Jefferies has lowered its price target for Banco Santander by about 4%, placing it at 12 euros per share, although it has reiterated its recommendation to "buy" the stock on the market, according to a report released this Tuesday.
The analysis firm argues that the upcoming presidential elections in Brazil could weigh on the results of the Spanish financial group, due to the high exposure of its Brazilian subsidiary to interest rate cuts and the impact of fiscal policy on banking business margins.
In this context, the Brazil unit, which contributed 16% of Santander's total profit in 2025, generates around 70 million euros in additional net interest income for every 100 basis points cut in the benchmark Selic rate.
"Therefore, a drop in the Selic below 10% from the current 13.75% would automatically add about 200 basis points to the return on equity (RoE) of Santander Brazil, ceteris paribus," the document specified.
"Lower real rates would also favor asset quality in the medium term, especially considering the high leverage of both households and businesses," it added.
Experts remind that Brazil will go to the polls on October 4 for the first presidential round, in a scenario of technical tie between Luiz Inácio Lula da Silva and Flávio Bolsonaro. Jefferies contemplates as a central hypothesis that neither of the two candidates will reach 50% of the votes, which would require a second round on October 25.
The firm explains that investors interpret a victory for Bolsonaro as a more favorable outcome for Santander, as it is associated with greater control of public spending, possible tax reforms, and a faster pace in the easing of monetary policy.
BEYOND THE ELECTIONS
Regarding credit behavior, Santander's management has indicated that the cost of risk would have already reached its peak after failing in provisions during the second quarter.
At the same time, it emphasizes that the Brazilian subsidiary maintains a "considerably more conservative" credit granting policy than its competitors, with a year-on-year increase of 5.8% in June, compared to the 9.7% recorded by the entire financial system of Brazil.
Jefferies adds that the Central Bank of Brazil (BCB) is considering tightening the risk-weighted capital requirements applicable to credit cards, a business that accounts for around 9% of the total loan volume of Santander Brasil.