vote of confidence in BB Santander (SANB11); Why buy stocks now? – MoneyTimes

Santander-Brazil
Santander Brasil has now been acquired by BB Investimentos (Image: Disclosure)

O Santander Brazil (SANB11) received a purchase recommendation from BB Investments after publishing the results for the third quarter of the year.

The update also includes a new target price of R$33.80 for the end of 2024, implying a potential upside of 25.2% from the current contract price.

BB analysts are now more confident about the name as figures released today suggest some line items have improved. This season, the institution highlights two positive points:

  • improving credit quality with lower credit ratios by default both in the metric above 90 days (from 3.3% to 3%), and between 15 and 90 days (from 4.2% to 4%); This
  • cost reduction for PDD (reserves for doubtful debts) in the amount of 6% quarterly and 9% annually.

BB also mentions progress in loan portfolio classified, which showed the return of some appetite between quarters.

Some data, however, remains under pressure. This is a case of financial margin, influenced by a more conservative mix of credit portfolios over the past few years.

“Treasury showed a slight improvement, but still made a negative contribution,” he adds.

According to BB, weak financial margins and still high provisioning costs are pushing pre-tax profits to levels “below Santander’s best periods”.

Looking to the future

Although results are still under pressure, BB Investimentos sees a more positive scenario for Santander.

BB claims that Santander is leaving the most difficult moment in Selic’s rise cycle after the pandemic.

“While signs of viability, such as portfolio growth and financial margins, are far from stellar, we believe that volatility in default rates, coupled with a prolonged cycle of monetary easing, should restore the bank’s appetite for growth and more profitable loan mixes,” he comments.

Despite​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​a concerns about the financial margin, Santander should benefit from Santander’s sequential improvements during the falling interest rate cycle in Brazil.

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