Disbursements made by the Brazilian Development Bank (BNDES) reached R$ 187.8 billion in 2014, dropping 1% against the R$ 190.4 billion from 2013. The result is keeping with the Bank’s expectations for stabilizing releases. Concerning approvals and inquiries, indicators also show a moderate performance.
Releases last year were led by the infrastructure sector with R$ 68.9 billion. The increase was 11% in the year-on-year comparison (y.o.y). The participation of this sector in the BNDES’ total disbursements in 2014 was 36.7%.
Highlights in infrastructure were highway transport (R$ 21 billion) and electric energy (R$ 19 billion). However, in relative terms, the highest growth was in telecommunications, with releases of R$ 5.3 billion last year, up a whopping 97%.
The performance of micro, small and medium-sized companies (MSME) is also worth mentioning as last year this sector received R$ 59.4 billion in financing from the BNDES. This represents 32% of the Bank’s global disbursements. The volume of operations with small-sized companies was a record, reaching 1.1 million and representing 96.2% of total operations performed. The BNDES Card contributed significantly to this result, as it was used nearly 800,000 operations last year, with record-breaking releases of R$ 11.5 billion.
The year of 2014 was marked by the expressive growth of financing to innovation, with disbursements of R$ 6 billion, recording an increase of 14% if compared to the result from the previous year.
To the industry sector, the BNDES earmarked R$ 50 billion in 2014 (26.7% of the total), with a 14% fall in the performance of 2013. The most significant disbursements were made to transport material (R$ 11.5 billion), chemicals and petro-chemicals (R$ 9.2 billion) as well as foodstuff and beverage (R$ 7.2 billion).
In 2014, total financing approvals of the BNDES reached R$ 204.8 billion, following a drop of 14% against 2013. Still, approvals for the infrastructure sector posted a positive performance with R$ 80.3 billion, up 9%
Likewise, the total number of consultations to the BNDES, in the amount of R$ 236.2 billion, dropped 15% on 2013. This result is partly due to reductions in the BNDES’ PSI program (Investment Maintenance Program), with a lower budget in 2014, and Progeren, which is focused on financing for working capital. However, consultations in the infrastructure sector rose 25% y.o.y, reaching R$ 105.5 billion in 2014.
The Brazilian Development Bank (BNDES) posted net earnings of R$ 8.594 billion in 2014, up 5.4% against the R$ 8.150 billion registered in 2013. This is the third largest result in the Bank’s history.
Positive influences on the Bank’s performance came from financing investment projects (financial intermediation), which rose from R$ 11.7 billion in 2013 to R$ 13.4 billion in 2014. Such a result is associated not only with maintaining the lowest default rate of 0.01%, but also with the Bank’s excellent operational management, and is also in keeping with the government’s strategic priorities.
Other indicators in the period were also positive. Profitability on the average net equity of the BNDES System reached 13.05%, and the Basel index hit 15.9%, which is well within Brazil’s Central Bank minimum of 11.0%.
Another important factor that boosted 2014’s earnings was the income from stakes in companies (shareholding), which increased from R$ 2.5 billion in 2013 to R$ 2.9 billion in 2014. It is worth mentioning that this growth took place within an extremely volatile capitals market, which raised allowances for losses in investments from R$ 2.04 billion in 2013 to R$ 2.8 billion in 2014.
As stated in the BNDES’ financial statements, the main component of registered losses last year were investments in the State-owned oil firm, Petrobras. Due to the significant and long-standing decline in the value of these shares, a qualitative analysis of the investment was carried out to establish the amount of assets that may not be recovered.
The analysis took into account: the specific characteristics of the BNDES’ operations; the specific characteristics of the assets, taking into consideration that the company has, in fact, met all financial obligations; and the fair value calculated in the economic-financial assessment.
Based on the results of this analysis, it was estimated that there will be an unrecoverable loss, within the scope of the Central Bank’s Circular 3,068/01, totaling R$ 2.6 billion, net after taxes.
Nevertheless, within the scope of Resolution Nº. 4,175/12 of the National Monetary Council, taking into account the characteristics of the shares owned by the Bank (transferred by the federal government to increase the Bank’s capital), which contain specific conditions related to restricted sales, losses of this nature are reclassified for earnings solely when the respective asset is sold or transferred. Therefore, of the total R$ 2.6 billion in unrecoverable losses, net after tax, some R$ 1 billion was registered in the 2014 period, while the residual balance remains in the Net Equity, entered as an adjustment to equity evaluation (Other Earnings).
Much like Petrobras’ recent financial statements, this was mentioned in the independent auditor’s report on the BNDES’ balance sheet.
Financial standing – The net worth of the BNDES System totaled R$ 66.3 billion in December 2014, higher than the R$ 60.6 billion posted in December 2013.
The total assets of the BNDES System reached R$ 877.3 billion on December 31, 2014, up some R$ 42.5 billion (5.1%) in relation to September 30, 2014, and up some R$ 95.2 billion in relation to December 31, 2013.
The total of the credit and on-lending portfolio, net after allowances for credit risk, reached R$ 651.2 billion at the end of 2014, of which some 81.4% corresponds to long-term credit.
Default – The low default rate of 0.01% is the result not only of good management and the high quality of the credit and on-lending portfolio — well above the average in the National Financial System (SFN) —, but also the consistency of the BNDES’ operational policies and, above all, the BNDES’ performance as a good development bank, when granting financing with reduced interest rates and conditions that are compatible with long-term projects.
In comparison, the average default rate in the National Financial System in December 2014 was 2.9%, according to data from Brazil’s Central Bank, considering that the BNDES’ criteria are much more conservative. In the BNDES System, to be in default means debts have been outstanding for 30 days, while Brazil’s Central Bank only considers a debt in default after 90 days.