May 12, 2020 / 10:15 AM / 3 months ago

UPDATE 2-Brazil's BTG Pactual pushes back retail banking due to COVID-19

(Adds CEO comments)

By Carolina Mandl

SAO PAULO, May 12 (Reuters) - Brazilian investment bank Banco BTG Pactual SA is delaying the launch of its new consumer banking platform by three to four months due to the coronavirus pandemic, Chief Executive Roberto Sallouti said on Tuesday.

The bank has started testing debit and credit cards but is not offering them to all clients, he said. The official launch will occur later this year or in early 2021.

BTG aims to become the country's sixth-largest retail bank by client base with the launch of its consumer banking unit.

Sallouti announced the delay on a Tuesday call to discuss first-quarter earnings, which missed estimates as the bank said it was reducing risks in financial markets, bracing for the impact of the COVID-19 respiratory disease sweeping Brazil.

"The outlook is very uncertain and requires caution. For this reason, we decided to preserve our solid capital and liquidity position," Chief Executive Roberto Sallouti said in a statement.

The bank's core capital ratio rose to 15% from 12.2% in the previous quarter, while its return on equity dropped 4.6 percentage points to 14.5%.

Recurring net income, which excludes one-time items, rose 9.4% from a year earlier to 789 million reais ($136 million), missing a Refinitiv analysts' consensus of 848.9 million reais.

BTG's total revenue rose 2% to 1.518 billion reais, as most business lines grew from a year earlier. Still, the bank posted a loss of 18 million reais on its proprietary investments, due to global market turmoil and real estate declines.

Net new money from asset and wealth management clients rose to 21.2 billion reais, up roughly 37% from the last quarter of 2019. Nearly two-thirds of the net new money is coming from its investment platform BTG Pactual Digital.

The bank's loan book rose 8.9% from the previous quarter, reaching 47.7 billion reais. Sallouti said the bank plans to increase the loan book to 2.6 times shareholder equity by year-end from 2.2 times currently.

BTG tightened its belt in the first quarter, with operating expenses growing 1% year-on-year, although it sped up costs related to its newly launched digital retail unit, as BTG has said it sees strong business opportunities.

$1 = 5.8172 reais Reporting by Carolina Mandl, editing by Louise Heavens and Cynthia Osterman

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