BNDES - Brazilian Development Bank

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Performance in 2011

The Evolution of the BNDES’ Disbursements

R$ billion

desempenho_graficodesembolso in 2011

The BNDES’ disbursements closed the year 2011 at R$ 139.7 billion. The result was within the Bank’ expectations and allowed the institution to continue contributing to the expansion of investments in the Brazilian economy, with emphasis on the infrastructure sector.

One of the main highlights of the year´s performance was the fact that the BNDES recorded the highest number of operations in its history. The total number of funding operations was 896,000, an increase of 47% compared to 2010, expanding access to the Bank’s credit, particularly for micro, small and medium enterprises (MSMEs).

Total disbursements to MSMEs, R$ 49.8 billion, was a record, and the proportion of resources allocated to smaller companies also closed the year at its highest level in history, 36% of total disbursements. The BNDES Card was one of the factors behind such growth. Card disbursements reached R$ 7.6 billion, an increase of 76% over 2010.

The geographic decentralization of credit was a highlight. The North and Northeast regions accounted for 22% of the Bank’s total disbursements, an increase in relation to the 17% in 2010. The participation of the two regions in the BNDES’ disbursement is in keeping with their contribution to Brazil’s GDP.

Although they account for a 17% drop compared to 2010 disbursements, R$ 168.4 billion, releases remained at a level similar to that year. Subtracting the R$ 24.7 billion invested by the BNDES in the capitalization of Petrobras, 2010 disbursements reached R$ 143.6 billion.

Exceptional operations in 2010 with the oil company also had a statistical impact on other BNDES indicators in comparison with 2011. Consultations for the Bank’s funding closed 2011 at a high level, R$ 195.2 billion, despite receding 24% in comparison with 2010. Approvals were at R$ 164.5 billion, which represented a decline of 18%.

Strategy -
The BNDES’ performance in 2011 helped the country maintain the expansion of investments in GDP growth, allowing Brazil to grow with no bottlenecks and inflationary pressures.

At the same time, the performance reflected the measures adopted in 2011, when the Bank changed the interest rates of the BNDES Investment Maintenance Program (BNDES PSI), reduced its level of participation in total loans and suppressed working capital lines that had been created in the most acute moment of crisis (pre-shipment for consumer goods and SGP). Thus, the BNDES seeks to broaden the space for growth in the performance of the private sector in granting long-term credit.

Sectors -
The biggest highlight in 2011 was the Bank’s transfers to large infrastructure projects. The infrastructure sector led disbursements, at R$ 56.1 billion or 40% of total disbursements. The most significant amounts were for highway transport, at R$ 26 billion, and electricity, at R$ 15.9 billion.

To  industry, the Bank disbursed R$ 43.8 billion (representing 32%), with emphasis on transport equipment (R$ 8.2 billion), chemicals and petrochemicals (R$ 7.1 billion), food and beverages (R$ 6.8 billion) and engineering industry (R$ 4.5 billion). To trade and services, the BNDES invested R$ 29.2 billion (21% of total) and to agriculture, R$ 9.8 billion (7%).

Financing machinery and equipment in the BNDES PSI lines strongly contributed to investments in all sectors supported by the Bank. In 2011, disbursements to the PSI - a program which expires next December - amounted to R$ 42.5 billion.

The Evolution of the BNDES’ Net Profit

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The Evolution of the BNDES’ Net Profit

The BNDES posted a net profit of R$ 9 billion in 2011. Gross earnings (before taxes and administrative costs) were influenced by the good performance of the credit and variable-income portfolios, which contributed 94% to profit. The Treasury portfolio also had a positive impact, accounting for 6% of the Bank’s result in the year.

The result for the credit portfolio and transfers from the BNDES, before the effects of reversal of provisions for credit risk, increased in 2011. The value went from R$ 5.8 billion in 2010 to R$ 6.1 billion in December 2011, thus reflecting the growth and quality of the Bank’s financing portfolio.

The good performance in the BNDES’ variable income operations enabled gross earnings to go from R$ 6.4 billion in 2010 to R$ 6.8 billion in 2011. The increase was mainly due to the extra R$ 1.9 billion in revenue from dividends and interest on equity, which amounted to R$ 4.2 billion in 2011.

The value obtained from divestments (share sale), an important component of gross earnings from corporate stakes, decreased from R$ 1.5 billion in 2011, influenced by unfavorable conditions in the capital market, especially from the second half of the year.

Gross earnings from the Bank's Treasury operations decreased R$ 700 million, going from a gain of R$ 1.6 billion in 2010 to R$ 900 million in 2011, mainly due to the monetization of resources for application in the Credit Portfolio and Transfers.

The small reduction in net profit in 2011, of 8.7% compared to 2010 (R$ 9.9 billion), was mainly due to the high amounts in credit recovery in 2010, of R$ 2.3 billion. This fact - non-recurring, or a one-off occurrence - contributed to income from reversal of provision for credit risk from that year surpassing the value obtained from the reversal of provisions in 2011 by R$ 2.1 billion.

Financial position - The BNDES’ net worth amounted to R$ 61 billion, corresponding to a Referential Equity (RE) of R$ 99 billion, higher than the R$ 83.1 billion achieved in December 2010. The RE growth was the result of a R$ 6.4 billion increase in capital held in the first quarter, which leverages the RE up to R$ 12.8 billion.

The Referential Equity is the base used by the Central Bank to set prudential limits to be followed by all financial institutions. The higher the BNDES’ Referential Equity, the greater its ability to provide financing.

The capital adequacy index (Basel Index), recorded by the BNDES System, was 20.6%. This means that for every R$ 100 financed, the Bank holds 20.6% of the equity, a comfortable situation regarding the 11% required by the Central Bank.

The BNDES was able to achieve a financial performance consistent with its activities as a development bank, reaching a credit portfolio of approximately R$ 426 billion in December 2011, representing 20.8% of the total supply of credit from the National Financial System (SFN). On the same date, some 83.1% (88.5% on 12/31/10) of the balance of credit transactions was classified as long term.

The BNDES’ default represented 0.14% of the total portfolio in 2011, below the SFN average: 3.6% in the same period. The quality of the Bank's portfolio is made evident by its profile of credit risk: 98.7% of total credits granted were classified between the risk levels AA and C in December 2011, well above the average of the National Financial System.

The low default rates and credit profile reflects the consistency of the operational policies. The Bank seeks to harmonize lower interest rates with the preservation of public equity by continuously monitoring credits and guarantees that cover the debt position over the duration of the contracts.

The total assets of the BNDES System amounted to R$ 625 billion in December 2011, an increase of R$ 75.8 billion (13.8%) compared to December 2010.

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Disbursements for infrastructure accounted for 45.5%, totaling R$ 11.4 billion. The electric power and transportation sectors were the highlight among disbursements Micro, small and medium-sized enterprises were the destination of more than 96% of financing operations and received R$ 11.5 billion, 45.6% of the releases. Investments in the North region increased by 108%, reaching R$ 1.6 billion. Disbursements in the South region increased by 10% and reached R$ 7 billion