About Banco Santander (Brasil) S.A.
What does the company do? Full-service bank in Brazil
2010 Financial report:
Net sales: $29.7 billion
Net income: $4.4 billion
Q. Is this a good time to buy a bank stock such as Banco Santander (Brasil) S.A.? The price has come down a lot, and I know Brazil has potential.
A. The third-largest private Brazilian bank in assets is expected to enjoy robust long-term growth in assets and loans as it focuses on that country's middle and upper classes, which are gaining in numbers.
Brazil's relatively low penetration rate of banking products and services enhances its growth potential.
Recently, however, the bank has had to cope with the battered Brazilian stock market, non-performing loan concerns and higher expenses. A potential investor would have to look beyond present uncertainties to determine whether its discounted stock price is attractive.
While the bank is well-capitalized to handle anything that comes its way, it is in competition with government-controlled banks that are able to offer below-market rates. And despite Brazil's growing economic power, that country has a difficult history of currency fluctuations and inflation.
Stock of Banco Santander (Brasil), whose ticker symbol is BSBR for its American Depositary Shares, is down 44 percent this year, a decline that prompted the bank to announce a share buyback plan in August. Its third-quarter profit was slightly lower than the year-earlier period.
It is majority-owned by Grupo Santander, Spain's largest bank, a relationship helpful in attracting international business and structuring acquisitions. Its importance to the Spanish bank's bottom line assures it of receiving full attention and professional assistance
The consensus analyst opinion of shares of Banco Santander (Brasil) is "buy," according to Thomson Reuters, comprised of one "strong buy," two "buys" and four "holds."
Banco Santander (Brasil), which derives the largest portion of its revenues from commercial banking, is also in global wholesale banking, asset management and insurance. It has locations across Brazil with a concentration in the south of the country, an area which accounts for nearly three-fourths of the nation's gross domestic product. Its branch network is one of Brazil's largest.
The bank's stated strategy is to increase commercial banking products and distribution; provide multinational companies with financial products; and attract up-and-coming personal banking clients. It has made significant acquisitions, including Banco Real in 2008.
Earnings are expected to decline 20 percent this year and rise 21 percent next year, according to Thomson Reuters. The five-year annualized return is expected to be 9 percent, in line with the Latin American banking industry.
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