The Brazilian Development Bank (BNDES) registered net income of R$ 373 million in the first quarter of 2017. The result of shares in other companies, which went from net loss of R$ 22 million in the first quarter of 2016 to net gain of R$ 1.1 billion, positively influenced the balance. The recovery of the stock market has reduced provisions for losses on investments (impairment) and provided earnings in operations with the sale of shares, which increased 127.7%.
In the credit and transfers portfolio, which reached R$ 592.7 billion, 96.2% of operations were classified between levels of AA and C, considered low risk in late March 2017. Additionally, the default, in the operations in general is at lower levels. The delay exceeding 30 days in the operations of the Bank retreated from 2.81% of the portfolio in 12/31/16 to 2.13% in 03.31.17.
The decrease in the level of economic activity in recent months, however, led to the deterioration of some credits in direct operations and to the review ratings assigned to certain economic groups. There was a significant increase in rating H, which requires 100% of the provision. Considering these facts, BNDES decided to constitute additional provision for doubtful debtors, i.e., in volume greater than the minimum required by the Brazilian Central Bank by R$ 1.8 billion, reinforcing the cautious stance of BNDES in the administration of its credit portfolio. Consequently, there was greater expense with provision for credit risk, which went from R$ 871 million in the first quarter of 2016 to R$ 3.3 billion in the same quarter of 2017. This higher volume of allowance resulted in net income of R$ 373 million with 76.6% decrease compared with the first quarter of 2016 when the Bank showed a net income of R$ 1.6 billion.
Prudential limits – The shareholders’ equity of the BNDES system closed at R$ 55.6 billion in March 2017, almost with no variation compared with December 2016. The reference equity (which determines the financial ability) was almost stable at R$ 135.9 billion. Despite this stability, the decrease of risk-weighted assets contributed to the increase in the Basel index, from 21.7% to 22.9%, above the 10.5% required by the Brazilian Central Bank.
Participation of BNDESPAR – Equity participation of BNDES, BNDESPAR registered net income of RS $1.2 billion in the first quarter of 2017, reversing the damage of R$ 1.8 billion registered in the same quarter of 2016, driven by the increase of R$ 4.4 billion of the result with shares in other companies.
The increase in the result with shares in other companies was impacted mainly by lower expenses with provision for losses on investments and by the increase of the result with divestitures (sale of shares), which provided R$ 1.1 billion in the first quarter of 2017.
The positive results with sales of shares from Petrobras and from Rumo Logística Operadora Multimodal accounted for 95.2% of the result with divestitures in the period from January to March 2017.
Integrate Reporting – Seeking to expand the transparency of its actions, BNDES anticipates the publishing of its Annual Report, historically launched in June. The piece follows the model of the integrate reporting international paradigm created by an international alliance called International Integrate Reporting Council (IIRC). This model, which has been gradually adopted by the Bank since 2012, follows the new State Law requirement. The report also continues the use of indicators of sustainability of the Global Reporting Initiative (GRI), now reporting 54 indicators, more than the double of previous years.
In a year of change in management, the publication depicts the transition BNDES went through, highlighting the new sections Challenges and Make a difference in your life, the latter with example of projects with results more significant in 2016. Our report seeks to answer in a simple and direct way everyone interested in our actions and to serve as a gateway to those seeking to know how BNDES generates value for society.