UPDATE 2-BTG Pactual's Esteves sees commodities increasingly adding to profit

miércoles 7 de mayo de 2014 17:12 GYT

(Adds comments from executive in paragraphs 6-10)

By Guillermo Parra-Bernal

SAO PAULO May 7 (Reuters) - The contribution of commodities sales and trading to Grupo BTG Pactual SA's profit will rise in coming quarters, Chief Executive Officer André Esteves said on Wednesday, underscoring the synergies the unit has with the investment bank's trading desk.

A move to extend the offering and trading of specialized products for fixed-income, equities and currencies to commodities since late 2012 was shown to be "the right decision because we leveraged our synergies in a number of key areas," Esteves said in a conference call to discuss first-quarter earnings.

BTG Pactual is betting big on commodities, taking advantage of regulatory hurdles afflicting larger rivals. Some operations outside Brazil are being integrated rapidly, raising revenue in areas from asset management to financial advisory services, Esteves and other executives added.

The contribution of commodities sales and trading, which includes grains, oil and gas, energy and mining and metals, to profit will be incremental in spite of a tough market for the asset class, he added. He provided no guidance on the unit, but said its share in the sales and trading revenue line should be similar to that of currencies, fixed-income and equities.

"Not more, not less, just in line with the other legs of the business," Esteves said of the weight of commodities sales and trading on revenue.

The São Paulo-based lender reported first-quarter net income of 832 million reais ($373 million), well above the 797 million estimate in a Reuters poll. Compared with the fourth quarter, profit rose 8.3 percent, while on an annual basis it soared 35.9 percent - the result of a tumble in taxes amid stable revenue and a slight decline in expenses.

Esteves, 45, who said BTG Pactual's business model is more stable than analysts think, weathered the toughest start to a year for Brazilian capital markets in a decade by cutting banker bonuses by 28 percent in the wake of lower private-equity and asset management income. Sales and trading thrived as the commodities drive bore fruit, making up more than half of first-quarter revenue.   Continuación...