The Brazilian Development Bank (BNDES) supported more than 460,000 clients, who employ more than 10 million people, in the year that Brazil experienced the effects of the Covid-19 pandemic.
In 2020, for the first time in its history, BNDES offered more resources to small- and medium-sized enterprises than to large ones, with 52% of disbursements allocated to these smaller companies. Even with the countercyclical action to support the lives and jobs of Brazilians, BNDES reported net profit of R$ 20.7 billion.
In the last quarter of 2020, BNDES registered a net profit of R$ 7.0 billion. This performance was strongly influenced by the result with equity shares, mainly the sales of Suzano and Vale shares, each contributing with a net profit of R$ 2.4 billion. The performance was presented this Friday, 12, by BNDES’s Board of Directors, with a balance of the institution’s actions last year.
In 2020, the R$ 20.7 billion net profit was impacted by the public offering of Petrobras shares, held in February; the sale of Vale and Suzano shares; and dividend revenues from invested companies. The result for the year was 17% above that of 2019, at R$ 17.7 billion.
Despite the economic scenario, which led to the revision of the credit rating of companies in the sectors most affected by the Covid-19 pandemic, the expenditure with provision for credit risk in the year was reduced by R$ 856 million in the fourth quarter, favorably impacted by the recovery of credits previously written off. Financial intermediation contributed R$ 12.8 billion in profits in 2020.
The recurrent result of R$ 8.0 billion in 2020 remained stable compared to the R$ 8.1 billion in 2019. The recurring result excludes divestment operations of the variable income portfolio and provisions for credit risk, among others.
Personnel expenses in 2020 (which include health and pensions) were around R$ 2 billion, the same level as in 2019.
Disbursements – BNDES disbursements totaled R$ 64.9 billion, a 17% increase compared to 2019. Considering the disbursements by sectors, the increase in financing for Trade and Services stands out, with a total of R$ 10.3 billion and a 66% increase compared to 2019, driven by countercyclical measures to combat the Covid-19 crisis. Another prominent sector was infrastructure, with R$ 24.8 billion in disbursements. Of this amount in infrastructure, the sub-sectors of energy (R$ 15.8 billion) and road and rail transport (R$ 5.9 billion) led the volume of operations.
Health – With the arrival of the pandemic in Brazil, BNDES played a relevant role in the health sector, providing support from the line in the fight against Covid-19 to the financial health of companies in the sector. Among the R$ 155.4 billion of BNDES’s total action against coronavirus, value updated until March, 1,700 medical equipment, 2,900 beds dedicated to the pandemic, and 4 million diagnostic tests for Covid-19 were supported.
BNDES worked with the Federal Government in launching special products to combat the crisis, including the PESE (Emergency Employment Support Program), the FGI PEAC (Emergency Credit Access Program) and specific actions for the health sector. We also launched the Matchfunding Saving Lives, an innovative crowdfunding model in which BNDES doubled every financial support from people and companies, helping the Unified Health System (SUS) across Brazil.
MSME – While BNDES’s general support benefited nearly 466,000 clients (who employ more than 10 million people), the emergency measures to combat the effects of Covid-19, such as FGI PEAC, PESE, and PEAC Maquininhas, boosted 393,000 enterprises. Of this total, the largest quota in values, number of enterprises supported, and jobs were small- and medium-sized enterprises.
BNDES disbursements (not counting emergency measures) supported 134,000 enterprises last year, of which 58,000 went to new borrowers, who did not access the Bank for at least the last six years. For the first time since 1995, when these data began to be calculated, BNDES disbursements to MSMEs were higher than all the others to other BNDES clients, reaching the 52% mark. These disbursements to MSMEs reached R$ 34.1 million last year, a 27% increase from the previous year.
Project factory – BNDES’s portfolio of denationalization projects reached 121 assets (44 federal, 69 state and 8 municipal). In all, a R$ 223 billion in mobilized capital (investment and grants) is estimated. Compared to 2019 the portfolio increased112% in the number of projects and 27% in capital volume.
In 2020, auctions and contracting of projects for public lighting, basic sanitation, and electric power took place. Among the main highlights that were added to BNDES’s Project Factory last semester are most of the 45 projects related to the environment, in park and forest concessions.
Assets – The BNDES System’s assets totaled R$ 778.3 billion on December 31, 2020, showing an R$ 50.2 billion (6.9%) increase in the year. The increase resulted mainly from the appropriation of exchange rate change and interest on the credit and transfers portfolio of R$ 43.1 billion; the R$ 35.8 billion increase in repo operations (third-party cash assets) from BNDES’s role as a dealer for the Central Bank of Brazil (BCB); the valuation of the nonassociated portfolio by R$ 4.9 billion; and the net inflow of FAT resources of R$ 4.0 billion.
These factors were mitigated by the transfer of the entire balance of R$ 20.7 billion from the PIS-Pasep Fund to the FGTS in the second quarter; and by the ordinary amortizations to the National Treasury in the amount of R$ 16.0 billion.
The amounts received from the National Treasury under the PESE (Emergency Employment Support Program) and the Emergency Credit Access Program (PEAC) totaled R$ 9.8 billion in applied resources.
The loan and transfers portfolio, net of provision, totaled R$ 446.9 billion, representing 57.4% of total assets as of December 31, 2020, an increase of 1.2% over the balance of December 31, 2019. The appropriation of exchange rate change and interest was mitigated by the net return on the portfolio and the provision for credit risk registered in the period.
Delinquency above 90 days decreased from 0.84% on December 31, 2019 (excluding operations with Union’s honor) to 0.01% on December 31, 2020, returning to the 2013 level and remaining well below the average delinquency of the National Financial System (2.12% on December 31, 2020). The good quality of the credit and transfers portfolio was maintained, with 91.9% of its operations classified at risk levels between AA and C on December 31, 2020. This percentage remains higher than that registered by the National Financial System, which was 91.0% on September 30, 2020 (latest information available).
The renegotiation index reached 51.26% of the credits on December 31, heavily impacted by standstill in the second quarter, which reached 43% of the total portfolio. This measure was taken at the very beginning of the pandemic in Brazil, when the impact of Covid-19 on the companies’ cash flow was still unpredictable. With this suspension of payments alone, BNDES benefited companies that employed about 2.5 million people.
The equity portfolio (including associated and nonassociated companies) totaled R$ 81.8 billion at fair cash value. The position represents a 32.3% decrease in the year, due to the sale of shares (R$ 45.4 billion), notably those of Petrobras, Vale, and Suzano, attenuated by the valuation of investments in nonassociated companies (R$ 7.9 billion), mainly in Vale and Suzano shares. The disinvestments made during the fourth quarter totaled a gross result of R$ 7.6 billion (R$ 4.8 billion net).
Funding sources – On December 31, FAT and National Treasury accounted for 40.5% and 25.1%, respectively, of BNDES funding sources. The amount owed by BNDES to the National Treasury reached R$ 195.3 billion on December 31, 2020 (of this total, R$ 36.8 billion is represented by Instruments Eligible for Core Capital), with a 2.2% reduction compared to the end of 2019. The decrease was due to ordinary payments in the amount of R$ 16.0 billion. There were no early settlements in 2020.
FAT remained the main source of BNDES resources. In 2020, R$ 17.8 billion came in from the FAT and its volume of funds with BNDES totaled R$ 315.0 billion on December 31.
The balance of foreign fundraising totaled R$ 35.4 billion on December 31, 2020, representing a 23.1% increase compared to December 31, 2019. This amount increased mainly due to the inflow of funds (R$ 4.6 billion) and the appropriation of foreign exchange rate change (R$ 8.2 billion), mitigated by contractual amortizations (R$ 6.3 billion).
Owners’ equity – Owners’ equity increased from R$ 104.8 billion at the end of 2019 to R$ 113.0 billion on December 31, 2020. The net profit of R$ 20.7 billion was mitigated by the negative equity valuation adjustment (notably shares in nonassociated companies) and by the registration of mandatory minimum dividends of R$ 4.9 billion.
Prudential limits – The basis for calculating the prudential limits established by BCB, the Reference Equity totaled R$ 194.5 billion on December 31, 2020 (compared to R$ 191.7 billion on December 31, 2019). The Basel Index remained comfortable, from 36.8% at the end of December 2019 to 41.2% in December 2020, above the 9.25% required by BCB.
Subsequent events – Some initiatives from January and February will have an impact on BNDES’ future balance sheets, mainly the divestments of shares issued by Vale (full disposal) and the anticipation of funds with the National Treasury of R$ 38 billion. The possibility of returning the remaining balance, which includes instruments eligible for core capital, will be analyzed under the recent ruling by the Federal Court of Auditors (TCU).
About BNDES – Founded in 1952 and currently linked to the Ministry of Economy, BNDES is the main instrument of the Federal Government to promote long-term investments in the Brazilian economy. BNDES’s actions focus on the socioenvironmental and economic impact in Brazil. BNDES offers special conditions for micro-, small- and medium-sized enterprises, as well as social investment lines, directed at education and health, family agriculture, sanitation and urban transport. In crisis situations, BNDES acts in an anticyclical manner.