Chief Executive Officer Sérgio Rial's efforts to improve customer experience and reduce fundraising costs should help bolster profitability metrics this year, executives said on Wednesday, when Santander Brasil posted record first-quarter profit that beat estimates.

Return on equity, a widely followed gauge of profitability, hit a six-year high of 15.9 percent last quarter. The number beat an estimate of 12.5 percent and topped a 2018 year-end goal of 15.6 percent for the first time.

Recurring net income, or profit excluding one-time items, came in at 2.28 billion reais (565.76 million pounds) in the first quarter, up 15 percent from the prior three months. The number beat a consensus estimate of 1.63 billion reais compiled by Thomson Reuters.

The results show how Rial's strategy has born fruit despite Brazil's harshest economic recession on record. Since taking the helm of Santander Brasil in September 2015, he set as a top priority cutting Santander Brasil's profitability gap with rivals Itaú Unibanco Holding SA (>> Itau Unibanco Holding SA) and Banco Bradesco SA (>> Banco Bradesco SA).

The latest improvement in the performance of Santander Brasil, for years a laggard among Brazil's largest banks, also propelled the results of parent Banco Santander SA (>> Banco Santander, S.A.).

Earlier in the day, the Spanish banking behemoth reported a 14 percent jump in first-quarter profit. Results at Santander Brasil represented 26 percent of Santander's profit last quarter, sharply up from 21 percent in the quarter before.

"Our ROE will get even closer to theirs in coming quarters, without putting at risk our credit risk view," Rial said at an event to discuss quarterly results, noting that he expects the industry to lower loan-loss provisions in coming quarters.

His remarks suggest that lingering credit quality woes for banks are taking the backseat. While it may take longer for retail and job market indicators to revive after a three-year slump, business confidence gauges and a central bank's interest-rate cutting cycle should bolster a recovery, economists said.

Units (>> Banco Santander Brasil SA), a blend of Santander Brasil's common and preferred shares, rose up to 2.0 percent on Wednesday, bucking a 0.4 percent decline in an index tracking financial shares trading in São Paulo <.IFNC>.

Rial kept other targets unchanged, including a December 2018 goal of bringing default ratios in line with those of peers.

($1 = 3.1470 reais)

(Editing by Mark Potter)

By Guillermo Parra-Bernal and Aluísio Alves