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UPDATE 2-Santander Brasil's profit surprises amid pandemic second wave

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(Adds CFO, analyst comments and shares)

By Carolina Mandl

SAO PAULO, April 28 (Reuters) - Banco Santander Brasil SA beat analysts' estimates for quarterly profit on Wednesday, surprising investors who had been more pessimistic about the lender's performance amid a brutal second wave of the pandemic in Brazil.

Recurring first-quarter net income came in at 4.012 billion reais, 9.2% above an analyst estimate compiled by Refinitiv of 3.673 billion reais and up 4.1% from a year earlier.

Units in Santander Brasil, comprised of one common share and one preferred share, were up more than 6% in morning trading, at roughly 39.90 reais.

Santander set aside 3.161 billion reais in provisions for bad loans, down 7.7% from a year earlier.

"We had expected a faster provisioning pace," analyst Pedro Leduc at Itau BBA wrote in a note to clients, calling the bank's first quarter results "solid".

However, loan-loss provisions were up by 9.7% from the fourth quarter, although CFO Angel Santodomingo said the spike was related to seasonality.

"We don't see worrying signs in asset quality, but we are not expecting a strong economic recovery in Brazil," he said.

Brazil has been hit hard by a second wave of the coronavirus pandemic, which analysts expected would lead to an increase in provisions.

The bank's 90-day default ratio remained stable at 2.1%.

Its loan book shrank 2.9% from December, mainly on loans extended through bonds, and grew by 7.4% in a year.

Santodomingo said the loan book is likely to grow by a high single digit or low double digit figure in 2021.

Analysts also highlighted better-than-expected net interest income, which grew by 6.1% from a year earlier to 13.422 billion reais.

Return on equity was 20.9%, in line with the previous quarter.

In Spain, Banco Santander's net income jumped to 1.608 billion euros versus 331 million euros a year earlier, on lower provisions and record earnings in the U.S. (Reporting by Carolina Mandl, editing by Louise Heavens, Kirsten Donovan)