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Banco Santander overcomes Brazil in search of 4 euros

Santander Bank is the firm of the sector that worst behavior is having throughout the year, with an accumulated loss of value of 10.7%. The entity chaired by Ana Patricia Botín has been one of the most affected by rate hikes due to its international exposure and in emerging markets, as well as by the tax to banking announced by the Government. Brazil is one of the territories where it operates that has weighed down the bank the most and that is how different analysts consider it, however, the bullish rally that it is leading in the month of August shows how it is overcoming obstacles.

The company is taking advantage of the rebound in the stock markets in recent weeks and has already scored close to an 8% revaluation so far this month. Although it is still far from maximum, its actions seek the 4 euros that many investment firms see possible to achieve, with recent valuations supporting the value, despite existing risks. Although it is true that some entities have cut their target price, the bank’s potential to generate returns is still attractive.

Deutsche Bank has been one of the firms that has cut Santander’s target price in recent days, from 4.2 to 4 euros, mainly due to the problems caused by its Brazilian subsidiary. “In this case, it seems that the possibility that Santander Brazil will experience a greater than expected deterioration in asset quality“, Analysts indicate in a report on Spanish banks.

The entity’s experts believe that, despite the fact that Santander’s net profit has been largely exceeded thanks to the strong income generationconcerns about specific problems such as the one in this territory have weighed down the company in the market. In fact, while CaixaBank, Sabadell either Bankinter positive progress on the Ibex since January, the bank of the Botín family is the most punished on the stock market, surpassing the other great victim, BBVA.


“Even in the case of a significant deterioration in Brazil, the bank would be trading at very low multiples. However, although we maintain a positive long-term view, We recognize that the lack of nearby catalysts and the doubts in the recovery are unlikely to allow a substantial appreciation until Santander is able to turn the trend in Brazil.“, they explain from the German bank.

In this sense, they also point out that the company will not have the revaluation mentioned until he is able to increase his to pay “without having capital problems”. Likewise, they consider that despite the negative view of Brazil, Santander maintains a good performance in income in most countries, “clearly exceeding expectations”.

Revenues and commissions recorded in the first half exceeded expectations by over 3%, mainly driven by the improvement in global trading activity trading activity and margins due to higher rates and volumes, especially in Poland, the United Kingdom, the United States and Mexico.

Deutsche Bank is not the only entity that has ruled on Spanish banking and Santander, emphasizing the Brazil factor. In this way, from Jefferies they have recently prepared a report, where their analysts They have backed Santander and raised their target price from 4.3 to 4.4 euros per share.

The North American firm has placed Banco Santander as one of its favorites, although it has lowered net profit estimates for 2022 by almost 4%, mainly due to regulatory risks in Poland and the “additional burden of provisions in Brazil”. But, despite the obstacles to the profitability of its Brazilian subsidiary, Jefferies experts believe that the capital risks in this market are “oversized”.


But the good rate of growth in income and the exit of the operation in Mexico for the purchase of Banamex, a subsidiary of the New York bank Citigroup, reduces the winds against the company chaired by Ana Botín. To this is added the cSantander’s commitment to maintain shareholder remuneration at 40% with respect to 2022 profitswhich should be positive for your run on the Spanish stock market.

That is why most of the investment firms that have given their assessment of the bank in August have done so positively, despite the caution shown in some price cuts. Since Morgan Stanley have lowered their target price by 7%, but set it at 4 euros per share. So has Credit Suisse, whose analysts price the same with advice to overweight the stock.

In this sense, the Swiss bank’s analysts believe that the effect on its price that the government tax has had to tax the extraordinary profits of the bank has been excessively high. Other analysis houses more optimistic like Keefe Bruyette & Woods believe that the potential of Santander can take its titles up to 4.98 euros or like Goldman Sachs who believe they can reach 5.20 euros.

The average target price of the 30 investment firms that follow the evolution of Banco Santander in the market is currently 3.89 euros per share, which represents an upward potential of more than 47%. Total, 20 of the firms in the market consensus collected by Bloomberg recommend buying shareswhile 9 maintain a neutral advice on value. Only 1 entity recommends selling its shares.

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