UPDATE 2-Santander Brasil shares up on profit beat, lower provisions

miércoles 27 de abril de 2016 11:26 GYT

(Recasts to add comments from executives, details, share performance throughout)

By Guillermo Parra-Bernal

SAO PAULO, April 27 (Reuters) - Shares in Banco Santander Brasil SA rose on Wednesday after the nation's largest foreign-owned lender posted a first-quarter profit that beat expectations due in part to lower loan-loss provisions and increased loan renegotiations.

The shares, which are a blend of Santander Brasil's voting and non-voting stock, had their biggest intraday jump in five weeks, adding as much as 4.2 percent to 18.12 reais. The rise extended Santander Brasil's gain this year to 14 percent.

Recurring net income totaled 1.660 billion reais ($471 million) last quarter, up 3.3 percent on a quarterly basis, São Paulo-based Santander Brasil said in a statement. The result topped the average consensus estimate of 1.100 billion reais compiled by Thomson Reuters.

Efforts by Chief Executive Officer Sérgio Rial to cut fundraising costs propped up interest income, offsetting the impact of slower loan disbursements in the quarter. Stringent expense controls and steps to renegotiate credits that could potentially sour in coming months helped shield results.

Chief Financial Officer Ángel Santodomingo told investors in a conference call that the strategy kept a lid on delinquencies.

Banks in Brazil are facing a deluge of requests from companies to renegotiate at least 100 billion reais in loans, posing additional headwinds for an industry already struggling with the deepest Brazilian recession in decades.

"Overall, we believe the key message was that credit quality didn't crack," said Domingos Falavina, a banking analyst with JPMorgan Securities.   Continuación...