Banco Santander (Brasil) S.A.

Key results & profitability context (Good/Bad): Recurring net income was ~BRL 2.9bn and ROE 11.9% for Q3’26. Management said profitability is still below the level they aim for, mainly due to a challenging macro environment (high rates, higher household debt) and an ongoing portfolio rebalancing. Expenses remained disciplined (cost growth below inflation) with the efficiency ratio at 38.8%, but spreads and risk costs pressured earnings in the quarter.

Client strategy & growth engine (Good/Opportunity): Santander Brazil reported 76.9m clients (+6% YoY) and emphasized “customer primacy” and deeper engagement. Santander Rewards reached ~700k clients, with spending by participants up >10% vs comparable clients—management views this as evidence that a more assertive value proposition improves relationship metrics. The opportunity is to scale this engagement economically (not just add clients).

Loan & funding mix changes (Surprising/Neutral-to-Bad near-term): Portfolio growth continued but with improving quality focus: mortgages +10.3% YoY, SMEs +8.5% YoY, consumer finance +9.1% YoY (noting the consumer finance portfolio sale). Management intentionally rebalanced toward higher-quality clients / more secured exposures, and increased hybrid & electric vehicles financed from 5% to 20% over 12 months. Funding strategy also shifted toward retail: transactional deposits +10% YoY. Near-term negative: client NII declined due to (i) lower average CDI, (ii) correspondent expense deferrals, (iii) effects from the portfolio sale, and (iv) selective origination—plus portfolio mix shifts that structurally lower spreads.