May 10, 2017 / 1:25 AM / a year ago

UPDATE 1-BTG Pactual profit growth fastest in over a year after trading surge

(Recasts to add details on results, background on company in paragraphs 3-7)

SAO PAULO, May 9 (Reuters) - BTG Pactual’s first quarter profit rose at the fastest pace in more than a year as surging sales and trading income helped Latin America’s largest investment banking firm offset the impact of rising banker bonuses.

São Paulo-based BTG Pactual SA earned net income of 720 million reais ($226 million) last quarter, up 33 percent on a quarter-on-quarter basis. Profit rose at the fastest quarterly pace since the fourth quarter of 2015.

Revenue jumped 67 percent on profitable trading positions in equities, currency and fixed income markets. BTG Pactual’s proprietary investments returned to profit last quarter, while expenses climbed from abnormally low levels in the fourth quarter.

The numbers suggest BTG Pactual’s revenues were finally normalizing following the spin-off of a commodities unit and the sale of Swiss private bank BSI Ltd last year. Both businesses, which represented a significant part of BTG Pactual’s profits, were segregated in the wake of a scandal involving the bank’s billionaire founder Andre Esteves late in 2015.

Management will discuss first-quarter results at a conference call on Wednesday.

Annualized return on equity, a measure of profitability, jumped to 18.7 percent in the first quarter from 12.7 percent in the prior three months. Management has a target for ROE of 20 percent over the long term.

Assets rose for the first quarter in six, totaling 125.171 billion reais at the end of March. BTG Pactual had to dismantle trading positions and reduce assets by two-thirds to cope with massive client fund withdrawals stemming from the scandal.

The regulatory capital ratio at BTG Pactual’s core banking unit fell to 19.5 percent in the first quarter, still the highest among Brazil’s largest banks. Such a level is key to promote expansion in investment banking and money management without straining costs, Chief Executive Officer Roberto Sallouti said in February.

$1 = 3.1898 reais Reporting by Guillermo Parra-Bernal; Editing by Sandra Maler and Andrew Hay

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