BTG Beats Analysts’ Estimates Amid Expansion in Commodities

May 07, 2014 1:03 pm ET

(Updates with Esteves’s comment in sixth paragraph, share price in last.)

May 7 (Bloomberg) -- Grupo BTG Pactual, the bank controlled by Brazilian billionaire Andre Esteves, said profit rose 36 percent in the first quarter, beating analysts’ estimates as the company expands in commodities.

Adjusted net income, which excludes one-time items, climbed to 832 million reais ($373 million), or 92 centavos a share, from 612 million reais, or 68 centavos, a year earlier, the Sao Paulo-based bank said yesterday in a regulatory filing after the market closed. Profit surpassed the 87-centavo estimate of four analysts surveyed by Bloomberg.

BTG is betting on commodities as other global banks retreat amid pressure from regulators. Revenue from sales and trading, which includes the commodities business, advanced 30 percent to 874 million reais in the first quarter from a year earlier, according to the filing.

“The positive highlight of 1Q14 was by far sales and trading,” Banco Bradesco SA analysts including Carlos Firetti wrote in a note to clients today. “The figures showed the resilience of the bank’s business model, in which despite large quarterly variations in different business units, as a whole, the bank’s revenue mix can sustain decent levels of return.”

Adjusted return on equity, a measure of profitability, rose to 20.2 percent in the first quarter from 16.9 percent a year earlier, according to the filing. That was the highest since the fourth quarter of 2012, when it was 25.1 percent.

The bank expects ROE to stay above 20 percent in coming years, Esteves, BTG’s chief executive officer, said on a conference call with analysts today.

BTG gained 0.1 percent to 31.63 reais in Sao Paulo at 1:55 p.m., compared with an advance of 0.5 percent for Brazil’s Ibovespa benchmark index. The shares rose 16 percent this year through yesterday.