BTG Profit Beats Estimates After Hospital-Chain Stake Sale

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Andre Esteves
Grupo BTG Pactual founder and billionaire Andre Esteves. Photographer: Chris Ratcliffe/Bloomberg

Grupo BTG Pactual, the investment bank controlled by Brazilian billionaire Andre Esteves, said second-quarter profit rose 6 percent, beating analysts’ estimates, after it sold a stake in a medical-care provider.

Earnings adjusted for one-time items climbed to 1.02 billion reais ($290 million), or 1.13 reais a share, from 962 million reais, or 1.06 reais, a year earlier, the Sao Paulo-based bank said in a regulatory filing Wednesday after the market closed. The average estimate of four analysts surveyed by Bloomberg was 99 centavos a share.

BTG in May sold a stake in Rede D’Or Sao Luiz SA to GIC Pte, Singapore’s sovereign wealth fund, for 1.6 billion reais. The sale helped the bank’s principal investments, which include private equity, real estate and proprietary trading, post revenue of 507.6 million reais. The division had 74 million reais in negative revenue a year earlier.

“In spite of the earnings beat, our first take is mixed to negative as results benefited from an individual sizable gain even as market-related businesses suffered in the quarter,” JPMorgan Chase & Co. analysts wrote in a research note. The report said corporate lending, asset management and investment banking showed resilience.

The bank rose 0.2 percent to 25.93 reais at 11:50 a.m. in Sao Paulo, matching the increase for the Ibovespa benchmark index.

Keeping Vigilant

“While we remain confident in the long-term outlook of the Latin American economies, we also remain vigilant and active in taking advantage of the opportunities that the prevailing market conditions present,” Chief Executive Officer Esteves wrote in the filing. The bank is reaffirming its ability to deliver a return-on-equity of more than 20 percent, he said.

ROE, a measure of profitability, reached 21 percent in the second quarter, up from 18 percent in the previous three months.

Chief Financial Officer Marcelo Kalim said on a conference call Thursday that the firm is shifting capital to banking businesses from principal investments.

BTG booked second-quarter provisions for investments concentrated in the oil and gas industry as a “conservative accounting approach,” according to its earnings statement, which didn’t name the holdings. The firm’s effective income tax rate declined to 0.7 percent in the second quarter from 27 percent in the three previous months and 4.3 percent a year earlier.

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