Shares in the Brazilian credit card networking services provider Redecard SA climbed to their highest in three months Monday after Banco Santander SA said the country's payment card industry may report "strong" growth of 20% this year.

"We still see a strong growth rate of 20% on transaction value, decelerating from 2008 but still maintaining above-level growth rates compared with other financial and nonfinancial sectors in Brazil," Santander analyst Boris Molina wrote in a research note. "In the credit card world, the Itau-Unibanco merger" would create "the largest credit card issuer in Brazil, with some 35 million credit cards issued, or a 28% market share."

A quarter of food purchases in Brazil are made with credit or debit cards, making Redecard a defensive company, and together with "the cannibalization of cash and check transactions by payment cards, may more than offset the economic slowdown effect," Mr. Molina wrote.

Redecard is jointly controlled by Citigroup Inc. and the Brazilian banks Banco Itau and Unibanco; the two Brazilian companies said in November that they had agreed to merge.

Redecard would likely benefit from the merger as the two controlling shareholders are unlikely to act "in a manner that would harm the value perception" of Redecard, Mr. Molina wrote.

Redecard surged 8.2% Monday morning; by midafternoon it was trading up 4.6%. Its shares fell 9% last year.

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