Santander Brasil Posts Steady Q4 Growth, Eyes Long-Term Profitability Target Amid Strategic Pivot

São Paulo – Banco Santander Brasil (NYSE: BSBR) closed 2025 on a note of measured growth, reporting a fourth-quarter net income of BRL 4.1 billion. The figure represents a 5.9% increase from the same period last year and a sequential rise of 1.9%, as the bank advances on a strategic roadmap designed to sustainably lift profitability.

CEO Mário Leão framed the current 17.6% return on equity (ROE) as an "intermediary step" toward the bank's publicly stated ambition of exceeding 20% ROE. "Our focus is on quality growth," Leão stated during the earnings call. "This means deepening relationships with our over 74 million clients, not just expanding our footprint."

The bank's strategy hinges on becoming the primary financial institution for its customers. A key lever is hyper-personalization, powered by an advanced customer interaction platform. Leão revealed that 60% of all customer interactions are now tailored using this system, which fueled over 1,400 targeted campaigns in 2025 alone.

Artificial intelligence is deployed on dual tracks: for operational efficiency in areas like fraud detection, and for revenue growth through tools like "Pitch Maker." This internal application, launched last year, allows relationship managers to generate customized client investment proposals in roughly 30 seconds—a task that previously took considerably longer.

CFO Gustavo Alejo attributed the solid quarterly results to "dynamic portfolio management" and a selective approach to credit. He highlighted a deliberate mix shift towards small and medium-sized enterprises (SMEs), consumer finance, and high-income individuals—segments deemed crucial for future profitability. "We see room to further accelerate in the high-income segment," Alejo added.

However, the earnings discussion also cast light on emerging pressures. Analysts zeroed in on worsening delinquency trends, particularly within lower-income and certain SME portfolios. Alejo acknowledged the headwinds, explaining that a portion of the increase in 90-day non-performing loans (NPLs) was driven by strategic write-offs of low-recovery loans from the first half of the year.

"The pressure is concentrated in the smallest enterprises, not specific sectors," Leão clarified, noting that medium-sized companies continue to perform well. He admitted that profitability in the mass-market segment "remains a drag" and that a recovery to desired levels could take two to three years.

On technology, the bank continues its core modernization via the "Gravity project" in collaboration with Brazil's central bank, moving away from legacy mainframe systems. Its consolidated "One App" has now migrated over 15 million customers, with a major refurbishment planned for early 2026.

Looking ahead, management signaled caution for the first half of 2026, expecting some quality indicators to face further pressure consistent with the economic cycle. The bank ended 2025 with a CET1 capital ratio of 11.6% and full-year profit growth of 12.6%.

When questioned about mergers and acquisitions, Leão left the door open for deals to accelerate growth in targeted areas but downplayed the likelihood of a large domestic transaction, expressing confidence in the bank's organic capabilities.

Market Voices: Analyst & Investor Reactions

Eleanor Vance, Senior Banking Analyst at Horizon Capital: "The steady ROE progression is encouraging, and the focus on mix shift is the right long-term strategy. However, the persistent asset quality issues in the lower-income book are a concern. The bank's guidance that this will be a multi-year turnaround tempers near-term optimism."

Carlos Ribeiro, Portfolio Manager at Boreal Asset Management: "The digital metrics are impressive—60% personalized interactions is a significant achievement. This, coupled with cost management that beat inflation, shows operational discipline. The market might be underestimating the future earnings power from this tech-led efficiency."

David Feldstein, Independent Market Commentator: "Another quarter of excuses on credit quality. They're talking about 'hyper-personalization' while a chunk of their loan book is deteriorating. The write-off explanation feels convenient. Is this disciplined management or just cleaning up past mistakes? The 20% ROE target seems to be receding into the distance."

Ana Silva, Head of Research at LatInvest Consultancy: "The clear communication on the SME segment breakdown—pressure in micro, strength in medium—is valuable. It shows a nuanced approach rather than a blanket retrenchment. Their restrained stance on M&A is also prudent in the current valuation environment."