Banco BTG Pactual S.A.

The outlook on BTG Pactual is stable, reflecting our expectation that in the next 12 months the bank will maintain a relatively resilient financial performance despite economic challenges stemming from COVID-19, thanks to its flexible balance sheet, cost structure, and sound management capabilities. It also reflects the outlook on our sovereign ratings on Brazil (BB-/Stable/B) and our expectation that the ratings on the bank will move in tandem with those on the sovereign because of its high exposure to the domestic market. We could lower the ratings on BTG Pactual following a similar action on our sovereign ratings on Brazil. In addition, we don't expect to lower the global scale ratings due to changes in the bank's credit factors because

...We expect BTG Pactual's funding profile to continue consolidating. The bank's customer deposit base has substantially increased thanks to its improved franchise and digital banking strategy, and it is now less reliant on institutional investors, while its funding sources have broadened. As a result, we believe its credit quality has improved. The bank's strong management team and flexible cost structure based on a partnership model will remain a key strength. BTG Pactual has a well-diversified business profile across investment banking, sales and trading, digital retail banking, wealth management, corporate and SME lending, asset management, and insurance. BTG Pactual has significant exposure to the volatility of sales and trading, as well as investment banking. The higher complexity and volatility of some of the markets in which BTG Pactual operates counterbalances our view of its business stability....

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