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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.
Strategic focus: primary relationship, hyper-personalization and AI
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.
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.
Business performance and portfolio mix
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
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.
Net interest income, fees, and expenses
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.
Credit quality: SMEs and low income under pressure, caution into 1H 2026
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.
Capital, profitability ambitions, and other topics
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.
About Banco Santander Brasil (NYSE:BSBR)
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.
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