BTG Profit Misses Estimates on Lower Merger Advisory Fees

Grupo BTG Pactual (BBTG11), Latin America’s biggest merger adviser, said fourth-quarter profit dropped 10 percent, missing analysts’ estimates on declining revenue from financial advisory and asset management.

Earnings adjusted for one-time items declined to 768 million reais ($320 million), or 85 centavos a share, from 854 million reais, or 94 centavos, a year earlier, the Sao Paulo-based lender said yesterday in a filing. That fell short of the 87-centavo estimate of three analysts surveyed by Bloomberg.

Revenue from investment banking decreased to 50 million reais in the fourth quarter from 121 million reais a year earlier, according to the statement. BTG said the division was hurt by a “lower number of mergers and acquisitions and weaker capital markets activity.” Asset-management revenue dropped 25 percent to 480 million reais.

Investment-banking revenue of 50 million reais was “well below” the average of 140 million reais in the previous three quarters, Deutsche Bank AG analysts including Mario Pierry wrote in a report to clients yesterday.

BTG slipped 1.2 percent to 24.41 reais at 1:18 p.m. in Sao Paulo, compared with little change for the Ibovespa benchmark index.

Chief Executive Officer Andre Esteves expects the bank to post return on equity, a measure of profitability, above 20 percent in coming years, he said on conference call with analysts today. BTG had a return on average equity of 18.4 percent in 2013, according to the filing. Esteves also said he expects BTG’s new commodities division to generate a profit this year.

Bonus expense in 2013 fell 19 percent to 947.2 million reais from a year earlier, according to the filing.

To contact the reporter on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net

To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net; David Scheer at dscheer@bloomberg.net

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