Banco BTG Pactual S A : 2Q23 Earning Release

Earnings Release

Second Quarter 2023

August 9, 2023

Net New Money

Total AuC

(R$)	(R$)
61bn	1.4tn
2Q 23	2Q 23
235bn LTM 2Q 23	31% y-o-y growth
Adjusted Net Income	Total Revenues
(R$)	(R$)
2.6bn	5.4bn
2Q 23	2Q 23
18% y-o-y growth	21% y-o-y growth
Credit and SME	Unsecured Funding
Portfolio (R$)	(R$)
154bn	182bn
31% y-o-y growth	10% y-o-y growth
SME: 15bn
Basel Ratio	ROAE Adj
15.4%	22.7%

2Q 23

2Q 23

Earnings Release

Second Quarter 2023

Highlights

Banco BTG Pactual S.A. reported total revenues of R$5,442.8 million and adjusted net income of R$2,574.9 million for the quarter ended June 2023.

BTG Pactual's adjusted net income per unit and annualized adjusted return on average shareholders' equity ("Annualized Adj. ROAE") were R$0.68 and 22.7%, respectively, for the quarter.

As of June 30, 2023, total assets of BTG Pactual were R$474.6 billion, a 0.9% increase compared to March 31, 2023. Our BIS capital ratio was 15.4%.

Banco BTG Pactual Financial Summary and Key Performance Indicators

	Highlights and KPIs		Quarter		Year to Date
	(unaudited)
	(in R$ million, unless otherwise stated)	2Q 2022	1Q 2023	2Q 2023	6M 2022	6M 2023
	Total adjusted revenues	4,513	4,803	5,443	8,864	10,246
	Accounting net income	2,067	2,133	2,441	4,010	4,574
	Adjusted net income (1)	2,175	2,263	2,575	4,237	4,838
	Adjusted net income per unit (R$)	0.57	0.59	0.68	1.11	1.27
	Annualized ROAE	21.6%	20.9%	22.7%	21.5%	21.7%
	Adjusted cost to income ratio	38.7%	39.3%	39.3%	38.9%	39.3%
	Adjusted shareholder's equity	41,359	44,208	46,708
	Total Number of Shares (# in '000)	11,496,481	11,433,761	11,433,761
	Number of Units (# in '000)	3,832,160	3,811,254	3,811,254
	Book Value per unit (R$)	10.8	11.6	12.3
	BIS Capital Ratio	15.2%	15.5%	15.4%
	Total assets (in R$ Billion)	454.8	470.4	474.6
	Total of WuM and AuM	1,067.6	1,285.1	1,398.1

Note: Number of shares ex-treasury

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Earnings Release

Second Quarter 2023

BTG Pactual Performance

BTG Pactual demonstrated once again the strength and resilience of the business by posting another quarter of record revenues and net income, growing its client franchises with efficient risk allocation in a challenging macroeconomic scenario prevalent throughout most part of the quarter. We recorded net inflows of R$60.8billion reaching R$1.4 trillion in wealth and asset under management, being able to expand our funding base and increase the retail portion of it. In June, we successfully issued a 10year subordinated CRA of R$3.5 billion, proving our expertise in product offering and the quality of our network and its distribution capacity.

Our growing fee income allied with robust risk management allocation and operational efficiency ensured the remarkable results, reflecting the effectiveness and diversification of our strategy.

Besides 2Q 2023 all-time high revenues and net income of R$5.4 billion and R$2.6 billion, respectively, we posted our best half year performance delivering 22.7% ROAE in the quarter and 21.7% in the semester. Our capital ratios remained robust since we maintain a very liquid balance sheet, with BIS ratio of 15.4%. It's worth mentioning that since July 1st our Basel Ratio increased 79bps due to the new RWA regulation.

As previously mentioned, 2Q 2023 results were strong in all business units. Total revenues grew 13.3% q- o-q and 20.6% y-o-y, with record revenues in Corporate & SME Lending, Sales & Trading and Wealth Management & Consumer Banking and strong net inflows in both Asset and Wealth Management.

Corporate & SME Lending posted R$1,277.3 million revenues, 7.2% above the previous quarter, which was our record. Revenue increase was in line with 7.3% portfolio growth, focused on premium counterparties at attractive spreads.

Sales & Trading had outstanding performance, increasing 27.1% in the quarter and totaling R$1,887.2 million with growing contribution from fee and flow-base revenues coupled with efficient risk allocation. Wealth Management & Consumer Banking recorded its 18th consecutive quarter of record revenues, reaching R$727.1 million, up 4.8% in the quarter, with strong R$35.4 billion net new money, reaching R$630 billion in wealth under management (WuM).

Asset Management also posted strong net inflows of R$25.4 billion, despite significant AM industry outflows of R$131.3 billion during the quarter, proving the robustness of our business, outperforming in challenging scenarios. Year-to-date AM industry recorded outflows of R$205 billion, while we had positive net inflows of R$38 billion (source: Anbima). Revenues were R$430.7 million, a marginal decrease compared to previous quarter due to low performance fees.

Investment Banking had a 17.5% increase from a weak 1Q 2023, totaling R$305.6 million of revenues, with higher contribution from both ECM and DCM, as market activity started to gain momentum towards the quarter's end.

Finally, Principal Investments and Participations recorded revenues of R$71.9 million and losses of R$54.2 million, respectively. Participations performance was again impacted by the accounting effects of Banco Pan's credit portfolio acquired during the quarter. Without this impact, BTGP Q2 ROAE would have been 25.2%.

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Earnings Release

Second Quarter 2023

Operating expenses were R$2,386.0 million this quarter, 12.4% higher than 1Q 2023. Higher bonus expenses - which are determined by revenue generation - accounted for most of the total operating expense growth. Our adjusted cost-to-income ratio ended the quarter at 39.3%, stable when compared to previous quarter.

Accounting net income reached the second consecutive quarterly record of R$2,441.2 million, 14.4% above 1Q 2023 and 18.1% higher than the same period last year. Shareholders' equity ended the period at R$46.7 billion, a 5.7% q-o-q increase and a 12.9% y-o-y increase. Our liquidity coverage ratio ("LCR") ended the period at 157%, while the Basel ratio was 15.4%. As previously mentioned, we gain additional 79bps of Basel Ratio since July 1st due to the new RWA regulation.

ESG & Impacting Investing agenda continued to expand during the quarter. We structured and distributed US$1.1 billion in green and sustainable bonds and to continue to contribute to a transition economy and join efforts to promote carbon markets, we have recently acquired a minority stake in Systemica, a Brazilian company that structures, develops and commercializes carbon projects and other environmental assets.

We have also received several awards during 2Q 2023 by Global Finance: (i) Top Financial Innovations: Sustainability/ESG - for being the lead coordinator bank of the first blue bond transaction in Brazil, issued in Nov/22, (ii) Outstanding Leadership in Sustainable Finance, in Sustainable Bonds and in Sustainability Transparency in LatAm, (iii) Outstanding Sustainable Financing in Emerging Markets, and (iv) Sustainable Finance Leadership in Brazil. In addition to that, we were recognized as the Best ESG research team in LatAm and Brazil by Institutional Investors and, Most Sustainable Bank of Brazil by World Finance.

We are also glad to announce that for the third consecutive time, we have been ranked first in all the most relevant categories of Institutional Investors 2023 sales ranking. We were recognized as the best: Research LatAm, Corporate Access LatAm, Trading LatAm, Sales LatAm, Research Brazil and Sales Brazil. In Research we were awarded in all 25 categories and being elected as number 1 in 18 of 25. We thank our clients and investors for the partnership and trust in all these years.

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