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BTG Pactual Q2 profit slumps 50% on lower i-bank, trading revenues

BTG Pactual Group posted a sharp drop in second-quarter profit as the Brazilian bank saw weaker revenues amid Brazilian political turmoil.

Net profit for the quarter hit 503 million Brazilian reais, halving from a year-ago profit of 1.00 billion reais. BTG Pactual, which operates through unit Banco BTG Pactual SA and its respective subsidiaries, noted that it recorded amortization expenses totaling 64 million reais in the second quarter related to the goodwill from sale of Swiss unit BSI SA to EFG International AG.

Adjusted net income totaled 603 million reais, or 67 centavos per unit, down from 1.00 billion reais, or 91 centavos per unit, earned in the year-ago period.

Total revenues in the quarter reached 851 million reais, down 68% from 2.65 billion reais a year earlier, mainly due to weak performance in investment banking. Operating expenses, meanwhile, decline to 498 million reais from 1.57 billion reais.

"Revenues were impacted by a weak performance in investment banking, where we had low levels of activity while maintaining our market share and leadership position, and sales and trading, where we had lower revenues especially from rates desks, mostly due to the rapid change in market dynamics following Brazil’s political turmoil, which contributed to higher volatility and lower volumes," the bank said.

Revenues from sales and trading decreased by 87% year over year to 154 million reais, while investment banking revenues fell 76% to 19 million reais. Revenues from BTG Pactual's asset management operations fell 17% annually to 107 million reais.

Revenues from corporate lending, however, increased 5% year over year to 289 million reais from 276 million reais.

BTG Pactual's loan portfolio totaled 11.13 billion reais at the end of the second quarter, down 72% from 40.32 billion reais a year ago. Annualized return on average equity fell to 13.3% from 19.4%.

The Brazilian bank noted that its assets under management and assets under administration stood at 127.9 billion reais at the end of second quarter of 2017, up 6% from 120.1 billion recorded in the prior quarter.

As of Aug. 1, US$1 was equivalent to 3.12 Brazilian reais.