BTG reports a loss of R$ 280 million with Sete Brasil.
The largest independent investment bank in emerging markets, headed by André Esteves, announced a net profit of R$ 854 million in the first quarter, a 2,6 percent increase compared to the same period in 2014; however, revenue was impacted by the investment in the oil exploration rig manufacturer Sete Brasil, with a negative gross impact of R$ 280 million; the company is under investigation in the Lava Jato corruption probe.
SAO PAULO (Reuters) - BTG Pactual's profit was virtually in line with analysts' forecasts in the first quarter, with strong results from the trading desk being partially offset by accounting adjustments in proprietary investments.
The largest independent investment bank in emerging markets announced on Wednesday that it had a net profit of 854 million reais in January, up 2,6 percent compared to the same period in 2014 and slightly higher than the average analyst estimate of 847 million reais.
BTG's total revenue reached 1,96 billion reais, a 15 percent increase over the previous year, supported by activities such as loans to companies (+62 percent), interest on financial investments (+98 percent), and the sales and trading desk, which rose 34 percent, the best quarterly level since 2010.
This last line reflected the robust performance of the commodities desks, especially metals and grains, said BTG Pactual.
These performances more than compensated for the weaker performance in lines such as asset management (-23 percent), mainly due to the recognition of performance fees.
Furthermore, revenue from investment banking fell by 42 percent, reflecting the weak activity in the Brazilian capital market during the period.
The main investments division, which brings together the bank's proprietary investments in segments such as private equity and real estate, had a negative revenue of 444 million reais, compared to a negative figure of 115 million reais a year earlier.
One of the factors contributing to this performance was the provision for impairment of assets on the investment in the oil exploration rig manufacturer Sete Brasil, equivalent to approximately 25 percent of the book value, with a gross negative impact of 280 million reais.
At the end of March, BTG Pactual's loans to companies totaled 49,1 billion reais, a 24,5 percent increase in 12 months, but 5,9 percent lower than at the end of 2014. Lower provisions than in the previous quarter helped BTG achieve higher revenues in this line item on a sequential basis.
(By Aluisio Alves)