Winner: BTG Pactual
In a market strewn with obstacles following the Covid-19 pandemic, one institution stands out for having maintained its characteristically aggressive growth strategy and successfully taking the firm to new heights across market segments and asset classes, both in its home market and abroad.
For its triumphs in the face of unprecedented challenges, BTG Pactual earns a record four awards this year. It is our Bank of the Year in Brazil after posting first half earnings that surpassed market expectations, while having boosted its market share in several of the segments where it operates.
BTG’s investment banking division has continued its climb towards the top of ECM, DCM and M&A rankings in the domestic market, earning it the award of Investment Bank of the Year in Brazil. Meanwhile, its ever more daring inroads into the asset management and private banking markets, both in Brazil and across Latin America, with support from growing teams in places like Miami and Lisbon, have won it the Wealth Management of the Year award.
And the bank’s overall performance, reflected by the three awards above, gave BTG Pactual the momentum for top honors as Bank of the Year in Latin America.
“We have achieved solid growth in assets, volumes of businesses and the number of clients, with record-breaking contribution, in terms of revenues, from all our main business lines,” says Roberto Sallouti, the bank’s CEO. “Furthermore, we have maintained robust capital and liquidity metrics.”
In Brazil, BTG Pactual has justified its status as the upstart challenger to the three mammoth privately-owned banks by releasing half-year results that reflect its exceptional performance since the onset of the pandemic.
In June, the bank reported milestones, including a 143% increase in the volume of loans to SMEs, a priority area of focus for the bank.
Net profits in the first six months of the year were 74% higher than in the same period of 2020, boosted by a strong second quarter that improved on the previous one by a strong 43%.
Sallouti says that the bank is making its best effort to take advantage of a relatively favorable context in which the Brazilian banking sector is undergoing a digital revolution that is taking place at the same time as a “financial deepening” caused by a drop in interest rates.
“The integration of our digital platforms to our traditional wholesale banking model is allowing us to leverage high growth rates and strong profitability,” he says.
In the second half of 2020, the bank launched BTG+, a digital platform at first offered to stakeholders and existing clients, and which was expanded to the general public in January.
The new platform offers investment services to the upper echelons of the retail banking market, and Sallouti says that by the end of 2022, a range of products will be available to users, ranging from full-service bank accounts to insurance and mortgage loans.
BTG Pactual has also launched a similar initiative to serve the SME market, which Sallouti believes to be poorly served by Brazilian banks and, as a result, an area which provides significant growth opportunities.
The bank has focused on SMEs since 2019, and in the past year the volume of business in its Corporate & SME lending unit grew by 51%, Sallouti says.
Analysts at Brazilian bank Safra wrote in a report following first half earnings that BTG Pactual is one of the best stocks available to take advantage of Brazil’s financial sector growth.
“The bank is surfing the good moment of the Brazilian capital market, which helped it to post very expressive revenues growth in almost all its lines of business,” Safra wrote in an analyst note. “We can see the driver for future profits too.”
The capital markets are indeed one of the places where BTG Pactual made an important mark in the past 18 months, earning it the Investment Bank in Brazil award.
The pandemic crisis notwithstanding, investment banking thrived at the bank over the past year, especially with the frenzy of debt and equity deals that took place in the Brazilian market since mid-2020.
“In the first six months of the year, our Investment Banking unit has already surpassed the revenues collected in the full years of 2017, 2018 and 2019, and reached around 90% of the record-breaking revenues of 2020, with a total of R$1.169 billion,” he said.
BTG Pactual led the IPO of energy company Raizen, the largest in Latin America in the first half of the year, and both the IPO and follow-on deals by truck rental firm Vamos, a stock that has delivered some of the best performances of late.
It also worked on some of the biggest M&A deals in the period, like the R$52 billion merger between Hapvidda, which BTG Pactual advised, and Intermédica, two healthcare groups. In the red hot retail market, the bank advised B2W in its R$7.9 billion union with Lojas Americanas, and Assaí in the R$5.2 billion purchase of the portfolio of stores owned by Pão de Açúcar.
According to Dealogic, BTG Pactual was third in Brazil’s revenue rankings, with $157 million earned between July 2020 and June 2020, while leading the M&A league table and coming fourth in both equity and debt markets. Sallouti sees BTG Pactual’s investment bankers finding further opportunities to deliver growth in the future.
“We believe that, in Brazil, there still is a large universe to be explored with the increase of activity in capital markets and M&As,” he says.
BTG Pactual is in fact active as a buyer of promising asset managers and research firms such as EQI, Ourinvest DTVM, Lifetime, Necton, Fator and Empiricus/Vitreo, which are seen as complementary to the growth of its wealth management business.
“In the past two years, we have expanded and strengthened our structure with strategic acquisitions,” Sallouti says, adding that organic growth is also part of the effort. “In the segments of UHNW and HNW, growth has been pursued by the hiring of the best professionals in the market, and our teams expanded by 61% in Brazil and 147% abroad, especially in the US and Portugal.”
BTG Pactual closed the first half with R$379 billion in assets under management, and Sallouti expects that the number will reach R$600 billion by the end of 2022. That optimism derives from the implementation of new services such as an investment hub with onshore and offshore platforms that is boosted by new technologies, he says. New net money in wealth management reached R$127.7 billion, and assets under management increased by 60% in the asset management business.
“In Wealth Management & Consumer Banking, our assets under custody almost doubled in the period of one year as we increased our share of the market, especially in the retail high income segment,” Sallouti points out.