Good morning, welcome to the first quarter of 2019 results conference call of Banco BTG Pactual. With us here today, we have Roberto Sallouti, João Dantas, and Pedro de Rocha Lima. We would like to inform you that this event is being recorded, and all participants will be in a listen-only mode during the bank's presentation. After Banco BTG Pactual's remarks, there will be a question and answer session for investors and analysts when further instructions will be given. Should any participant need assistance during this call, please press star zero to reach an operator. Today, we have a simultaneous webcast that may be accessed through the website www.btgpactual.com/ir and the platform. There will be a replay facility for this call from May ninth through May 15th.
Before proceeding, let me mention that this call may contain forward-looking statements relating to the prospects of the business, estimates for operating and financial results, and those related to the growth prospects of Banco BTG Pactual. These are merely projections and as such, are based exclusively on the expectation of Banco BTG Pactual's management concerning the future of the business. Such forward-looking statements depend substantially on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors and risks disclosed in Banco BTG Pactual's filed disclosure documents and are therefore subject to change without prior notice. Now, I'll turn the floor to Mr. Roberto Sallouti, who will begin the presentation. Please go ahead.
Thank you very much, good morning or good afternoon to everybody. If we could please start with page three of the presentation, where we have the first quarter highlights of the results. We're very satisfied with the results of the first quarter. It shows a significant strength in all of our client franchises and a continued increase in the return on equity quarter after quarter in the same path that we have been having in the last few quarters. The first point to highlight is that we had a very strong performance in Investment Banking. This not only came from Brazil, but also from our franchises in the other Latin American countries, specifically Chile, Peru, and Colombia. We also continue to grow Wealth Management very strongly.
The assets in our Wealth Management business grew 33.4% year-over-year, so Q1 2018 versus Q1 2019, reaching BRL 134 billion. This is a function of both our traditional Asset Management business, but also of our tech-enabled digital franchise targeting the retail markets. The growth in this business has been accelerating quite strongly recently. We have been increasing the number of registered investment advisors that we are onboarding. We are also making new investments in the platform. We expect by year-end to offer some transactional banking to ensure our clients a more complete experience in the platform. With this, we expect that the strong growth in our Wealth Management continues over the next quarters. Even though we have been investing significantly in technology and marketing, all of these costs have been going directly to expenses.
Even so, we have been able to keep our cost income within the historical average. This means that on our traditional businesses, all of the IT investments that we have been doing have also allowed us to improve our productivity in the traditional businesses. Finally, the last point to highlight is that Banco Pan reported results yesterday. Once again, consistent and with continuous growth. They reported an adjusted return on equity of 21% for Q1. Also, in big part, due to the full digitalization of both the front end and the back end that has been happening there over the last few years. Turning on to page four of the presentation, we can look at some of the details of the Q1 results.
We had total revenues of BRL 1.48 billion and BRL 722 million earnings for the quarter, an adjusted ROE of 15.1, a net income per unit of BRL 0.83. As I said previously, cost income and comp ratios were within the historical average, 43% and 23%. Finally, we closed the quarter with assets of BRL 164.7 billion, a capital ratio of 17.6% and shareholders equity of BRL 19.4 billion. Moving on to page five, you can see the breakdown of the revenues between the different business units, you can see that it's very evenly spread out among the client franchises. The only business area that is still, let's say, higher than the others is Sales and Trading, this has been decreasing as a percentage of total revenues.
Slowly but surely, we have been increasing the client franchises which don't use capital or the credit business, which is more stable. Quarter-over-quarter, this has been a trend, we expect this trend to continue throughout the next quarters and years. Turning on to page six, we show the return on equity of our different financial businesses. It's very easy to know how much regulatory capital is associated to each of our financial businesses. The core Banco BTG Pactual businesses had a return on equity of 18.7%. Banco Pan, in our balance sheet, had a return of 10.6% without any adjustments, and EFG had a return of 4.4%. With that, I will pass on the floor to João Dantas, who will be able to talk a bit, each of the business sides in more detail.
Thank you, Roberto Sallouti. Thanks to everyone joining the call today. Let's turn to page eight, where we start with our Investment Banking franchise. As you see, we have reached BRL 175 million in revenues in the quarter, that performance comes essentially from Debt Capital Markets and M&A transactions. We continue to see the business environment improving in Latin America, slowly. In the quarter, ECM activities were very weak, especially in Brazil. Despite the growing appetite for equity assets, we see that growing appetite coming from local investors, not so much yet from international investors. That caused ECM markets to have very little activity, therefore very little revenues. DCM revenues were the highest since our IPO, M&A revenues were the highest in the last two years. That is a strong statement to the quality of our franchise because M&A is a direct, a bilateral one-to-one relationship.
As we continue to be leaders in M&A, we are also sure that the franchise is performing at its best. Turning to page nine, here we have corporate lending portfolio. You see that our portfolio increased from BRL 29.7 billion -BRL 30.8 billion total credit exposure. Corporate credit demand has not yet picked up in Brazil, especially. Our corporate lending portfolio is now growing more in Chile than it is in Brazil. We believe that this is due to local investors are waiting for a more concrete view on how the reform, especially the pension reform, will be approved in Brazil, and therefore the growth in the quarter hasn't been so accelerated as we saw last year. There is also very small contribution from our special situations portfolio. The business is progressing very well.
Special situations, we have a lot of activity and launching new initiatives, particularly in the quarter, we didn't have any significant contribution to revenues from special situations, and this led to the performance of BRL 186 million of revenues. We also had positive outcome in some credits that we had for which we've made provisions in the past, and we were able to release provisions through P&L in the quarter given the successful turnaround processes that concluded. On the other hand, we took advantage of that to increase further some other provisions in the corporate lending portfolio. All in all, it was a wash, but we believe that the quality of the loan loss provision has improved, since we have maintained the level of provision despite the improvement in some specific cases, as I mentioned.
Turning to page 10, here we have Sales and Trading, where we reached BRL 436 million of revenues in the quarter. It's at the average of the performance for the year of 2018. Still, we believe below the historical average for Sales and Trading, but we did have very good performance from equity, fixed income, and FX during the quarter. The only desk where we didn't have a very good performance during the quarter was the energy desk. During the quarter, we increased our VaR as a percentage of equity. We will mention that in more details further down in the presentation, and we also increased the use of balance sheet during the quarter. We did see stronger flows, despite the market, which was more volatile. We still don't see a lot of presence from international investors in these flows. The flows are stronger from local investors.
We're happy with the results of Sales and Trading in the quarter. Turning to page 11, here we have our Asset Management franchise. The assets under management grew BRL 6.6 billion in the quarter, going from BRL 207.5 billion -BRL 214.1 billion. New money was flat. It was a quarter of significant senior management announcements, with our new partner, Will Landers, that joined us March 18th to run the equities Asset Management, and our new Asset Management CEO, who will join us in July 1st, Eduardo Guardia. In an institutional Asset Management business like ours, it's natural that during the period of management announcements, net new money pace slows down. We already have the new management in place and talking to clients and making the visits.
We are now seeing that the pace is picking up gradually. We expect that pace to resume an even further increase. We expect net new money to continue to be strong since we see positive performance in our products across LatAm. Revenues of Asset Management reached BRL 167 million, which is in line with the third quarter of 2018, slowly growing in line with the AUM growth. The revenues were smaller in the quarter compared to the fourth quarter of 2018, because typically in the fourth quarter, we capture performance fees from our funds mandates, not typically in the first quarter of 2019. Turning to page 12. Here is the Wealth Management platform, where we had BRL 7.4 billion of net new money, moving wealth under management from BRL 119.2 billion at the end of last year to 133.6 billion at the end of the first quarter.
It is a very significant net new money, very significant performance. Because of that, revenues continue to increase, reaching a new plateau of BRL 131 million. It is important to emphasize that the performance of our core Wealth Management business, we have been delivering great service, we have been delivering good performance. The investments on technology are also helping the Wealth Management platform because it helps the interaction with clients. The user experience for clients in Wealth Management is also increasing with the digital investments. The digital investments are starting to show results in wealth under management. We have been increasing the pace of onboarding of new clients, both B2C clients and B2B clients that come through independent financial advisors. Not only the pace of the onboarding has increased significantly, we believe that the quality of the onboarding process continues to be very good.
We are dedicating a lot of attention in our teams to deliver great service to our direct clients and the clients that we acquire through independent financial advisors. If you see the number of downloads of our Investment Banking apps, they have increased significantly, exponentially. We are very happy with the progress of the franchise. We still do not disclose numbers of the digital Wealth Management clients. They are embedded in the Wealth Management platform numbers. We are very happy with the progress. The fact that we onboarded many independent financial advisors in the recent weeks means that the onboarding of these clients, the process is starting now. We have significant flows to come as the onboarding process continues.
On page 13, we have Principal Investments. We reached BRL 180 million of revenues, mostly coming from Merchant Banking, where we had BRL 190 million of revenues. Mostly coming from our position in Eneva. Eneva shares are mark-to-market in our balance sheet. They went from BRL 16.09 per share in the end of last year to BRL 18.50. We also have some performance of our investment in PetroAfrica. We do have some performance as well coming from Global Markets where we have seed money to our global hedge funds. The negative BRL 12 million performance from Real Estate is essentially the allocation of funding costs to the positions. Moving to page 15. Here we have our expenses and main ratios, a few things to highlight. Our cost-income ratio closed the quarter at 43%.
The normalized cost income ratio, which excludes one-off items, basically the one one-off item that we have in the quarter is some legal expenses regarding arbitration and litigation in Europe. The adjusted, the normalized ratio is 42%. To compare historically, when we IPO-ed the bank in 2012, our cost income ratio was 45%. Throughout these years, we have been increasing the relevance of our franchise revenues and our franchise business to our mix of revenues, while we have been also taking the cost income ratio down. We would expect that franchise businesses run at a higher marginal cost income ratio than the Sales and Trading and Corporate Lending businesses, which is typically true. The point here is that digitalization and the investments in technology are taking our cost income ratio down as we grow our franchise businesses.
This is a very interesting, very important side effect of the investments that we are doing in technology that are not only helping us grow our new franchise of core affluent and mass affluent clients, but also helping us operate the bank more efficiently. Moving to page 17. Here's the balance sheet analysis. I'll make some important explanations here. First, you see the total assets growing from BRL 137.6 billion, which is roughly 6.1x our equity in the end of last year to currently BRL 164.7 billion, which equates to about 7.2x assets to equity. This growth, as you see further down, is coming essentially from our portfolio of assets financed through repos and our portfolio of trading assets, is totally associated with the growth in volumes from our Sales and Trading franchise, as we mentioned before. This is not structural growth.
On the contrary, these are flow transactions that increased in volume towards the end of the quarter, that we expect to normalize. This is not to be viewed as a structural increase in our total assets, even though 7.2x total assets to equity would still be a conservative asset to equity ratio. We also have an increase of our cash position from BRL 21.3 billion to BRL 22.1 billion. We have close to our equity in cash, basically, which leads to us having a LCR, which is the regulatory measure of liquidity, running at 218% average in the quarter, which is an extremely comfortable ratio. We continue to run the balance sheet very conservatively from a capital and from a liquidity point of view. Moving to page 18. This is the broader credit portfolio picture, which goes basically in line with our Corporate Lending portfolio.
The difference from one to the other is essentially the Wealth Management credit portfolio. As we said before, the growth of the portfolio with good quality and the same spreads. Spreads are in line with the historical spreads that we used to capture. Turning to page 19, here we have the unsecured funding base analysis. This is one of the main highlights of the quarter for us. During the quarter, our unsecured funding base went from BRL 45.1 billion -BRL 47 billion. We did have some funding renewals during the quarter. We had very strong statements made during the quarter. During the quarter, we issued a Tier 2 bond in international markets of $600 million, a 10-year non-call five, which was a very successful transaction, very strong demand from international institutional investors, very qualified.
The typical names that invest in emerging markets were present in our bond issuance. We also have a Tier 2 issuance of CLP 100 million equivalent that we did from our Chilean bank in local currency in Chile, in Chilean pesos, CLP 100 million for a 10-year bond that was issued also in a very satisfactory manner. The biggest highlight for the quarter is the increase in the local funding. The BRL funding, bilateral, basically funding in local CDs and local LFs, increased a lot. It's a less visible progress that we make because we don't engage underwriters in that funding space. We fund in our bilateral relationships with our counterparties, so it's less visible. The growth on the local funding base in reais has been extremely effective and continues to be post-quarter.
All that led to an increase in the average tenor of our liabilities by about 13% in the quarter. We renewed funding with longer-dated instruments than the average of the residual portfolio, which is also positive since we see funding costs decreasing slightly and the tenor of our liabilities increasing, which gives us even more dry powder to capture value in a possible growth of our portfolio, this time a structural growth, that we can capture if conditions improve further in Brazil and Latin America. Finally, on page 20, there's Basel ratio and our Value at Risk. Basel ratio is at 17.6%. This already incorporates the Tier 2 issuances that I mentioned before. Very comfortable levels of capital.
VaR as a percentage of equity increased to 0.69% of our average equity, which is pretty much in line with historic averages and reflective of the bigger usage of balance sheet for Sales and Trading. With that, I conclude the comments that I wanted to share, and we would like now to open the floor to your questions. Thank you very much for joining our conference.
The floor is now open for questions from investors and analysts. If you have a question, please press star one on your touchtone phone at this time. If at any point your question is answered, you can remove yourself from the queue by pressing star then two. Questions will be taken in the order they are received. We would ask you to please pick up your handset when you ask your question in order to ensure optimum sound quality. Please hold while we poll for questions. The first question is from Jorge Kuri of Morgan Stanley. Please go ahead.
Hi. Hello, everyone. Congratulations on the strong results. I have a couple of questions. First, could you provide some color on the banking pipeline for the year? Should we expect maybe a weaker second quarter and then a much stronger second half if the pension reform is approved? My second question would be on trading revenues. Given the higher VaR level and the impact from volatility and energy this quarter, what would be the normalized revenue under this higher level? Lastly, could you provide some more color on BTG Pactual digital, maybe the current level of assets under management, number of clients, independent financial advisors, a little bit more color on that would be great. Thank you.
Thank you, Jorge Kuri. Starting with the first question on Investment Banking. We're having a strong. You have three products, right? M&A, DCM, and ECM. What you said is probably true for equity capital markets, especially IPOs, but on follow-ons, these have been happening. We have been announcing some quite significant M&A transactions this quarter. It's very hard to anticipate the seasonality, especially because it's hard to anticipate the timing of the closing of the deals. We still believe that this will be a very strong year overall. I don't want to give you any guidance on quarter-by-quarter seasonality because sincerely, I don't have it. It's going to be much more dependent on the clients than on us. On Sales and Trading, we still continue with what we think averages BRL 600, some quarters more, some quarters less.
We still think BRL 600 on average is the normalized rate, BRL 600 million of revenues is the normalized rate of Sales and Trading. For BTG Pactual digital, investors and analysts always ask us about the number of clients and the number of RIAs. We have discussed this a lot, and we have intentionally decided not to disclose this number. While we understand that this might help the equity story of BTG, we also think this will give the wrong incentive to our teams. We have to be focused on the experience of the client and of the RIA. If you start focusing on just the number of clients and RIAs, that means that you will be basically jamming your platform with clients that do not necessarily have the profile that are the clients that we can deliver the adequate resources to give good service.
For us, choosing the right RIAs is very important because from the way we see it, we are coming from a premium brand, and we have to ensure that the same quality which got us here continues when we go into the retail market. We have decided that the best way to show the growth of this business is just show the net new money and total assets on the Wealth Management business, because at the end of the day, this is a Wealth Management business with different segmentation. The truth is our traditional Wealth Management business has performing very strongly. Quarter-over-quarter, both the total AUM and the net new money from the digital, the new retail channels are gaining importance.
That's why we're very confident that the strong growth that we've been seeing in the Wealth Management business overall will continue over the next quarters and years.
Perfect. Thank you very much.
Thank you.
Once again, if you wish to ask a question, please press star one on your touch-tone phone. Please hold again while we poll for questions. There are no questions at this time. This concludes our question and answer session. It brings us to the end of the question and answer session. I would now return the floor to Mr. Roberto Sallouti for closing remarks.
Thank you very much. Thank you all for joining the call. We hope to see you again at the end of the second quarter. Have a great day. Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may disconnect your line at this time, and have a nice day.