Link Securities | Banco Santander (SAN) will benefit from the 50 b.p. cut in interest rates by Brazil’s central bank on Wednesday, according to Expansión on Friday.
Santander has a negative sensitivity to Brazilian interest rates because, due to its type of business, interest on deposits rises much faster than lending rates, affecting the bank’s margins the more rates rise.
At a recent conference with analysts, Santander CEO Héctor Grisi and José García Cantera, the bank’s chief financial officer, acknowledged that the bank’s internal models reflect a margin increase of around €140 million in the 12 months following a one percentage point interest rate cut in Brazil. As the central bank has announced that it intends to continue lowering rates by 50 basis points, the bank could expand its margins by at least that amount in the coming months. Brazil contributes 15.7% of the group’s total profit despite the fall compared to previous years.
