Santander shares fall 5.3% after Lula wins Brazil’s presidential runoff
Key Facts
Santander shares fell 5.3% to 10.90 euros in early European trading on October 26 after Luiz Inácio Lula da Silva won Brazil’s presidency, according to a Dow Jones Newswires report. The stock was the worst performer among its European peers in early trading, after falling about 5%, according to Reuters. The move followed the runoff Lula won on October 25, defeating Flávio Bolsonaro. Investors are now focused on how the political landscape will affect Brazil’s economic outlook and the impact on Santander’s business in the country.
The result shifted between the two rounds: Bolsonaro led the first round on October 4 with 47.03% of valid votes, compared with 45.16% for Lula. Lula won the runoff after finishing second in the first round, an electoral backdrop that is important to understanding markets’ reaction after the result was announced. A total of 128.2 million voters took part in the runoff, out of more than 158 million eligible voters. Turnout was about 19.2% lower than the 21.08% abstention rate in the first round.
Citi said in a note carried by Reuters that investors would focus on Brazil’s fiscal outlook and the risk that the benchmark interest rate could remain high for longer. The bank added that this could delay a recovery in banks’ asset quality, linking the course of domestic economic policy with Santander’s outlook in its Brazilian market. Citi estimated that Brazil contributes about 15% of the group’s profits. The country was Santander’s second-largest market in 2025 and contributed the same share of profits, with pretax profit of 3.22 billion euros, according to a Dow Jones report. Santander Brasil describes itself as the country’s third-largest private bank and says it has operated there for more than 40 years.
Concerns about funding costs come as Brazil’s central bank cut the Selic rate to 13.75% a year effective September 17, 2026. The Monetary Policy Committee said the labor market remained strong despite a gradual moderation in activity. Before the runoff, Brazilian stocks closed on Friday about 7% above their level before the first round, while the real was about 5% stronger against the dollar, according to Reuters. In Asian trading on October 26, November Brazilian real futures fell 10%, and the Tokyo-listed Nomura NF Ibovespa Link ETF dropped 15%. These moves show the reaction spreading from Brazilian assets to the bank’s shares, given its significant exposure to the domestic market.
For near-term updates, Santander said it will publish its financial results for the first nine months of 2026 on Wednesday, October 28, with an audio presentation for analysts at 10:00 a.m. Madrid time. The upcoming release will give investors a view of the period’s results before the year is complete, as they monitor Brazil’s contribution to the group’s performance after the election. The Brazilian Institute of Geography and Statistics is also scheduled to publish its monthly Continuous National Household Sample Survey for September 2026 on October 30. The data release comes two days after the bank’s results, giving markets two upcoming indicators to watch: Santander’s performance disclosure, followed by an official reading of Brazil’s labor market.