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(Adds Santander Brasil "no comment" and Santander Brasil share price in last two paragraphs)
RIO DE JANEIRO, May 26 (Reuters) - Banco Santander Brasil SA , the Brazilian unit of Spain's Banco Santander SA , will only invest in new projects if they can deliver a minimum 20 percent return on capital, the Valor Economico newspaper reported on Monday.
The minimum return target applies to everything the bank does, from the purchase of new units to the opening of branches, Valor said, citing Santander Brasil Chief Executive Jesus Zabalza, who took office last June.
Zabalza plans to focus Santander Brasil's capital on three areas: agriculture, secured personal loans, and increasing the number and size of businesses that use the bank to handle credit and debit-card transactions, the paper reported.
Zabalza is trying to improve the bank's performance after reporting an 11.2 percent recurring return on equity in the first quarter of 2013, well below Zabalza's target, Valor said. The bank is also trying to reverse a decline in its share of the Brazilian credit market, which shrank to 8.5 percent at the end of 2013 from 10.9 percent in 2009.
Units of Spain's Santander Group own 75 percent of Santander Brasil, according to Santander Brasil's website.
Santander Brasil preferred shares fell one centavo to 0.14 reais in late morning trading in Sao Paulo.
Santander Brasil officials declined to comment, according to a statement from the company's press office in Sao Paulo. (Reporting by Jeb Blount and Roberta Vilas Boas; Editing by James Dalgleish)