Santander Brasil's net profit up 44% in Q2, beating forecasts

SAO PAULO (Reuters) - Santander Brasil's second-quarter recurring net profit jumped 44.3% on a yearly basis, the bank reported on Wednesday, topping market forecasts helped by higher lending and fees.

WHY IT'S IMPORTANT

Santander Brasil is one of Brazil's largest banks and typically its first big private lender to publish quarterly results, setting the tone for upcoming reports from peers Itau Unibanco and Bradesco.

Latin America's largest economy is a key market for Spanish parent Banco Santander, which reported its own second-quarter results earlier in the day, raising profitability goals after strong growth at its main retail business.

BY THE NUMBERS

Santander Brasil's quarterly bottom line came in at 3.33 billion reais ($596.23 million), up 44.3% year-on-year and above the 3.19 billion expected by analysts polled by LSEG.

Net interest income (NII) - earnings on loans minus deposit costs - rose 10.6% to 14.75 billion reais. Return on average equity, a gauge of profitability, hit 15.5%, up 4.3 percentage points.

Allowance for loan losses fell 1.4% to 5.89 billion reais, while the bank's consolidated loan book increased 7.8% to 665.59 billion reais.

ADDITIONAL CONTEXT

Santander Brasil in recent years has focused on being more selective in its lending as credit conditions deteriorated. It reported some poor results while implementing the strategy but has been saying the worst is now behind it.

KEY QUOTES

"We delivered a clear expansion of client NII driven by higher volumes, with market NII at positive levels. Fees also grew consistently," chief executive Mario Leao said in a statement.

"In short, we are building a robust, diversified and enduring portfolio, capable of generating sustainable results."

($1 = 5.5851 reais)

(Reporting by Gabriel Araujo, Editing by Louise Heavens and Mark Potter)