Banco Santander (Brasil) S.A. (BSBR) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals several positive aspects: robust growth in consumer finance fees and SME portfolios, strong revenue growth vs. expense management, and strategic technological advancements. While NII declined year-on-year, the company is managing expenses well and leveraging AI for future growth. The Q&A section highlights a cautious but optimistic outlook on portfolio growth and risk management, with a focus on profitable segments. Despite some uncertainties in guidance, the overall sentiment is positive, indicating a likely stock price increase in the short term.
Key Financial Performance
Net Income BRL 4.1 billion, almost 6% year-on-year increase and 1.9% quarter-on-quarter increase. Reasons for change include maintaining profitability at 17.6% and a growing customer base.
Customer Base 64 million clients, with a quarterly evolution up by 4.6%. The increase is attributed to strategic improvements and opportunities for further growth.
Net Interest Income (NII) Grew 0.8% in the quarter but decreased year-on-year due to market conditions. The decline is attributed to market NII being more negative quarter-on-quarter.
Expense Management Quarterly expenses grew nominally due to collective bargaining, seasonality, and marketing expenses. However, year-on-year expenses were negative, reflecting disciplined cost management.
Consumer Finance Fees Up 73% year-on-year from a base of 100. Growth attributed to enhanced customer experience and new insurance products.
Cards Portfolio Grew 13.4% year-on-year, driven by increased customer transactionality.
Small and Medium-Sized Enterprises (SMEs) Portfolio Grew 13% year-on-year, supported by segmentation and targeted offerings.
Time Deposits from Individuals Annual growth of close to 20%, attributed to increased customer loyalty and transactionality.
Revenue Growth vs. Expense Growth Revenue grew 17% over 2 years, while expenses grew 5%. Adjusted for inflation, expenses decreased by 4%. Growth funded by investments in expansion and technology.
Cost to Serve Reduced by 43% over 2 years, attributed to improved cost management and technological advancements.
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Operating Highlights
Hyper-personalization: 60% of all client interactions across channels are hyper-personalized, leveraging client-specific data for tailored communication.
AI for Efficiency: AI is used to improve processes, reduce manual tasks, and lower operating costs, particularly in ombudsman and fraud areas.
AI for Growth: AI tools like Pitch Maker enable personalized client pitches in 30 seconds, enhancing client interaction and advisory services.
New App: A new app was launched, integrating a customer interaction platform for personalized campaigns and improved client engagement.
Consumer Finance Growth: Record growth in Consumer Finance portfolio, including a 73% year-on-year increase in insurance and fees.
SME and Corporate Expansion: Focus on doubling small and midsized company segments with segmented customer groups and enhanced offerings.
Retail Banking Funding: Time deposits from individuals grew by 20% annually, reflecting increased customer loyalty and transactionality.
Expense Management: Expenses grew by 5% over two years, with a focus on technology and expansion, while other areas remained flat.
Efficiency Gains: Revenue grew by 17% over two years, while expenses grew by only 5%, leading to operational gains.
Cost Reduction: Cost to serve reduced by 43% in two years for low-income segments, improving portfolio quality.
Customer Centricity: Focus on increasing active and transactional clients to become their primary bank.
Technological Transformation: Implementation of the Gravity project to modernize and enhance operational efficiency.
Geographical Expansion: Micro-regional segmentation and outreach campaigns to enhance SME and corporate client engagement.
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Risk or Challenges
Market NII: The market NII has been declining year-on-year due to market conditions, with a slight improvement in asset management but deterioration in market making. This poses a challenge to profitability.
Expense Management: Quarterly expenses grew nominally due to collective bargaining, seasonality, and marketing expenses. While year-on-year expenses were negative, managing these costs remains a challenge.
NPL (Non-Performing Loans): There is increased pressure on over 90-day NPLs, particularly in lower-income segments, agribusiness, and SMEs. This could lead to additional provisioning needs and impact financial stability.
Credit Risk: The company remains cautious in granting credit, focusing on selective growth. However, there is still pressure from underperforming portfolios, which may affect quality indicators in the first half of 2026.
Funding Composition: Demand deposits have reduced due to a natural migration to time deposits. This shift could impact liquidity and operational flexibility.
Macroeconomic Conditions: The challenging macroeconomic environment continues to influence credit quality and operational performance, requiring disciplined management.
Technology Investments: While investments in technology and expansion are prioritized, they contribute to expense growth, which needs to be carefully managed to avoid eroding profitability.
Customer Segmentation and Growth: Efforts to grow in high-income segments and SMEs are ongoing but require significant resources and strategic focus, posing execution risks.
Regulatory and Compliance Risks: No explicit mention, but implied risks exist in maintaining compliance with evolving regulations, especially in credit and funding operations.
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Guidance & Outlook
Profitability: The company aims to achieve over 20% profitability in the mid-term, building on the current 17.6%.
Customer Base Growth: The company plans to continue growing its customer base, focusing on increasing active and transactional customers to become their primary bank.
Hyper-Personalization and AI: The company will intensify the use of hyper-personalization and AI to enhance customer interactions and operational efficiency. This includes expanding the use of tools like Pitch Maker and AI-driven customer interaction platforms.
Consumer Finance: The company expects continued growth in Consumer Finance, including loans and insurance, building on a record year in 2025.
Small and Medium-Sized Enterprises (SMEs): The company plans to double its SME business within a year, leveraging segmented customer groups and enhanced offerings.
Efficiency Improvements: The company aims to further improve its efficiency ratio by growing revenue while maintaining or reducing expenses, supported by technology investments like the Gravity project and One App.
Funding Mix: The company plans to achieve a 60% funding mix from individuals, up from the current 50%, to strengthen customer loyalty and transactionality.
Credit and Risk Management: The company will maintain a cautious approach to credit, focusing on selective growth and improving the mix of assets and liabilities.
Market NII and Fee Growth: The company expects improvements in market NII and fee income, particularly in cards and insurance, supported by increased customer transactionality and new product offerings.
Technological Advancements: The company will continue to invest in technology, including the Gravity project for operational efficiency and new versions of the One App to enhance customer engagement.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What is causing the worsening delinquency ratio in SMEs?
A:The pressure in SMEs is primarily in smaller enterprises rather than medium-sized ones. It is more related to the size of the companies and less to specific industries. High interest rates have also impacted smaller enterprises more significantly.
Q:Does PLL (Provision for Loan Losses) grow with the portfolio?
A:Management does not provide guidance but aims to grow the portfolio in a healthy way. PLL may increase due to a carry effect in some subsegments, but the mix of the portfolio is managed to ensure compatibility with growth.
Q:What is the relevance of branches in serving the mass income or low-income segment?
A:Branches still play a role but are being reduced and modernized to align with changing customer dynamics. The focus is on efficiency, with fewer stores and more digital and AI-driven solutions for low-income clients. Profitability in the mass income segment is expected to improve over the next 2-3 years.
Q:How much more investment in technology is expected, and how is AI being deployed?
A:Technology investments will continue, including modernizing legacy systems and migrating to platform-based systems. AI and GenAI are being used in risk and recovery models, with ongoing enhancements to improve efficiency and credit growth.
Q:What is the outlook for the low-income segment and its performance?
A:The low-income segment faces more pressure due to strict recovery policies and high interest rates. Management is focusing on derisking and improving the cost to serve, aiming for a viable and profitable segment in the long term.
Q:What is the bank's approach to payroll deductible loans?
A:The bank is cautious and testing the market for payroll deductible loans. It aims to grow gradually, focusing on profitability and risk management. The product is seen as viable but requires further testing before significant expansion.
Q:What are the main levers for improving ROE (Return on Equity)?
A:The bank plans to grow credit selectively in profitable segments, manage capital intelligently, and maintain expense discipline. Operating leverage will be achieved by growing revenue while keeping other costs flat or reducing them.
Q:What is the dynamic of the cost of risk and NPL (Non-Performing Loans) for 2026?
A:The cost of risk is controlled and aligned with the evolving portfolio mix. The mix is shifting towards high-income and SME segments, reducing exposure to low-income and agribusiness portfolios. NPL pressure is expected in Q1 but will be managed throughout the year.
Q:What is the status of the FGC (Settlement Guarantee Fund) and its replenishment?
A:The FGC will be replenished in coordination with the Central Bank and National Monetary Council. The process is expected to be finalized in February, with banks contributing proportionally to their deposit base. Measures are being discussed to prevent similar cases in the future.
Q:Is M&A (Mergers and Acquisitions) part of the bank's strategy?
A:M&A is not ruled out but is unlikely in Brazil. The bank believes its current franchise is mature enough to achieve growth organically. The focus remains on disciplined and resilient growth in key segments.
Q:Review of Unclear Management Responses
A:Management avoided providing direct guidance on PLL growth, stating they aim for a healthy portfolio mix without specifying numerical targets. Similarly, they did not provide detailed figures for technology investments or a clear timeline for achieving 20% ROE, using general terms like 'gradual improvement' and 'long-term focus.'
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
App
CRM
Consumer Finance
Executive Officers
Investments
Macro
Member Executive
PIX
Santander
Transactionality
addition
advance
campaign
capability
company individual
content
core
customer
expert bank
gain
hand side
hyper personalization
information
insurance
interaction
journey year
map
mindset
name
offering
organization
platform
progress
relationship client
second
use AI
BSBR Transcript
Banco Santander (Brasil) S.A. (BSBR) Q4 2025 Earnings Call Transcript
Positive2-4
The earnings call reveals several positive aspects: robust growth in consumer finance fees and SME portfolios, strong revenue growth vs. expense management, and strategic technological advancements. While NII declined year-on-year, the company is managing expenses well and leveraging AI for future growth. The Q&A section highlights a cautious but optimistic outlook on portfolio growth and risk management, with a focus on profitable segments. Despite some uncertainties in guidance, the overall sentiment is positive, indicating a likely stock price increase in the short term.
Banco Santander (Brasil) S.A. (BSBR) Q3 2025 Earnings Call Transcript
Positive10-29
The earnings call summary and Q&A indicate strong financial performance with significant growth in key areas such as fees, SMEs, and cards. The strategic focus on digital transformation, efficiency, and profitability, combined with optimistic guidance for future growth, supports a positive sentiment. However, the lack of clear guidance on market NII and the impact of regulatory changes introduce some uncertainty. Overall, the company's strong growth metrics and strategic initiatives suggest a positive stock price movement in the short term.
Banco Santander (Brasil) S.A. (BSBR) Q2 2025 Earnings Call Transcript
Positive7-30
The earnings call summary and Q&A indicate strong financial performance, strategic growth in key segments like SMEs, and optimism in fee income growth. Despite challenges like the high Selic rate and unclear guidance on market NII, the bank's focus on efficiency, profitability, and disciplined risk management are positive indicators. The cautious expansion in consumer finance and SME segments, alongside strong client base growth and profitability improvements, suggest a positive outlook for stock price movement.
Banco Santander (Brasil) S.A. (BSBR) Q1 2025 Earnings Call Transcript
Unknown5-1
The earnings call presents a mixed outlook. While the bank reported strong net income growth and improved ROAE, challenges such as increased expenses, higher delinquency rates, and regulatory impacts on loan origination costs are notable. The cautious growth strategy and lack of a share buyback program also weigh on sentiment. The Q&A section revealed some management opacity, particularly concerning regulatory impacts and credit appetite changes. These factors suggest a neutral stock price movement, as positives are balanced by significant uncertainties and challenges.
BSBR Report
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