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UPDATE 2-Brazil's BTG Pactual profit jumps 74% as capital markets boom

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(Updates with shares, analyst comment)

By Carolina Mandl

SAO PAULO, Aug 10 (Reuters) - Shares in Brazil's Banco BTG Pactual SA rose more than 3% on Tuesday as booming activity in the country's capital markets bolstered the lender's investment banking unit and drove a surge in its second-quarter recurring net income.

BTG's recurring net income jumped 75% to 1.719 billion reais ($328.48 million) from a year earlier, while revenue rose 52% to 3.771 billion reais, mainly driven by lending as well as investment banking and asset management fees.

Second-quarter investment banking fees tripled from a year earlier, as many Brazilian companies launched share offerings and engaged in mergers and acquisitions. Share offerings are up 42.6% from a year earlier, totaling $20.1 billion, while M&A volumes grew by almost five-fold, according to Refinitiv.

"In the financial sector, BTG Pactual is one of the best names to expose to the current boom in the Brazilian capital markets," Banco Safra analysts said in a note to clients.

Net new money for its wealth and asset management units totaled 98 billion reais in the quarter, helped by its digital broker, BTG Pactual digital. The bank has sealed a raft of deals this year to add more independent financial advisers and boost assets under management.

While shares in Brazil's biggest brick-and-mortar lenders are under pressure amid fierce competition from financial startups, those of BTG are up nearly 34%, as it builds a less costly digital retail bank.

Return on equity was 21.6% in the second quarter, rising 4.1 percentage points from a year earlier. ($1 = 5.2332 reais) (Reporting by Carolina Mandl, Additional reporting by Paula Laier, Editing by Louise Heavens, Kirsten Donovan and Anil D'Silva)

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