Santander Brasil Slumps to Eight-Week Low as Loan Defaults Soar

Banco Santander Brasil SA, the Brazilian unit of Spain’s biggest lender, fell to an eight-week low after reporting an increase in loan delinquencies.

Shares fell 1.2 percent to 14.36 reais at 12:33 p.m. in Sao Paulo after earlier dropping to 14.06 reais, the lowest intraday price since Dec. 6. The benchmark Bovespa index rose 0.3 percent.

Sao Paulo-based Santander Brasil said today that its 90-day loan default rate rose to 5.5 percent in 2012 from 4.5 percent in the previous year. Parent Banco Santander SA (SAN) posted a fourth- quarter profit that trailed analysts’ estimates as it set aside money for further loan losses in its home market.

“Despite posting a slight recovery in the loan growth, good fee income from its acquiring business, and cost control, Santander’s asset quality/provisioning dynamics make for weak fourth quarter results,” Votorantim Corretora analysts including Renato Schuetz wrote today in an e-mailed note.

Santander Brasil has dropped 11 percent in the past year while the Bovespa slid 5.7 percent.

To contact the reporter on this story: Julia Leite in New York at jleite3@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net