UPDATE 2-BTG Pactual misses profit view, in sign asset sales biting

martes 9 de agosto de 2016 23:20 GYT

(Adds details, BSI outflows throughout)

By Guillermo Parra-Bernal

SAO PAULO Aug 9 (Reuters) - Grupo BTG Pactual SA on Tuesday missed second-quarter profit estimates for the first time in almost two years, as downsizing efforts by Latin America's largest independent investment bank curbed trading and money management income.

Net income totaled about 940 million reais ($299 million) in the second quarter, below an analysts' consensus estimate of 1.1 billion reais. Profit dropped 12 percent from the prior three months, falling below the 1 billion-real threshold for net income for the first time in five quarters.

Income from wealth management activities sank as São Paulo-based BTG Pactual sold control of Swiss subsidiary BSI SA and trading suffered with the spin-off of a commodities platform to ease capital needs. The downsizing also drove expenses down, yet at half the pace of revenue, which also suffered from weak asset management activity.

Return on equity (ROE) slumped to 16.1 percent in the quarter, the lowest in three years and below a 18.1 percent estimate.

Founder André Esteves, who steered the bank through an aggressive global expansion until his arrest in November in a corruption probe, had set a long-term goal for ROE of 20 percent. Esteves has denied allegations of his involvement.

The results suggest that BTG Pactual's decision to shed assets and dismantle risky but very profitable trading positions in the wake of Esteves' arrest may hamper the bank's ability to generate a more stable stream of revenue in coming quarters.

Esteves' arrest forced his partners to dispose of assets in the wake of massive client fund withdrawals. He returned to BTG Pactual in a senior advisory role in April, after a Brazilian judge freed him from months of house arrest.   Continuación...