UPDATE 1-Santander Brasil posts Q1 net profit down 46.6%

(Adds details, CEO quotes)

SAO PAULO, April 25 (Reuters) - Banco Santander Brasil SA on Tuesday reported a first quarter net profit of 2.14 billion reais ($425.09 million), down 46.6% from a year earlier but still above analysts' forecasts of 1.83 billion in a Refinitiv poll.

The Brazilian unit of Spain's Banco Santander SA has been trying to be more selective in lending for more than a year now, as credit conditions deteriorated, but in the meantime posted some weak quarterly results.

The lender's chief executive, Mario Leao, said in a statement that Santander started 2023 with a focus on strengthening its balance sheet, but even so managed to increase its portfolio in some strategic businesses such as auto, payroll and real estate loans.

Santander Brasil's loan portfolio totaled 500.3 billion reais in the quarter, up roughly 10% from a year earlier, while loan-loss provisions jumped 46.7% to 6.76 billion reais - although slowing down 8% on a sequential basis.

"Allowance for loan losses and the rise in the cost of credit are appropriate for current circumstances, as they continue to be influenced by prior vintages," Leao said, while highlighting a one-off event that generated revenue from the reversal of tax provisions in the quarter.

Quarterly return on average equity (ROAE), a gauge of profitability, recovered to 10.6% after plummeting to single-digit levels in late 2022, but remained well below the 20.7% seen a year ago, Santander Brasil said.

Its Spanish parent firm, which has in Brazil its main market, reported results earlier in the day, beating forecasts with a 1% rise in net profit but saying weaker trade in Latin America's largest economy offset a strong performance in Europe.

($1 = 5.0342 reais) (Reporting by Gabriel Araujo Editing by Louise Heavens and Mark Potter)