Consolidated financial statements under IFRS
Banco BTG Pactual S.A.
December 2023
www.pwc.com.br
(A free translation of the original in Portuguese)
Banco BTG Pactual S.A.
Consolidated financial statements at
December 31, 2023
and independent auditor's report
(A free translation of the original in Portuguese)
Independent auditor's report
To the Board of Directors and Stockholders
Banco BTG Pactual S.A.
Opinion
We have audited the accompanying consolidated financial statements of Banco BTG Pactual S.A. and its subsidiaries ("Institution" or "Consolidated"), which comprise the consolidated balance sheet as at December 31, 2023 and the consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, including significant accounting policies and other explanatory information
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Banco BTG Pactual S.A. and its subsidiaries as at December 31, 2023, and their financial performance and their cash flows for the year then ended, in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) (currently described as "IFRS Accounting Standards" by the IFRS Foundation).
Basis for opinion
We conducted our audit in accordance with Brazilian and International Standards on Auditing.
Our responsibilities under those standards are described in the "Auditor's responsibilities for the audit of the consolidated financial statements" section of our report. We are independent of the Institution and its subsidiaries in accordance with the ethical requirements established in the Code of Professional Ethics and Professional Standards issued by the Brazilian Federal Accounting Council, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgment,
were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We planned and performed our audit for the year ended December 31, 2023 taking into consideration that the operations of the Institution had not changed significantly in relation to the previous year.
In this respect, the Key Audit Matters, as well as our audit approach, have remained substantially in line with those in the prior period.
PricewaterhouseCoopers Auditores Independentes Ltda., Avenida Brigadeiro Faria Lima, 3732, Edifício B32, 16o São Paulo, SP, Brasil, 04538-132
T: +55 (11) 4004-8000,www.pwc.com.br
Why it is a Key Audit Matter | How the matter was addressed in the audit |
Fair value measurement of complex or illiquids financial instruments As disclosed in Notes 3(b), 4(b), 4(d), 7, 8 and 9, the fair value measurement of complex or illiquid financial instruments is an area that includes subjectivity, as it depends on valuation techniques performed based on internal models and involving Management's assumptions for valuation of instruments and/or observable data. We kept to consider this a focus area in our audit as the use of different valuation techniques and assumptions may produce significantly different fair value estimates and due to the materiality of the financial instruments in the context of the financial statements. | Our main audit procedures considered, among others, our understanding of the main processes involving the fair value measurement of financial instruments related to: (i) recording and confirmation of transaction data; (ii) criteria for fair value measurement; and (iii) reconciliation of accounting balances with analytical reports for balance sheet and income statement balances. We also (i) tested the completeness and integrity of the data extracted from the underlying systems that serve as a basis for fair value measurement; and (ii) independently re-performed, on a sample basis, the calculations for measurement of financial instruments with the support of our specialists in pricing financial instruments in accordance with the requirements provided for by the International Financial Reporting Standards (IFRS). We believe that the criteria adopted by management in the fair value measurement of these financial instruments are consistent with the information analyzed in our audit. |
Measurement of the provision for expected losses associated with credit risk As disclosed in Notes 3(b), 4(b and c) and 12, the provision for expected losses associated with credit risk is estimated based on the analysis of the loan operations and specific risks presented in each portfolio, considering the contractual terms, loss scenarios weighted by probability, the risk rating of the client based on the periodic analysis of the quality of the customer and sectors of activity, according to the criteria established by IFRS 9. This is an area that has been defined as the focus of audit, because application of different criteria and judgment in measuring the provision for expected losses associated with credit risk could result in significant variations in the estimate of this provision. | Our procedures considered, among others, our understanding of the main processes related to: (i) granting of credit; (ii) attribution of risk level; and (iii) reconciliation of account balances with auxiliary reports. We also performed (i) analysis, on a sample basis, of the criteria described in the policy and their consistency with those used by management to determine the credit risk of the operations; (ii) tests regarding the validation of models applied in the determination of recoverable credit value on a sample basis, with the assistance of our specialists, considering the parameters developed for the most significant portfolios; (iii) tests on classification in stages provided for in IFRS 9, and (iv) test of the completeness and integrity of the data extracted |
Why it is a Key Audit Matter | How the matter was addressed in the audit |
from the underlying systems that serve as a basis for calculating the provision. We believe that the criteria adopted by management to measure and record the provision for expected losses associated with credit risk are consistent with the information analyzed in our audit. | |
Deferred tax assets in consolidated subsidiary As disclosed in Notes 2 and 22, Banco Pan S.A. ("Bank"), an indirect subsidiary of the Institution, included in the consolidation process in the consolidated financial statements, has deferred tax assets totaling R$ 3.3 billion, arising from temporary differences in the calculation basis of corporate income tax and social contribution on net income and income tax and social contribution losses, recognized based on the projection of taxable income for the realization of these deferred tax assets. This projection, prepared based on a study of the current and future scenario by the Bank's management, involves subjective judgments and assumptions. We kept this an area of audit focus, as the use of different assumptions in the projection of taxable income could significantly modify the terms and amounts expected for the realization of deferred tax assets. | Our key audit procedures considered the understanding of the calculation and recording processes, as well as an understanding of the significant assumptions used by management to project future taxable profit for purposes of estimating the realization of deferred tax assets. We compared the main assumptions used by Banco Pan S.A. to project taxable profits with the budget projections approved by its Board of Directors and with the macroeconomic projections disclosed in the market and analyzed historical data to corroborate the consistency of these realization estimates. We believe that the assumptions and criteria adopted by management are consistent in relation to the initial recognition, maintenance and realization of the deferred tax assets and are aligned with information approved by those charged with governance. |
Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) (currently described as "IFRS Accounting Standards" by the IFRS Foundation), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the ability of the Institution and its subsidiaries, as a whole, to continue as a going concern, disclosing, as applicable,matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Institution and its subsidiaries, as a whole, or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Institution's financial reporting process.
Auditor's responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Brazilian and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Brazilian and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Institution and its subsidiaries.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Institution and its subsidiaries, as a whole, to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Institution and its subsidiaries, as a whole, to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether these financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats to our independence or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the Key Audit Matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
São Paulo, March 28, 2024
PricewaterhouseCoopers Auditores Independentes Ltda. CRC 2SP000160/O-5
Edison Arisa Pereira Contador CRC 1SP127241/O-0
Consolidated financial statements under IFRS Banco BTG Pactual S.A.
Balance sheet
At December 31
(All amounts in thousands of reais)
Note | 12/31/2023 | 12/31/2022 | |
Assets | |||
Cash | 6 | 2,439,095 | 3,069,046 |
Financial instruments | 436,303,404 | 398,146,160 | |
Financial assets at fair value through profit or loss | 7 | 178,807,129 | 156,996,525 |
Financial assets at fair value through other comprehensive income | 8 | 22,070,238 | 16,455,650 |
Financial assets at amortized cost | 235,426,037 | 224,693,984 | |
Money market repurchase commitments | 10 | 66,382,691 | 65,365,726 |
Interbank deposit investments | 11 | 7,181,798 | 8,748,546 |
Deposited with the Central Bank | 22,542,833 | 17,629,141 | |
Credit operations | 12 | 119,808,899 | 111,157,950 |
Marketable securities | 13 | 18,138,572 | 15,431,811 |
Other receivables | 1,371,244 | 6,360,809 | |
Deferred tax assets | 22 | 5,592,892 | 5,800,485 |
Other assets | 15 | 32,427,762 | 27,044,878 |
Investments in affiliates and jointly controlled subsidiaries | 16 | 7,826,277 | 7,917,758 |
Property and equipment | 515,092 | 508,618 | |
Right-of-use | 322,262 | 401,066 | |
Intangible assets | 17 | 9,689,026 | 10,253,420 |
Total assets | 495,115,810 | 453,141,430 | |
Note | 12/31/2023 | 12/31/2022 | |
Liabilities | |||
Financial liabilities at fair value through profit or loss | 7 | 44,730,105 | 62,834,530 |
Financial liabilities at amortized cost | 14 | 341,911,634 | 297,156,935 |
Money market funding | 97,075,862 | 87,139,332 | |
Deposits | 133,273,103 | 115,749,672 | |
Acceptances and endorsements | 73,531,521 | 67,944,679 | |
Borrowings, onlendings and leases | 17,911,780 | 18,103,247 | |
Subordinated debts and debt instruments eligible to capital | 20,119,368 | 8,220,005 | |
Tax liabilities | 18 | 4,496,878 | 2,178,344 |
Current | 4,020,634 | 1,484,157 | |
Deferred | 476,244 | 694,187 | |
Sundry liabilities | 19 | 30,031,428 | 23,214,981 |
Other liabilities | 20 | 8,209,895 | 9,268,805 |
Social and statutory liabilities | 4,034,629 | 3,569,719 | |
Provision for contingent liabilities | 21 | 4,995,441 | 5,091,446 |
Provision for expected loss arising from credit risk for financial guarantees | 317,633 | 275,636 | |
Total liabilities | 438,727,643 | 403,590,395 | |
Equity | |||
Share capital | 23 | 15,760,364 | 15,760,364 |
Treasury shares | (532,428) | (231,252) | |
Capital reserves | 652,515 | 652,515 | |
Revenue reserves | 32,123,118 | 25,139,020 | |
Other comprehensive income | 3,951,687 | 3,590,324 | |
Total equity of controlling stockholders | 51,955,256 | 44,910,971 | |
Non-controlling interest | 4,432,911 | 4,640,064 | |
Total equity | 56,388,167 | 49,551,035 | |
Total liabilities and equity | 495,115,810 | 453,141,430 | |
7 |
See the accompanying notes to the consolidated financial statements under IFRS.
Consolidated financial statements under IFRS
Banco BTG Pactual S.A.
Statement of income Years ended December 31
(All amounts in thousands of reais, unless otherwise stated)
Note | 12/31/2023 | 12/31/2022 | |
Net profit (loss) from financial instruments | 25 | 23,508,085 | 21,333,925 |
Expected losses from credit risk | 12 | (2,280,246) | (4,650,965) |
Net foreign exchange variations | 1,109,240 | 1,200,631 | |
Revenue from provision of services | 26 | 9,098,936 | 8,400,584 |
Equity in the earnings of subsidiary, affiliates, and jointly controlled subsidiaries | 16 | 1,076,706 | 748,437 |
Administrative expenses | 28 | (10,381,413) | (9,194,637) |
Personnel expenses | (5,803,678) | (4,997,240) | |
Tax expenses | (1,882,157) | (1,628,460) | |
Other revenues / (expenses) | 27 | (2,781,697) | (2,267,891) |
Operating profit before taxes | 11,663,776 | 8,944,384 | |
Income tax and social contribution | 22 | (1,409,016) | (1,293,642) |
Provision for current income tax and social contribution | (2,138,356) | (904,145) | |
Provision for deferred income tax and social contribution | 729,340 | (389,497) | |
Net income for the year | 10,254,760 | 7,650,742 | |
Net income attributable to controlling stockholders | 9,980,342 | 7,194,764 | |
Net income attributable to non-controlling stockholders | 274,418 | 455,978 | |
8 |
See the accompanying notes to the consolidated financial statements under IFRS.
Consolidated financial statements under IFRS
Banco BTG Pactual S.A.
Condensed statement of comprehensive income Years ended December 31
(All amounts in thousands of reais)
Net income for the year
Other comprehensive income with reclassification to profit or loss
Change in carrying value adjustments - affiliates and jointly controlled subsidiary
Change in carrying value adjustments of financial assets at fair value through other comprehensive income
Accumulated translation adjustments
Foreign exchange variations on foreign investments on non-monetary items Hedge from foreign investments
Goodwill/negative goodwill in acquisition of interest in subsidiaries Others
Total comprehensive income
12/31/2023
10,254,760
247,042 (114,422)
81,455 (10,499)
(2,158) (60,127)
(1,095,838) 1,099,909 31,239
(286) 10,616,123
See the accompanying notes to the consolidated financial statements under IFRS.
12/31/2022
7,650,742
(1,088,823) 1,090,005 - - 7,466,876
9
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Banco BTG Pactual SA published this content on 29 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 March 2024 17:09:42 UTC.