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Santander Brasil books record profit in Q4'16, cuts ROE target

Banco Santander (Brasil) SA recorded an annual increase of 23.77% in its fourth-quarter 2016 recurring profit as net interest income grew and loan-loss allowances fell.

The São Paulo-based company booked about 1.99 billion Brazilian reais in managerial net income for the quarter, up from 1.61 billion reais in the year-ago period, the bank said in a Jan. 26 earnings release. According to Reuters, the fourth-quarter 2016 profit is the lender's best quarterly result ever.

Net interest income rose to 7.83 billion reais from 7.38 billion reais a year earlier. Fee and commission income, meanwhile, jumped to 3.86 billion reais from 3.21 billion reais.

The bank recorded 2.68 billion reais in allowance for loan losses in the last three months of 2016, down from 2.76 billion reais a year ago and 2.84 billion reais in the previous quarter. At the same time, general expenses declined to 4.94 billion reais from 4.63 billion reais a year earlier.

The company's expanded credit portfolio reached about 322.78 billion reais at the end of 2016, up 3.8% from the close of the third quarter of that year. The bank's 90-day delinquency ratio for the fourth quarter came in at 3.4%, compared to 3.5% in the previous quarter and 3.2% at the end of 2015.

The fourth-quarter results brought the bank's full-year managerial net profit to about 7.34 billion reais, up 10.8% from 6.62 billion reais in 2015.

The firm's annualized return on average equity, excluding goodwill, was 13.3% for the full year, up from 12.8% in 2015. Its annualized return on average assets, also excluding goodwill, remained stable at 1.1%.

In a presentation following the earnings release, the bank said it is now targeting return on equity of 15.6% by December 2018, down from its previous goal of about 17%, Reuters reported.

Ana Botín, the executive chairman of Spanish parent company Banco Santander SA, recently said Brazil would be less impacted than Mexico by changes in U.S. foreign and economic policy because Brazil does less business with the U.S.

As of Jan. 25, US$1 was equivalent to 3.17 Brazilian reais.