Santander’s Profit Growth Faces Brazilian Drag

Banco Santander reported a 19% increase in underlying third-quarter profit on Wednesday, supported by acquisitions and stronger earnings in developed markets, although deteriorating credit conditions in Brazil exposed the challenges facing its international banking operations.

The Spanish lender recorded underlying net profit of €3.85 billion, exceeding analysts' expectations of €3.75 billion. However, reported profit attributable to shareholders declined 2% to €3.43 billion after restructuring and impairment charges, mainly associated with its acquisition of US lender Webster.

Santander's expansion in Britain and the United States helped drive growth, with underlying profits increasing 40% and 48% respectively in those markets. Performance was considerably weaker in Brazil, the bank's second-largest market, where net profit fell 15% from a year earlier. Loan loss provisions in the country increased 23%, reflecting continued pressure on borrowers and the quality of lending portfolios.

Across the group, provisions for potential credit losses rose 22% to €3.49 billion, partly because of deteriorating expectations in Argentina. The divergence between developed and emerging markets highlighted the advantages and risks of Santander's geographically diversified business model. Higher borrowing costs and currency movements remain important factors in its Latin American operations.

Despite these pressures, Santander maintained its financial targets for 2026 to 2028, supported by expectations of stronger contributions from recent acquisitions. The results suggest that international expansion is improving earnings capacity, but the bank's ability to sustain that growth will also depend on managing credit risks in markets facing more difficult economic conditions.