Santander (SANB11) slips 5% before earnings release; is there a bomb?

Santander Brasil shares fell sharply this Wednesday (1st), the eve of the release of fourth quarter 2022 results (Image: Angel Garcia/Bloomberg)

The actions of Santander Brazil (SANB11) fell 5.53% this Wednesday (1st) for the Brazilian stock market.

Despite widespread losses in the sector, Santander’s retreat stood out in relation to the other benches. The market seems to anticipate bad numbers for the company, which releases its results for the fourth quarter of 2022 this Thursday (2).

Analysts believe that Santander, along with Bradesco (BBDC4), should mark the negative end of the earnings season. On the other hand, Bank of Brazil (BBAS3) and Itau (ITUB4) should present another batch of good numbers.

The assessment of harvest for Santander, it is data that is still under pressure on the profit margin with the market and on credit quality. According to the institution, this should lead to the last line of the bank’s result to retreat in comparison with the same period of 2021.

THE USB BB says the combination of a higher effective tax rate (which has been unusually low in previous quarters) and lower customer margins should lead to “another significant contraction in earnings”.

UBS estimates that Santander will post a profit of 2.8 billion reais in the fourth quarter.

2023 and the “American risk”

Larissa Quaresma, analyst at Empiricus Researchsays that the case of Americans (AMER3) should not spill over into the fourth quarter results, not least because the retailer announced the existence of accounting inconsistencies in January.

According to the analyst, the impact should come on the results of the first quarter of the banks, with greater weight for Bradesco and Santander, since they are more exposed to Americanas.

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According to Quaresma, assuming that banks can play this provisioning forward a little, “we see an impact on earnings for the next 12 months of 3% in the case of Itaú and 10% in the case of Santander”.

THE Genial Investimentos recently downgraded Santander’s paper recommendation from “neutral” to “sell” and cut the target price from R$33.50 to R$27.10.

According to the brokerage, what is on the horizon for the company is another difficult year, with Americanas as an aggravating factor.

Genial analysts expect a 5.5% drop in Santander’s profit in 2023, also considering the more challenging macroeconomic scenario. On the part of Americanas, they see an impact of the provisions with the retailer’s debts of -8% on the bank’s profit in 2023, considering 50% of provision, and -0.3 percentage points on Tier 1 capital, considering 100% of provisioning.

Source: Moneytimes

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