- Return on Equity (ROE): 22.5% for the quarter.
- Total Revenues: BRL6 billion for the quarter.
- Net Income: BRL2.9 billion, growing 15% year-over-year.
- Total Assets Under Management (AUM): Surpassed BRL1.7 trillion, with BRL56 billion of new money and 23% year-over-year growth.
- Funding Base Growth: 30% year-over-year.
- Credit Portfolio Growth: 27%, reaching BRL195 billion.
- Cost-to-Income Ratio: 37.3% for the quarter.
- Compensation Ratio: 20.8% for the quarter.
- Total Assets: BRL600 million.
- Equity: BRL53 billion.
- Basel Ratio: 16.2%.
- Net Income per Unit: BRL0.77.
- First Half Total Revenues: BRL11.88 billion.
- First Half Net Income: BRL5.84 billion, growing 21% year-over-year.
- First Half Return on Equity (ROE): 22.8%.
- First Half Net Income per Unit: BRL1.53.
- Investment Banking Revenues: BRL558 million for the quarter.
- Corporate Lending Revenues: BRL1.534 billion, growing 20% year-over-year.
- Sales & Trading Revenues: BRL1.388 billion for the quarter.
- Asset Management Revenues: BRL548 million, growing 27% year-over-year.
- Wealth Management Revenues: BRL928 million, growing 27.6% year-over-year.
- Wealth Under Management: BRL799 billion, growing 27% year-over-year.
- Net New Money in Wealth Management: BRL27.8 billion for the quarter.
- Participation Results: BRL224 million in profits.
- Total Operating Expenses: Increased 1.9% during the quarter.
- Effective Tax Rate: 19.9%.
- Total Assets Growth: 5.8% during the quarter.
- Liquidity Levels: BRL75 million of cash and cash equivalents.
- Unsecured Funding Base: BRL236 billion.
- Core Equity Tier 1: 12.3%.
- VaR (Value at Risk): 21 basis points.
Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Banco BTG Pactual S.A. (BSP:BPAC3, Financial) achieved record results in Q2 2024, driven by revenue growth and increased operational leverage, with a return on equity (ROE) of 22.5%.
- The company reported robust results in investment banking, particularly in debt capital markets (DCM) and corporate lending, with strong portfolio growth and healthy spreads.
- Total assets under management (AUM) surpassed BRL1.7 trillion, with a 23% year-over-year growth, and BRL56 billion in new money.
- The funding base expanded by 30% year-over-year, maintaining strong capital and liquidity metrics with a Basel ratio of 16.2%.
- The wealth management business showed a 27% growth in AUM year-over-year, reaching BRL799 billion, and the asset management business grew by 20% year-over-year, closing at BRL920 billion.
Negative Points
- Sales and trading revenues remained flat compared to the last two quarters, facing challenging market conditions and low VaR allocation.
- Investment banking revenues decreased compared to Q1 2024, despite strong DCM activity, due to lower M&A and ECM contributions.
- Asset management revenues saw a 4.6% decrease during the quarter, impacted by the absence of dividends from independent asset management companies.
- The effective tax rate remained stable at 19.9%, influenced by the JCP distribution, which could impact net income.
- The company's unsecured funding base grew, but retail funding remained stable at 28%, indicating potential challenges in increasing retail funding share.
Q & A Highlights
Q: Can you provide more detail on the sales and trading performance and expectations for the second half of the year?
A: We expect the second half of the year to be better than the first half. The low VaR this quarter was due to specific conditions, but we are confident that the dynamics will improve, leading to better performance in sales and trading. (Roberto Balls Sallouti, CEO)
Q: What is your strategy for M&A, and can we expect more deals in the second half?
A: Our M&A strategy focuses on complementary product lines and leveraging our current offerings. We will continue to look for opportunities that add value to our client base or bring additional clients to our platform. No transformative acquisitions are expected, but we will pursue specific opportunities. (Roberto Balls Sallouti, CEO)
Q: Can you explain the drop in investment banking revenues this quarter and the outlook for fees?
A: The drop in revenues was due to the timing of M&A transactions, which are only booked when closed. Q1 had strong M&A fees, while Q2 saw strong debt capital market fees. There is no deferred accrual; the fees will be recognized as transactions close. (Roberto Balls Sallouti, CEO)
Q: What was the impact of independent asset management companies on the asset management business this quarter?
A: The decrease in revenues was due to the high comparison base from the previous quarter, which included dividends from independent asset managers. Despite this, we saw constant growth in management fees and strong net new money, reflecting a healthy performance in a challenging market. (Roberto Balls Sallouti, CEO)
Q: Can you provide a regional breakdown of revenues and the outlook for LATAM?
A: All LATAM geographies are having record years with strong performance. Although Brazil's growth has decreased LATAM's participation to below the historical 15%, we expect it to return to this level as LATAM businesses continue to perform well. (Roberto Balls Sallouti, CEO)
Q: What are your expectations for corporate lending growth for the rest of the year?
A: We expect corporate lending growth to exceed 20% for the year. The strong performance in this segment is driven by healthy spreads and revenue diversification. (Roberto Balls Sallouti, CEO)
Q: Can you elaborate on the expected ROE expansion and the role of Banco Pan in this?
A: We are confident in sequential ROE expansion due to strong performance across business lines, particularly in sales and trading. Banco Pan's ramp-up and reduced netting effect will also contribute to ROE growth. (Roberto Balls Sallouti, CEO)
Q: What is the target for retail funding growth, and how do you plan to achieve it?
A: We expect retail funding to grow as a percentage of total funding, potentially exceeding 30% in the next few quarters. This growth will be driven by successful capital markets transactions, strong net new money in high-income retail and wealth management platforms, and expansion in personal and business banking activities. (Roberto Balls Sallouti, CEO)
Q: How are you able to sustain stable take rates in wealth management despite challenging markets?
A: We are confident in sustaining stable take rates due to our comprehensive product offering and strong client feedback. As new money matures, it starts generating revenues, and we continue to expand our product offering, particularly in personal banking. (Roberto Balls Sallouti, CEO)
Q: What is your approach to SME lending, and how do you view the competition in this segment?
A: We see ourselves as disruptors in the SME segment, offering a robust product suite and excellent client experience. While competition from incumbent banks is expected, we are confident in our ability to grow client activity and maintain healthy spreads. (Roberto Balls Sallouti, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
