Banco BTG Pactual S.A.

The positive outlook on our rating on BTG Pactual reflects prospects for an upgrade of Brazil in the next two years. The ratings on the latter constrain those on financial institutions, given their exposure to sovereign risk. Therefore, we expect the ratings on BTG Pactual to move in tandem with the sovereign ratings. We would likely raise the ratings on BTG Pactual following a similar action on the sovereign ratings. Absent sovereign constraints, the bank could have a higher rating given its stronger credit fundamentals reflected in its higher SACP than the rating on the sovereign. We would likely change our outlook on our rating on the bank to stable following a similar action on the sovereign ratings. We classify

...We expect BTG Pactual¦s funding profile to continue consolidating. The bank's customer and retail deposits continue strengthening thanks to its sound franchise and digital banking strategy, and it is now less reliant on institutional investors, while its funding sources have broadened. 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. Thanks to this business diversification, the bank has been able to post consistently resilient revenues, stronger than those of local peers....

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