November 5, 2019 / 9:49 AM / 7 days ago

UPDATE 2-BTG Pactual to expand loan book in Chile, Colombia

(Adds CFO comments)

By Carolina Mandl

SAO PAULO, Nov 5 (Reuters) - Banco BTG Pactual SA , Latin America’s largest independent investment bank, plans to boost lending outside Brazil to offset growing domestic competition as the economy improves, Chief Financial Officer Joao Dantas said on Tuesday.

Chile and Colombia are the bank’s main targets for loan expansion in Latin America, he said in an interview. The vast majority of BTG’s borrowers are Brazilian companies.

“BTG already advises many companies outside Brazil as an investment bank,” he added. “Now we want to broaden our relationship with clients.”

In Chile, BTG has a $1 billion loan book, while in Colombia it has just started extending corporate loans.

BTG’s loan book grew 13.3% to 49.4 billion reais in September from June, as demand from Brazilian companies began to rise with the economic recovery.

Dantas said competition is likely to intensify in the coming quarters, deteriorating margins, and expanding to other countries could offset it.

RESULTS

BTG on Tuesday reported a 56.6% rise in third-quarter net income on higher trading gains and investment banking fees.

Recurring net income, which excludes one-time items, totaled 1.073 billion reais ($267.43 million), up from 685 million reais a year earlier.

Total revenue rose 74% from the year-ago quarter to 2.184 billion reais, bolstered by gains at its trading desk, investment banking unit and proprietary investments.

Strong revenues offset higher operating expenses.

The Sao Paulo-based bank reported an annualized return on equity, a measure of profitability, of 20.8%, up 0.2 percentage points from the previous quarter.

Net inflows to BTG’s asset and wealth management businesses totaled 27.3 billion reais in the quarter.

Brazilian federal police raided BTG’s headquarters twice this year as they investigated its founder, Andre Esteves. In August, they searched its offices as part of a probe into the sale of stakes in African oilfields to BTG Pactual. Earlier this month the bank was investigated for alleged illegal leaking of interest rate decisions to a fund named Bintang.

BTG has denied any wrongdoing.

Units in BTG Pactual, comprising one common share and two preferred ones, almost tripled in value this year, helped by the influx of money to the bank’s funds and its digital investment platform, BTG Pactual Digital. Units rose 1% in afternoon trading to 68.68 reais. ($1 = 4.0122 reais) (Reporting by Carolina Mandl; editing by Louise Heavens and Richard Chang)

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