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On Wednesday, Citi maintained its Neutral rating on shares of Banco Santander (BME:) Brasil SA (SANB11:BZ) (NYSE:BSBR), with a consistent price target of R$27.00. The decision comes after incorporating the bank’s fourth-quarter results from 2023 into their analysis. Citi has adjusted its earnings estimates for the years 2024 and 2025, reducing them by 16% and 3% to R$12.4 billion and R$15.3 billion, respectively.
The report suggests that Banco Santander Brasil’s loan growth for 2024 is expected to align with the broader banking system’s projection of 8-9%. This growth is anticipated to be propelled by credit lines secured with guarantees. However, the bank’s net interest income (NII) from clients may face challenges due to an increase in funding costs. Conversely, the NII from market activities could benefit from declining interest rates.
Banco Santander Brasil is noted for its cautious approach to credit, which is forecasted to lead to improvements in the cost of risk (CoR). Nevertheless, such improvements are not expected to materialize in the short term, given the bank’s substantial portfolio of renegotiated loans.
Citi concludes that, due to the lack of short-term catalysts and the bank’s current valuation levels, there is limited potential for stock price appreciation. This assessment underpins the firm’s decision to reiterate its Neutral rating on Banco Santander Brasil.
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