BTG Profit Beats Estimates on Commodities as Esteves Returns

  • Revenue from sales and trading unit rises 67% on energy
  • Bank boosts wealth-management revenue more than 11-fold

Grupo BTG Pactual, the Brazil investment bank whose founder returned from house arrest last month, said profit rose 25 percent, topping analysts’ estimates, on higher revenue from sales and trading and wealth management.

First-quarter net income advanced to 1.07 billion reais ($309 million), or 1.19 reais a share, from 854 million reais, or 94 centavos, a year earlier, according to a regulatory filing Tuesday. That’s more than the 98-centavo estimate of three analysts surveyed by Bloomberg.

Co-Chief Executive Officers Roberto Sallouti and Marcelo Kalim focused on boosting liquidity after former Chairman and CEO Andre Esteves was arrested in November in connection with a nationwide corruption investigation. The firm sold assets, including loan books and Swiss private-banking unit BSI, cut dividend payments and payroll, and secured a 6 billion-real rescue line from Brazil’s privately owned deposit-insurance fund.

Esteves denied wrongdoing through his lawyers, while the bank said it wasn’t part of the investigations. He was released from prison in December and remained under house arrest until April 25, when he was freed by Brazil’s Supreme Court. Two days later, BTG said Esteves would return to the bank as a senior partner, advising on strategy.

Unit Results

The sales and trading unit, which includes commodities, fixed income and foreign exchange, posted revenue of 1.96 billion reais in the first quarter, up from 1.17 billion reais a year earlier. Wealth-management revenue jumped more than 11-fold to 1.23 billion reais as the bank started consolidating BSI into its earnings. BTG completed the acquisition of BSI in September, before agreeing to sell it in February.

First-quarter assets would be 133 billion reais compared with the reported 235 billion reais with the BSI stake sale and the planned spinoff of the commodity-trading business, Kalim told analysts on a conference call Wednesday. Last month, the bank said it planned to segregate the unit, renaming it Engelhart Commodities Partners.

Principal investments, which include private equity, real estate and proprietary trading, posted a loss that widened to 519 million reais from 444 million reais last year.

BTG fell 0.5 percent to 19.40 reais at 12:23 p.m. in Sao Paulo, compared with a 0.4 percent gain for Ibovespa benchmark index. The shares had fallen by half during the three weeks Esteves remained jailed. Since Esteves won his release from prison in December, the bank’s shares rose 34 percent, more than the 18 percent gain for Ibovespa.

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