Despite the headwinds for region’s banks, there were some outstanding performances that demonstrate what can be achieved without macroeconomic support. The best example of this was Santander Brasil, Latin America’s best bank.
The success of Santander Brasil’s chief executive, Sergio Rial, since joining in September 2015 has been such that, following Santander’s abortive attempt to hire UBS’s Andrea Orcel to be its group chief executive at the beginning of this year, there were strong rumours that the bank would appoint Rial to the position.
That it didn’t is probably more in recognition that it would just be creating a very large Rial-shaped hole in what it is now its most profitable market – generating 26% of Santander’s total earnings. So instead Santander created for him the position of chief executive of all of its south American business.
Sergio Rial Santander Brasil’s results in 2018 were truly historic. The bank broke the stranglehold that Itaú and Bradesco have held over the country’s privately owned banking sector. It pushed Bradesco into third place by return on equity. Santander Brasil hit ROE of 21.1% in the fourth quarter of 2018, with a net profit of R$12.4 billion ($3.2 billion). Net interest income was R$42 billion in 2018, up by 12.5% in the year, compared with Itaú’s rise of 0.8% and Bradesco’s 0.3%.
Little wonder his peers have nothing but words of praise at the scale and speed of the accomplishment – the bank’s ROE was just 12.1% at the end of 2014. Its stock price has tripled since 2016, and in 2018 alone the shares appreciated 25.8% and the bank’s market value reached R$159.5 billion.
When speaking at the announcement of the fourth-quarter 2018 results Rial said that it is time to move beyond Santander Brasil’s transformation narrative to one of continued, solid growth based on service quality.
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