Brazil based investment bank BTG Pactual reported Q4 earnings today that were surprisingly good with rising returns from its asset management business.
BTG Pactual’s investment funds recruited excellent returns from its funds namely, BTG Pactual Distressed Fund (AUM $245 million) which returned 46 percent last year while the BTG Pactual Global EM and Macro Fund (AUM $4 billion) gained 27.7 percent in 2012.
Moving on to BTG Pactual’s earnings for the fiscal quarter ending on Dec. 31 2012. The investment bank made a profit of $436 million which is 7.7 percent more than what the investment group made in 3Q2012.
Analysts polled by Thomson Reuters gave a consensus estimate of $345 million in profits for Q4. Similarly the Q4 revenue forecast of $690 million was beaten soundly with $960 million in revenues that were reported today, this marks a 12 percent increase from what BTG posted in previous quarter.
The corporate lending unit of BTG also boosted revenues in last quarter. Brazilian research firm, Bradesco Corretora maintains an Outperform rating on the stock and a price target of 40 reals.
BTG incurred losses in several sectors but these was offset by returns from its asset management unit. BTG Pactual reported a 18 percent reduction in its inflows from investment banking fees, a 47 percent dip in sales and trading profits and a 9.5 percent decline in revenues from principal investments. While BTG declined in its Brazilian focused investments, its activity in U.S. real estate and credit space and emerging markets more than paid off.
While as a bank, BTG may have posted less than exciting fourth quarter earnings, as an asset management unit, BTG Pactual’s funds beat several U.S. based hedge funds in compounding big returns. The asset management posted revenues of $342 million, up from $104 million in Q3, mainly attributable to the year end performance fees. Total assets are now up to $87 billion, up from $77 billion in Q3.
The asset management sector in the U.S. has also posted a healthy Q4. Apollo Group Inc (NASDAQ:APOL) announced a 95 percent increase in earnings in last quarter compared to the year ago period, the firms’ AUM rose to $113 billion. Och-Ziff Capital Management Group LLC (NYSE:OZM) posted an EPS of $0.77 as compared to only $0.04 reported for 4Q2011. Och Ziff’s total AUM jumped $500 million from Q3 to Q4 to close the year with to $32.6 billion, as of Dec 2012. Asset managers like, The Blackstone Group L.P. (NYSE:BX) reported a 43 percent rise in earnings while KKR & Co. L.P. (NYSE:KKR) made 22 percent more in profits than it did in the year ago quarter.
Notable asset managers that have yet to report earnings include Fortress Investment Group LLC (NYSE:FIG), due to release on Feb 27 and MAN GROUP PLC (LON:EMG) (PINK:MNGPF), due to report earnings on Feb 28.