brazil through an integrated network of branches, ATMs and digital channels. Its shares are represented abroad via American Depositary Shares listed on the New York Stock Exchange under the ticker BSBR. The bank offers a full range of financial products and services for retail, small and medium-sized enterprises, and corporate clients. The article "Banco Santander Brasil Q4 Earnings Call Highlights" was originally published by MarketBeat.

This article first appeared on GuruFocus. Net Profit: BRL 4 billion in the quarter, a 10% increase quarter-on-quarter and year-on-year. Profitability: Return on Equity (ROE) increased by 120 basis points, reaching 17.5%. Net Interest Income (NII): Client NII increased 2.7% quarter-on-quarter and 11.1% year-on-year. Fees: Grew 6.7% quarter-on-quarter with diversification among different fee lines. Expenses: Grew 0.2% quarter-on-quarter and decreased 0.5% year-on-year. Efficiency Ratio: Improved by 140 basis points year-on-year, ending at 37.5%. Customer Base: Exceeded 73 million, a 7% increase year-on-year. Loan Portfolio: Growth in cards (14.5%), financing to consumption (12.6%), and SMEs (12.4%) year-on-year. Delinquency Rate: 90-day NPL rate at 3.4% at the end of the third quarter. Consumer Finance: 43% year-on-year growth in fees, with a high NPS of 90. Capital Ratio: CET1 at 11.7%. Warning! GuruFocus has detected 7 Warning Signs with BSBR. Is BSBR fairly valued? Test your thesis with our free DCF calculator. Release Date: October 29, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Banco Santander (Brasil) SA (NYSE:BSBR) achieved a net profit of BRL4 billion in the third quarter, marking a return to this level after over three years. The bank's profitability increased to 17.5%, with a healthy composition of results. Client net interest income (NII) and fees showed positive growth, with NII increasing by 2.7% quarter-on-quarter and 11.1% year-on-year. The bank's customer base exceeded 73 million, with a 7% year-on-year growth, and customer satisfaction metrics like NPS reached record levels. The introduction of the new 'One App' is expected to enhance customer experience, reduce costs, and improve cross-selling opportunities. Net interest income dropped quarter-on-quarter due to market NII, impacting overall financial performance. The efficiency ratio increased slightly, indicating room for improvement in cost management. The bank's loan portfolio growth remains low, with no significant increase in overall portfolio size. There are concerns about the sustainability of the low tax rate, which significantly contributed to the net income growth. Regulatory changes, such as those affecting real estate credit and FGTS, could impact future financial performance and require strategic adjustments. Q: What are the expected effects of implementing the One App at Banco Santander Brasil, and how will it impact cost reduction, consumer experience, or cross-selling? Additionally, what are the anticipated impacts of regulatory changes such as funding changes in real estate credit and FGTS advance regulation? A: Mario Roberto Opice Leao, CEO, explained that the One App is designed to enhance customer experience by offering a personalized and fluid interaction. It aims to improve customer engagement and transaction levels, potentially reducing costs through increased digital interactions. Regarding regulatory changes, the real estate credit changes are seen positively, as Santander has a strong journey in this area. The FGTS changes are acknowledged as a government decision, and the bank will adjust its credit appetite accordingly. Q: Can you provide insights into the cost of risk and credit quality, particularly regarding the write-off and coverage ratios? A: Mario Roberto Opice Leao, CEO, clarified that there were no changes in policy or management regarding write-offs and coverage ratios. The previous quarter's anticipation of losses was a one-time effect. The current coverage ratio reflects the mix of loan originations and performance, with no changes to criteria or policies. Q: What is the bank's risk appetite or credit appetite, and what factors would lead to a more aggressive position in the loan book? A: Mario Roberto Opice Leao, CEO, stated that the bank will continue to focus on subsegments and products that offer high profitability. The bank aims to grow in areas that bring transactionality and profitability, maintaining a disciplined approach to capital allocation. The macroeconomic context remains challenging, and the bank will continue to be cautious in its growth strategy. Q: How does Banco Santander Brasil view the PIX in installments, and what is the strategy regarding potential regulatory changes? A: Mario Roberto Opice Leao, CEO, explained that the bank has implemented PIX on credit cards, and initial results are positive. The bank believes that the journey should be defined by the banks and not necessarily be separate from credit cards. The bank is advocating for a streamlined journey that integrates credit limits across products. Q: What are the expectations for market NII, and how does the bank plan to manage its sensitivity to interest rates? A: Gustavo Viviani, CFO, noted that the bank has been hedging the marginal origination of the fixed portfolio since last year, reducing sensitivity to interest rates. The bank expects a more stable market NII in the future, with less exposure to interest rate fluctuations. The process is ongoing, and the bank aims for a more stable market NII by 2026. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Release Date: July 30, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Banco Santander (Brasil) SA (NYSE:BSBR) achieved a record quarterly profit of 3.4 billion, marking the best first half ever with strong revenue growth across global businesses. The company has successfully increased its customer base by over 8 million year on year, leveraging global platforms to enhance customer experience. The balance sheet remains solid with a strong capital ratio of 13%, contributing to strong shareholder value creation. Banco Santander (Brasil) SA (NYSE:BSBR) is executing a 10 billion share buyback program, enhancing shareholder returns. The company's global businesses continue to drive profitability, with significant efficiency gains and revenue growth in wealth, CIB, and payments sectors. The company faces challenges in Brazil with a higher cost of risk due to elevated interest rates and inflation, impacting profitability. There is a noted decline in car volumes in Europe, affecting consumer profit stability. The NPL ratio in Brazil is approaching 7%, indicating potential credit quality issues. Currency depreciation, particularly of the Brazilian real and Mexican peso, has created a 5% negative impact on growth rates. The company is experiencing regulatory headwinds, with some charges postponed to 2026, impacting capital planning. Q: Can you comment on the Q2 dynamics of NII in the UK, particularly regarding deposit costs and the structural hedge, and update your NII guidance for the UK going forward? Also, what is the outlook for NPLs and cost of risk in Brazil? A: In the UK, we are focused on profitability and have seen strong net operating income and better fees. The structural hedge had some takeaways, and we expect NII to be slightly up in 2025. In Brazil, despite a challenging environment, we are maintaining returns similar to last year. We are focusing on secure lending and expect cost of risk to remain around 5% or below. Q: What is the potential direction of cost trends under the "one transformation" initiative, and how might capital generation improve? A: Costs remain under control, and we expect to deliver lower costs in current euros in 2025. We are deploying new platforms while managing costs effectively. Capital generation is expected to improve, with asset rotation initiatives concentrating in the second half of the year, and regulatory charges being lower than initially expected. Q: With the "one transformation" implementation nearing completion, have we seen all the benefits, or could costs go below 41% in the coming years? Also, when will the consumer segment stop dragging down group profitability? A: We are just seeing the tip of the iceberg with "one transformation." As we complete platform deployments and decommission old systems, we expect further cost improvements. In the consumer segment, Open Bank is performing well, and we expect returns to normalize as new, more profitable production replaces older, less profitable production. Q: What will drive the step-up in ROT from 16% to the target of 16.5%? How much is consumer profitability affected by Open Bank launches? A: The step-up in ROT is driven by increased active customers and product sales, leading to higher fees and commissions. Open Bank is contributing positively, especially in the US, with significant deposit growth. The consumer segment's profitability is expected to improve as new, higher-margin products replace older ones. Q: Can you provide clarity on the provisions at the corporate center and the outlook for NII in Brazil? A: Provisions at the corporate center were taken to accelerate charge-offs and are not expected to recur. In Brazil, we have repositioned the balance sheet for a lower rate environment, and we expect NII to improve as rates decrease, potentially reaching a return on equity of 20% by 2027. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.