Approvals of new financing by the Brazilian Development Bank (BNDES) increased 27% between January and December 2018, if compared to the same period in 2017, and totaled R$ 94.9 billion. In the period, disbursements were R$ 69.3 billion (−2%), and consultations (the first stage of an application for financing at the Bank) were stable at R$ 98.8 billion.
The infrastructure sector stood out among the approvals in 2018, with a performance 60% higher than that observed in 2017 and a total of R$ 47.6 billion, just over 50% of approvals in the year. The following are the agricultural and industrial sectors, whose approvals grew 10% and 5% respectively when compared to 2017, and then the commerce and services sector, that varied −3% compared to last year.
Disbursements – Of the R$ 69.3 billion released by BNDES between January and December 2018, R$ 30.4 billion (43.9% of the total disbursed) went to infrastructure investments, a 13% growth compared to 2017. The agricultural sector follows it, with R$ 14.7 billion (21.2% of the total disbursed) and a growth of 2% when compared to the previous year.
Disbursements for the industrial, commercial and services segments corresponded to R$ 12.3 billion (17.8% of the total) and R$ 11.9 billion (17.2% of the total), respectively – in both cases, a reduction of 18% considering the previous year.
Regions – In 2018, the Midwest registered the highest percentage growth in BNDES disbursements. R$ 9.4 billion were released for the region, 12% higher than in 2017. The number corresponds to 13.5% of the total released by BNDES in 2018.
Approvals for new operations grew 70%, reaching R$ 12 billion, mainly influenced by the approval of the financing for the transmission system that will connect the Converter Stations Xingu (PA) to the Terminal Rio (RJ) for outflow of the energy generated by the Belo Monte Hydroelectric Power Plant.
For the other regions of the country, the disbursements of the Bank were distributed as follows: the Southeast received R$ 26.5 billion (38.2% of the total); the South, R$ 17.96 billion (25.9%); the Northeast, R$ 11.9 billion (17.2%); and the North, R$ 3.5 billion (5.1%). Compared to 2017, releases to the South and Southeast remained stable, at 1% and −1%, respectively. For the North and Northeast, the variations were −8% and −16%.
Approvals for the North, South and Southeast regions, in turn, had the following increases compared to the previous year: 270%, 29% and 17%, respectively. As for the Northeast, after a 70% growth in 2017, compared to 2016, approvals varied by −9%.
MSMEs – Micro, small and medium-sized enterprises (MSME) received R$ 30.1 billion, or 44.7% of the total disbursed by BNDES in 2018. The percentage for the segment is the highest recorded in the Bank's historical series, and the amount corresponds to an increase of 4% compared to that observed in 2017.
Capital Markets – In 2018, through BNDESPAR, BNDES invested R$ 412 million in credit funds, with a multiplier effect of 3 – that is: for every million of BNDES, R$ 3 million was invested by other investors.
The Bank's role as an investor in this type of fund, together with private investors and development financial institutions, aims to stimulate the segment and increase the access of infrastructure projects and small and medium-sized enterprises to other forms of financing via capital markets.
Despite the reduction in the result of financial intermediation arising from the significant reduction in its loan portfolio, the Brazilian Development Bank (BNDES) registered a net income of R$ 6.7 billion last year. The increase of 8.5% in net income is explained mainly by the increase in the sale of shares in other companies, especially those held by BNDESPAR.
BNDES loan portfolio went from R$ 560 billion in December 2017 to R$ 520 billion in December 2018 (corresponding to R$ 624 billion at the end of 2016). The dynamics of this item from the Bank’s balance sheet reflects the reduction of investments in the Brazilian economy in general and the maturing of BNDES credit portfolio. The adjustment of the size of this portfolio, as well as the increase in provisions for credit risk, notably due to loans abroad, took the result of financial intermediation from R$ 8.3 billion in 2017 to R$ 6.4 billion in 2018.
The provisions in 2018 totaled R$ 5.9 billion, coming mostly from R$ 2.2 billion associated with loans to Venezuela and R$ 2.2 billion associated with defaulted loans to Cuba. The impact of the convergence of TJLP (currently 7%) and the SELIC rate (6.5%) on the revenues of the Bank was limited, because the funding and application rates are generally associated.
The result by the disposal of shares in companies reached R$ 6.1 billion in 2018, substantially above the R$ 3.7 billion obtained in 2017, due to the acceleration of sales and stock appreciation. In addition to the sales profit of Petrobras (R$ 2.2 billion) and Vale (R$ 2.6 billion), the sale of Eletropaulo shares stands out with profit of R$ 1.1 billion, after a long process of strengthening of the company with the support from BNDES, which resulted in the acquisition of the company by a strategic investor. The participation of the BNDES System in the capital of Petrobras went from R$ 35.3 billion (16.5%) at the end of 2017 to R$ 46 billion (15.0%) at the end of 2018.
The positive performance with shares in other companies of the BNDES System (including BNDESPAR) reflected the increase of dividends and interest on its equity, which increased from R$ 0.9 billion in 2017 to R$ 2.5 billion in 2018, with R$ 1.3 billion coming from the Petrobras portfolio. The appreciation of the Brazilian stock market has allowed the reversal of revaluation of some shares (impairment), resulting in gain of R$ 460 million in 2018, against losses of R$ 628 million in 2017. Adding the profits of disposal to the reversal of impairments, to the increased dividends/interest on capital and other factors, the result with BNDES shareholdings went from R$ 5.1 billion in 2017 to R$ 9.9 billion in 2018.
Administrative and personnel expenses remained stable in nominal terms, around R$ 2.2 billion. Other expenses had a nonrecurring increase by the pension plan rebalance, reached equally, that is, with equivalent effort by sponsor and sponsored. Considering the intermediation and portfolio gains, as well as BNDES expenses, the result before taxes on profit reached R$ 12 billion, compared with R$ 9.7 billion in 2017, an increase of 23%.
The volume of taxes on profit increased 62%, contributing to the public coffers with R$ 5.2 billion. Thus, the Net Profit for the period reached R$ 6.7 billion in 2018, value close to the R$ 6.2 billion in 2017.
Despite the net profit of BNDES being stable, the participation of employees in this profit decreased, going from R$ 336 million to R$ 89 million, mainly due to the reduction in the volume of disbursements and recurring revenues of the BNDES System.
Assets – The assets of the BNDES System totaled R$ 802.5 billion in 2018, a reduction of R$ 65 billion (-7.5%) in the fiscal year, reflected on the reduction of 26% of liabilities with the National Treasury (R$ 307 billion at the end of 2018, against R$ 416 billion in 2017), with early payment of R$ 130.2 billion in debts to the National Treasury. This payment was only possible because the volume of settlements of loans surpassed the disbursements in R$ 91.5 billion.
The portfolio maintained good quality, concentrating 94.7% of operations between the risk levels AA and C, considered low-risk. This low-risk percentage is higher than the average of 90.6% of the National Financial System (SFN), disclosed in September by the Central Bank.
Default rate – The default rate above 90 days increased in the year, going from 2.08% in 2017 to 2.95% in 2018. This increase is explained by the reversal of some credit casualties, made in the wake of successful renegotiations, which still require substantial provisions.
The renegotiation index, which comprises the credit operations renegotiated in the last 12 months, rose from 3.6% in 2017 to 4.4% in 2018, influenced by the renegotiation of debts of states and municipalities, within the Complementary Law 156/2016, made in the 1st quarter of this year.
Funding – On September 31, 2018, the National Treasury and FAT/PIS-Pasep accounted for 38.3% and 36.4%, respectively, of BNDES funding sources. The FAT balance totaled R$ 271.7 billion in December, an increase of 8.55% in the fiscal year. In the year, R$ 18.1 billion of resources from FAT Constitucional were added.
The liability with the PIS-Pasep Fund, on the other hand, totaled R$ 20.5 billion, with reduction of 26% in comparison with December 2017, due to early settlements of R$ 8.8 billion in the period.
Shareholders’ Equity – The Shareholders’ Equity of the BNDES System totaled R$ 79.6 billion at the end of 2018 – an increase of R$ 16.7% billion (26.6%) compared with 2017. The result reflects the effects of the stock portfolio appreciation, with positive impact of R$ 11.6 billion in Stockholders’ Equity and net income of R$ 6.7 billion. These effects were partially mitigated by the provision of minimum mandatory dividends relating to the net income of 2018 (R$ 1.6 billion).
Prudential Limits – The basis for the calculation of prudential limits established by the Central Bank of Brazil, the Reference Equity reached R$ 166.8 billion at the end of 2018 (R$ 146.4 billion in December 2017). The prudential limits of BNDES remained above the minimum required by the monetary authority, showing an improvement in the Basel Index compared with December 2017.
The Basel index went from 27.51% at the end of 2017 to 29.01% in December 2018, above the 10.5% required by the regulation, mainly due to the increase in the reference equity, which resulted from the appreciation of the portfolio of shares in other companies.
BNDESPAR – BNDESPAR, a wholly-owned subsidiary of BNDES, registered adjusted net profit in the amount of R$ 7.2 billion for the disposal of shares in other companies. This result represents an increase of 90.4% in relation to the net profit of R$ 3.778 billion in 2017.
This increase is explained by the result with disposals of shares in other companies of R$ 7.8 billion and by the result with dividends and interest on equity of R$ 2.2 billion in 2018. In 2017, the result obtained with disposals was R$ 4.3 billion and the result with dividends and interest on equity was R$ 0.9 billion.
The main divestments made by BNDESPAR were the partial disposals of shares of Petrobras, Vale and the total disposal of shares of Eletropaulo, which, together, accounted for 97.4% of disposals. The percentages of the participation of BNDESPAR in the total capital of Petrobras and Vale were 8.13% and 6.43%, compared with 9.67% and 7.60% in the previous year, respectively.
The result with dividends and interest on equity in 2018 was influenced by dividends and interest on equity received from Petrobras and Vale, in the amount of R$ 952 million and R$ 790 million, respectively.
The consolidated financial statements of BNDES and the financial statements of BNDESPAR for the fiscal year ended on 12/31/18 are available from BNDES Investors Relations Portal, at the address: BNDES Investors Relations Portal .