Banco BTG Pactual Corporate Presentation
Updated as of 1st Quarter 2017 Disclaimer
This presentation has been prepared by Banco BTG Pactual S.A. and BTG Pactual Participations Ltd. (“BTG Pactual”, and together with its subsidiaries and affiliates, the “Company”) for the exclusive use of the party to whom BTG Pactual delivers this presentation. This presentation was prepared based on BTG Pactual own information and other publicly available information. BTG Pactual does not make any representation or warranty, either express or implied, as to the accuracy, completeness or reliability of the information, estimates or projections as to events that may occur in the future (including projections of revenue, expense, net income and stock performance) contained in this presentation. There is no guarantee that any of these estimates or projections will be achieved. Actual results will vary from the projections and such variations may be material. Nothing contained herein is, or shall be relied upon as, a promise or representation as to the past or future. BTG Pactual expressly disclaims any and all liability relating or resulting from the use of this presentation.
This presentation has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. BTG Pactual should not construe the contents of this presentation as legal, tax, accounting or investment advice or a recommendation. This presentation does not purport to be all-inclusive or to contain all of the information that BTG Pactual may require. No investment, divestment or other financial decisions or actions should be based solely on the information in this presentation.
This material must not be copied, reproduced, distributed or passed to others at any time without the prior written consent of BTG Pactual.
2 Table of Contents
Banco BTG Pactual
Section 1 BTG Pactual Overview
Section 2 BTG Pactual Business Units
Section 3 BTG Pactual Financial Highlights
Section 4 1st Quarter 2017 Highlights
3 Section 1 BTG Pactual Overview BTG Pactual at a Glance
Investment Corporate Sales & Asset Wealth Principal Interest Participations Banking Lending Trading Management Management Investments & Others % of Revenues 2016 4.2% 10.0% 32.0% 6.1% 27.4% (0.3)% (1.3)% 22.0% 3M 2017 9.0% 9.2% 34.7% 6.3% 5.2% 6.7% 6.1% 22.8%
• Financial • Financing • Fixed Income • LatAm FI & • Investment • Global • ECTP • Interest on Advisory • Structured • FX Eq. Advisory Markets • EFG capital (M&A) Credit • Equities • Alternative • Financial • Merchant • Pan • ECM Description • Letters of • Insurance Investments Planning to Banking • Others • HNWI DCM Credit • Energy • Fund Services • Real Estate • Global Hedge • BTG Pactual Funds Digital
Net Revenues and Net Income Evolution (R$mm) Highlights
11,081 4Q 2016 1Q 2017
R$111.8 bn R$125.2 bn Total Assets 8,797 (US$34.3 bn) (US$39.5 bn) Shareholders’ R$17.7 bn R$18.3 bn 6,552 Equity (US$5.4 bn) (US$5.8 bn) 5,623 R$115.7 bn R$120.1 bn AuA and/or AuM (US$35.5 bn) (US$37.9 bn) 3,369 3,409 R$73.7 bn R$79.9 bn WuM 1,661 (US$22.6 bn) (US$25.2 bn) 720 2,197 2,188 Employees(1) (230 partners) (224 partners) 2014 2015 2016 3M 2017
Total Revenues Net Income
Note: 5 * Financial data as of March 31, 2017, converted for end of period R$/US$ rate of 3.1684 (1) Includes outsourced employees and interns as of March 31, 2017 Summarized Shareholder Structure
Partners
100%
BTG Pactual 33.6% 66.4% Free Float Holding S.A.(1)
BPAC 11 Units
28.6%
71.4% Banco BTG Pactual S.A.
Total Units(2) Each BPAC11 Unit is composed of 1 ON and 2 PNA shares of Banco BTG Pactual S.A. BPAC11 Formed: 275,377,935 BPAC11 Theoretical: 911,529,057
Notes (1) Includes units acquired by investment vehicles owned by certain partners individually or collectively and vehicles under common control of the Partnership 6 (2) Assumes all current BBTG11 unit holders decide to break up their units and hold new Banco units and BTGP units; however the breakup is not mandatory and it is likely that there will be some BBTG11 units outstanding following the transaction BTG Pactual History
2016 Sale of BSI and a 30% stake in the 2013 combination of Start of operations of 2011 EFG BSI 2009 Acquisition of BTG Pactual Seguradora and BTG Pactual BTG acquires co-controlling Distribution of 2006 UBS Pactual, stake in Banco Resseguradora in Brazil Pan for ECTP to BBTG11 2000-2001 UBS acquires establishing shareholders 1989 Banco Pactual BTG Pactual R$450mm Creation of Commencement of creating UBS Pactual Asset Pactual Banking Activities Management and opening of an 2017 office in São Paulo BBTG11 2014 Units migration 2012 Announced the acquisition of BSI, a into BPAC11 2010 IPO: primary capital private banking business and BBTG12 2008 US$1.8bn increase of R$3.2 billion based in Switzerland, for units 2002 BTG founded by André capital CHF1.5 Bn 1990 increase from Sale of Arie Commencement of Esteves, Persio Arida Re 1983 Commencement and a group of former international Founded as regional expansion of Wealth in Brazil: opening Pactual partners and investors Acquisition of Celfin brokerage house Management former UBS MDs in Rio de Janeiro of Belo Horizonte Capital in Chile Announced the activities (MG) and Recife acquisition of Ariel Re. a (PE) offices reinsurance company based in London and Bermuda Acquisition of Bolsa Y Renta in Colombia
Announced the acquisition of Pan Seguros, as a development of our insurance strategy for R$580mm
7 BTG Pactual Organizational Chart and Main Executives
Board Members Elected, 2016
Chairman of the Board Audit Committee Marcelo Kalim
Vice Chairman of the Board Huw Jenkins
(2) BTG Pactual Compliance Anibal Joaquim Nelson Jobim Persio Arida External Directors Claudio Galeazzi Claudio Galeazzi Roberto Sallouti Claudio Galeazzi Roberto Sallouti Mark Clifford Maletz Nelson Jobim Mark Clifford Maletz Bruno Duque Pedro Longuini Mariana Cardoso Guillermo Ortiz(1)
BTG Pactual Main Executives
CEO Roberto Sallouti
Corporate Lending Sales & Trading Asset Management Investment Banking Wealth Management Renato Santos Renato Santos Steve Jacobs | José Guilherme Paes Rogerio Pessoa Rogerio Stallone Rodrigo Goes Zitelmann
Notes: 8 (1) Still subject to approvals, including regulatory (2) Compliance Committee responds directly to the board of directors. Section 2 BTG Pactual Business Units Business Units Investment Banking - Financial advisory and capital markets services
BTG Pactual is the leading M&A and Capital Markets franchise since 2010, having advised the most relevant transactions during this period
Rankings Highlights & Awards
Brazil 2013 - Best IB: Brazil 2013 - Best IB: Chile (2012/11/10) 2015 – Best IB: Chile st 1 M&A |over US$150 bn in 2014 – Best M&A Bank: LatAm transaction volume (2013/12)
2013 - Equity House of the Year: nd ECM | aprox. US$13 bn in LatAm 2 2013 - Investment Bank of the Year: 2013 - Best Equity House Brazil transaction volume Chile 2013 - Best M&A House Brazil 2010 - Best Investment Bank: Brazil 2013 - Best Equity House LatAm Latin America
Deloitte Diario Financeiero - Chile st 2013 – Most innovative IB: 1 ECM | over US$18 bn in 2011 - Best OPA Agent / Transaction LatAm transaction volume 2011 - Best Debt Restructuring Agent 2011 - Best Financial Institution
4th M&A | over US$170 bn in transaction volume 2010 - Financial Advisor of the 2015 - Best Investment Bank in Year: Brazil Brazil
10 Business Units Investment Banking - Financial advisory and capital markets services Revenues in 1Q 2017 mainly attributable to capital markets in Latam. We continue to maintain our leading market share.
Revenues (R$ million) Overview of 1Q 2017 • Financial Advisory revenues decreased compared to last quarter, due to lower volume transactions 459 456 in the period • Significant increase in ECM and DCM revenues as 383 market activity in the region picked up 367
Market Positioning Highlights (1Q 2017)
M&A: #3 in number of transactions in Brazil 152 ECM: #1 in number of transactions in Brazil and #2 in Latin America
ECM: #3 in transactions volumes in Brazil
2013 2014 2015 2016 3M 2017
11 Business Units Corporate Lending
Financing and loan guarantees to corporations in Latin America
Main Highlights Corporate Lending Portfolio (R$ bn) • Integrated origination platform • Anticipation of demand and needs of our clients 29.2 • Greater flexibility and agility in order to structure and approve loan 25.8 21.7 transactions 20.4 19.3 20.1 • Partners involved in credit and risk analysis • Cross-selling with IBD, Wealth Management, Merchant Banking and FICC distribution desk • Main booking areas: − High Grade Credit Desk: tailored credit solutions for large corporations 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 − Special Situations: credit arbitrages on loans and acquisition of non-performing loans (NPL) portfolios Revenues (R$ mm) Corporate Lending Portfolio by Industry (%)(1,2) Utilities Oil & Gas 10% 985 985 Wealth Management 3%1% Infrastructure 4% 767 Financials 32% 692 Agribusiness 4% Retail 4% Food & Beverage Real Estate 5% 155 Auto-Parts Telecom 6% Metals & Mining 10% Petrochemicals 6% 2013 2014 2015 2016 3M 2017 Others 7% 7%
Notes: (1) Does not include Banco Panamericano Loan Portfolio and includes off balance sheet items (loans, debentures, CRIs, FIDCs, FIPs, TDs, corporate bonds, letter of credit, commitments and others) 12 (2) As of March, 2017 Business Units Sales & Trading
Integrated and diversified platform of customer facilitation businesses in Latin America
Renowned Market Intelligence and Expertise across LatAm
LatAm Equity Sales LatAm Equity Sales (2014, 2013) (2015) Persio Arida Guillermo Ortiz Eduardo Loyo st Brazil Equity Sales nd Brazil Equity Sales . Former governor of the . Former governor of the Bank of . Former Executive 1 2 Central Bank of Brazil Mexico director at the IMF (2014, 2013) (2016, 2015) . Former President of BNDES . Former Chairman of BIS . Former Director of the Brazil Equity Brazil Equity . Former Board Member of . Former Chairman of Banorte Central bank of Brazil Research Research Itau, Vale, Unibanco amidst . Former Secretary of finance (2015, 2014, 2013) (2016) others Representative of IMF
Luis Oscar Herrera Andres Borenstein In 2016, BTG Pactual had a total of 17 ranked . Former Chief Economist at . Former Chief Economist at analysts, including 7 ranked #1 in their the central bank of Chile British Embassy respective sectors/regions . Former Head of Research . Former Director for at EuroAmerica programee econ at UTT – Equity research and sales teams named . Former Director of . FormerBoard member of among the best teams in LatAm, covering financial policy Romikin and Atlas Pharma 214 companies in 20 industries
Latin America Dedicated Bank – Fixed Income and Credit Research team named among the best teams in LatAm, Fixed Income covering over 30 companies Equities FX Energy Insurance and Reinsurance
13 Business Units Sales & Trading
In 2011, BTG Pactual debuted on Institutional Investor’s inaugural Latin American Sales Team as No. 5. In 2012 the firm soared to second, and in 2013, 2014 and 2015 the São Paulo-based outfit claims the summit
Institutional Investor 2015 Brazil Rankings Latin America Sales Team Rank Total Team Positions First Team 2016 Firm 2016 2015 2016 2015
2nd 17 18 7 5
1 Itaú BBA 18 17 6 5 3 Credit Suisse 12 15 - 3 4 BofAML 11 12 - 1 5 JP Morgan 9 10 2 1 In 2016, BTG Pactual had a total of 17 ranked analysts, including 7 ranked #1 in their respective sectors/regions
Revenues (R$ mm)
4,806
2012 2013 2014 2015 2016 2,966 2,817 1,730 2nd 1st 1st 2nd 6th 586
Local presence started in 2012 2013 2014 2015 2016 3M 2017
14 Business Units Asset Management
Leading Latin American asset manager and world class global markets manager with R$120.1 billion in assets, with a complete range of both traditional and alternative investment products
Fixed Income Hedge Funds Infrastructure Timberland Real Estate Private Equity Fund Adm. & Equities
Best specialist fund manager, Best Best Brazilian Equities GEMM was awarded specialist equity fund Fitch Assigns Highest Best Asset Manager best Global Macro Fund manager, Best Multi- Rating Grade - M11 in Chile Top Equity Fund Fund Manager, S&P Manager and Valor Econômico Market Fund manager 2014, 2009, 2008 & 2016 2012 & 2010 2015 2015, 2014 & 2013 2015 2007
THOMSON REUTERS LIPPER FUND AWARD Top Performer BTG Pactual Funds Equity EM Latin America Best Fixed Income Best Brazil Fund Best Fixed Income Fund Top Performer received 5-star rating and Equity Performer in Manager Manager Manager Equity Brazil in Nordic consistently Brazil Countries 2016 2015 2015 Over Years 2013, 2012 & 2011 2013, 2012 & 2011
15 Business Units Asset Management
Revenues decreased marginally, and are composed mainly of management fees. Positive NNM in 1Q 2017, including R$2.1 bn in LatAm Fixed income and Equities.
Revenues (R$ million) AuM and AuA (R$ billion)
(0.1) 1.6 (42.0) (81.0) 0.5 1,378
1,252 201.4 1,172 189.5 192.5 22.9 21.3 24.6 40.0 37.0 46.2 115.7 120.1 3.6 44.5 51.9 3.6 540 28.7 57.7 29.5 6.6 8.7 32.6 33.0 6.9 6.7 7.9 80.2 77.9 107 57.1 43.5 46.9
2013 2014 2015 2016 3M 2017 2013 2014 2015 2016 3M 2017 Brazil FI & EQ Funds LatAm FI & EQ Funds Fund Services Alternative Investments Global Hedge Funds Net New Money
16 Business Units Wealth Management
BTG Pactual Latin America franchise with R$79.9 billion in Wealth under Management
Main Highlights WUM Evolution (R$ billion) • Proactive and systematic approach to portfolio monitoring 84 • Strong cross-selling with all business units 81 80 • LatAm Platform 74 68 − One of the largest private wealth managers in Latin America − Broad footprint in Brazil, with offices in São Paulo, Rio de Janeiro, Recife, Belo Horizonte, Brasilia and Porto Alegre − Strong presence in Latin America and also a broker dealer presence in New York and offices in Miami
2013 2014 2015 2015 3M 2017
Revenues (R$ mm) Recent Highlights & Awards
• Best Wealth Management in Brazil – 2015 & 2016 World 464 Finance Awards 393 386 • 337 Best Private Bank in Brazil – 2014 World Finance Magazine • Best Private Bank for Growth Strategy – 2014 PWM / The Banker Magazine • Best Private Bank in Colombia – 2014 PWM / The Banker 87 Magazine • Best Family Office Services in Brazil – 2014 Euromoney Magazine 2013 2014 2015 2016 3M 2017 • Best Corporate Advisory for Private Banking Clients in Brazil – 2014 Euromoney Magazine
17 Note: * Considers only BTG Pactual WuM Section 3 BTG Pactual Financial Highlights Track Record of Strong, Controlled and Profitable Growth
Shareholders' Equity (R$mm) Net Income (R$mm) ROAE (%)
Net Income, Shareholder’s Equity, ROAE & Basel Ratio 19,713 17,727 18,338 • Consistent growth, even in adverse 14,733 32.7% market conditions 25.1% 18.7% • Solid profitability (average ROAE of 24.6% in 5,623 18.2% the last 4 years) 3,369 3,409 843
• Strong capitalization 2014 2015 2016 3M 2017
(2) Basel Ratio (%) VaR/Avg. Shareholders' Equity (%) 21.5% VaR(1,2) and VaR/Average Shareholder’s Equity 19.5% 17.5% 15.5% • Excellence in risk management, proven
in extremely adverse market conditions 1.0% 0.7% 0.6% 0.5%
2014 2015 2016 3M 2017
Note: 19 (1) 1 day Value at Risk (95%) (2) Incudes BSI‘s RWA and VaR since September 15th 2015 Industry-Leading Operating & Profitability Metrics
ROAE (%) ROA (%)
32.7% 2.8% 2.7% 2.4% 25.1% 2.0% 22.4% 1.9% 18.2% 18.7%
2013 2014 2015 2016 3M 2017 2013 2014 2015 2016 3M 2017
Compensation Ratio (%)(1) Cost to Income Ratio (%)(2)
28% 54% 27% 26% 23% 45% 46% 42% 20% 42%
2013 2014 2015 2016 3M 2017 2013 2014 2015 2016 3M 2017
Notes: * Includes BSI from September 1st, 2015 onwards – a one month impact for the 3rd quarter 2015, and a full impact for the 4th quarter 2015 onwards 20 (1) Salaries and benefits + bonus expenses / net revenues (2) Total operating expenses / net revenues BTG Pactual Rating Summary
• Outlook Stable • Rating Outlook Negative • Outlook Negative • Bank deposits Ba3/NP • Foreign and local currency • Issuer Credit Rating: BB- Long Term IDR BB- • Issuer Credit Rating brA-/brA-2 Banco • NSR Bank Deposits – A2.br/BR-1 Short Term IDR B (local): BTG Pactual S.A. Dom Currency • Local Long Term IDR A-(bra) Short Term IDR F2(bra)
• Rating Outlook Negative BTG Investments • Foreign and local currency L.P. Long Term IDR B+
• Rating Outlook Negative BTG Pactual • Foreign and local currency Holding S.A. Long Term IDR BB-
21 Section 3.1 1st Quarter 2017 Highlights Performance Summary 1Q 2017 We continue to operate with high capitalization and liquidity levels, low leverage and a strong balance sheet
1 For 1Q 2017, total revenues and net income reached R$1,661 million and R$720 million, respectively • Annualized ROAE(1) of 18.7% • Net income per unit(1) of R$0.92 • Adjusted net income of R$843 million 2 Cost income ratio in line with our historic average • Cost to income ratio at 42% for the quarter • Compensation ratio at 20% for the quarter 3 Total assets at R$125.2 billion. BaseI ratio for BTG Pactual was 19.5%. Shareholders’ equity at R$18.3 billion • Avg VaR in the quarter decreased to R$117.0 million, or 0.65% of average shareholders’ equity
Revenues (R$ million) Net Income (R$ million) Shareholders’ Equity (R$ billion)
3,545 20.4 17.7 18.3 1,009 1,661 680 720 1,022 0.92 1.12 20.1 18.7 0.91 0.74 15.1 0.79 0.65
1Q 2016 4Q 2016 1Q 2017 1Q 2016 4Q 2016 1Q 2017 1Q 2016 4Q 2016 1Q 2017
(1) Net Income Shareholders Equity Revenues ROAE (%) (1) Earnings p/Unit (R$) Avg. daily VaR / avg. SE (%) Prior to ECTP and BSI transactions Note: * Balance sheet items represents end of period data 23 ** Includes BSI from September 1st onwards – a one month impact for the 3rd quarter, and a full impact for the 4th quarter onward (1) Annualized ROAE and net income per unit considers the adjusted net income as reference for the calculations starting 1Q 2017 Total Revenues Business Units Breakdown
Revenue breakdown; strong contribution from Sales & Trading and Investment Banking
1st Quarter 2017
Total Revenues = R$1.7 billion 586 (R$mm)
384
152 155 107 113 87 76
35% (% of total) 23%
9% 9% 6% 5% 7% 5%
Investment Corporate Sales and Asset Wealth Principal Participations Interest & Banking Lending Trading Management Management Investments Other
24 Expenses and Main Ratios
Cost income ratio of 42% and compensation ratio of 20%, reflect adequate efficiency levels. Bank still has cushion of operational leverage as we expected for market activity to recover in the region
Quarter 1Q 2017 % change to Full Year
(in R$ mm, unless stated) 1Q 2016 4Q 2016 1Q 2017 1Q 2016 4Q 2016 Bonus (500) (102) (204) -59% 99% Salaries and benefits (569) (131) (132) -77% 1% Administrative and other (551) (189) (180) -67% -5% Goodwill amortization (55) (85) (97) 78% 14% Tax charges, other than income tax (134) (19) (89) -34% 362% Total operating expenses (1,809) (527) (702) -61% 33%
Cost to income ratio 51% 52% 42% Compensation ratio 30% 23% 20%
Income tax and social contribution (727) 185 (239) -67% -229% Effective income tax rate 41.9% -37.4% 24.9%
Prior to ECTP and BSI transactions
25 Balance Sheet Analysis
(In R$ billion) Assets Liabilities
125.2 125.2 1.2 10.9 111.8 111.8 Settlement Cash & 2.5 27.9 1.3 account Equivalents 12.7 REPO Settlement 19.5 Financing account 1.9 27.7
Assets financed 19.2 through REPOs 36.9 Secured 30.6 funding
Trading portfolio 43.7 38.1 of assets Unsecured 29.5 31.6 funding Coverage (1) Credit 13.0 13.7 218%
7.3 8.4 Other liabilities Other assets 11.1 10.1 Equity & 22.4 20.3 Illiquid assets 15.8 16.6 Perpetual
4Q 2016 1Q 2017 1Q 2017 4Q 2016
26 Note: (1) Excludes demand deposits from BTG Pactual stand alone Broader Credit Portfolio (BTG Pactual Ex-BSI)
Broader credit portfolio had a small increase
Broader Credit Portfolio by Area (R$ billion) Broader Credit Portfolio by Product (R$ billion)(1)
31.6 31.6
3.6 26.5 26.5 6.3 26.5 26.5 2.1 24.9 24.9 24.3 24.3 2.8 4.7 2.5 4.5 5.6 1.9 2.8 4.6 4.1 1.9 1.9 2.1 11.0 9.2 9.5 9.3 8.8 0.00.4 25.8 0.00.3 21.7 0.00.2 0.00.2 0.00.3 20.4 19.3 20.1
13.8 12.3 11.2 10.8 11.1
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 Corporate Lending Wealth Management Others Loans Funds Letter of credit Marketable securities
27 Note: • Excludes BSI (past quarters) for illustrative purposes Unsecured Funding Base (BTG Pactual Ex-BSI)
Stability of funding base reflects our lower appetite for capital deployment, despite a constant and stable flow of renewals across all funding instruments and sources.
(In R$ billion) 49.9 4.6 42.3 6.9 4.2 37.4 4.2 34.2 33.6 7.8 5.8 Borrowings and 3.9 4.3 4.1 onlendings 7.7 3.5 3.7 Perpetual 7.8 16.4 7.3 7.3 Subordinated debt 13.4 10.7 9.7 8.4 Securities issued
13.7 10.9 10.5 9.0 9.6 Time deposits 0.2 Interbank deposits 0.3 0.2 0.2 0.3 Demand deposits 0.1 0.1 0.1 0.1 0.1 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
28 Basel Ratio and VaR
Basel index ended the quarter at 19.5%. Average VaR as a percentage of the average equity decreased in the quarter
Basel Ratio Daily Average VaR (%) (% of average equity) 21.5%
19.5% 3.8% 1.12% 1.14% 2.9% 16.4% 15.5% 15.5% 14.2% 2.1% 4.7% 0.88% 2.3% 2.1% 4.1% 0.79% 1.9% 2.6% 3.0% 2.8% 0.66% 0.65% 2.4%
13.1% 12.5% 11.6% 10.1% 10.6% 9.9%
4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 Common Equity Tier I Additional Tier I Tier II
29 Note: * Includes BSI from September 1st onwards – a one month impact for the 3rd quarter, and a full impact for the 4th quarter onward Main Contacts
www.btgpactual.com/ir [email protected]
Investor Relations Team Pedro da Rocha Lima Philippe Katz
30