HSBC cuts Banco Santander Brasil stock rating on liquidity concerns

HSBC has reduced its rating on Banco Santander Brasil SA from Buy to Hold, lowering its price target from R$36.00 to R$31.00. The downgrade comes amid concerns over liquidity resulting from an exchange offer by parent company Santander Group. HSBC expects this will significantly decrease the stock’s liquidity and eliminate the ADR program.

Analyst Carlos Gomez-Lopez noted that the company has undergone management changes and adopted a conservative approach to credit. Despite the downgrade, the stock remains undervalued as per InvestingPro Fair Value analysis, suggesting potential upside. Banco Santander Brasil is currently trading at a P/E ratio of 8.21, and it has paid dividends consistently for 18 years.

The company reported a recurring net income of BRL 3 billion in Q2 2026, with a return on average equity of 12.5%. However, HSBC points out that the bank is navigating a challenging macroeconomic environment, with lower funding results and deferred expenses impacting revenue. JPMorgan recently downgraded the stock rating from Overweight to Neutral, citing a weak earnings report and a slower path to earnings recovery.