The Brazilian Development Bank (BNDES) registered R$ 9.8 billion in net profit in the first quarter of 2021, 78% more than in the same period of the previous year, with the positive result driven by the sale of equity interests and financial intermediation. Disbursements grew 35%, reaching R$ 11.3 billion, of which 46% (R$ 5.2 billion) were allocated to micro-, small- and medium-sized enterprises (MSMEs) and 49% (R$ 5.6 billion) to the infrastructure sector.
More than half of BNDES’ non-automatic direct and indirect credit portfolio (52.5%) is associated with projects that support the green economy and social development. These resources are allocated in projects from sectors such as sanitation, renewable energy, urban development, among others included in the acronym ESG (which refers to environmental, social and corporate governance issues). In the first quarter of 2021 alone R$ 3.7 billion were disbursed to these sectors, according to the presentation of results made on Thursday (13th).
Financial intermediation reached R$ 4.4 billion, an increase of 7.8% compared to the first quarter of 2020. Revenue from credit operations and transfers increased 10.8% compared to the first quarter of 2020, reaching R$ 9.2 billion.
Between January and March 2021, these operations benefited 23,000 companies with about 162,000 workers.
The reversal of a R$ 432 million provision for credit risk also had a positive impact on the result of the first quarter of 2021. This reversal results from the recovery of credits, mainly in honor of the Export Guarantee Fund (FGE), in addition to improvements in the risk rating of some companies. In the first quarter of 2020, a provision of R$ 1.7 billion was registered, influenced by the revision of ratings in sectors most affected by the Covid-19 pandemic.
Even excluding extraordinary events, such as stock sales and provisioning for credit risk, for example, BNDES’ recurring result was positive at R$ 2.4 billion in the first quarter of 2021, stable when compared to the same period in 2020.
Assets – The BNDES System’s assets totaled R$ 737.2 billion, on March 31, 2021, showing a decrease of R$ 41.1 billion (5.3%) in the quarter. The reduction was mainly due to the advance payment of R$ 38 billion to the National Treasury and the devaluation of the portfolio of equity interests due to fluctuations in securities in the financial market.
The loan and transfers portfolio, net of provisions, totaled R$ 446.1 billion, representing 60.5% of total assets as of March 31, 2021 and remaining at the same level as of December 31, 2020.
Default above 90 days, the reference for the banking sector, remained low, ranging from 0.01% on December 31, 2020 to 0.04% on March 31, 2021, falling well short of the default of the National Financial System (2.19% on March 31, 2021). The good quality of the loan and transfers portfolio was maintained, since 91.8% of the operations were classified at the lower risk levels (between AA and C) on March 31, 2021. This percentage remains higher than that registered by the National Financial System, which was 91.0% on September 31, 2020 (latest information available).
The renegotiation index reached 51.85% of the gross portfolio as of March 31, 2021, still heavily impacted by standstill renegotiation procedures, which reached 44.5% of the gross portfolio.
The equity portfolio totaled R$ 61.5 billion on March 31, 2021. The position represents a 21.1% decrease in the quarter due to the disposition of shares (R$ 12.6 billion), most notably of Vale and Klabin, in addition to the devaluation of investments in non-affiliates, especially Petrobras and Eletrobras.
Funding sources – On December 31 2021, FAT and National Treasury accounted for 43.6% and 20.9%, respectively, of BNDES’ funding sources.
The amount due by BNDES to the National Treasury was R$ 153.9 billion as of March 31, 2021, representing a 21.2% reduction when compared to the position at December 31, 2020. The decrease resulted from early payments totaling R$ 38 billion, in addition to R$ 3.4 billion in ordinary payments.
FAT remained the main source of BNDES’ resources. In the quarter, R$ 5.1 billion came from the Constitutional FAT and R$ 6.3 billion were settled for half-yearly interest. The fund’s volume of resources with the Bank totaled R$ 321.5 billion as of March 31, 2021.
Liabilities with external funding totaled R$ 37.9 billion on March 31, 2021 (a 7.1% increase in the quarter, mainly due to the exchange rate effect).
BNDES’ total sources of financial resources closed the quarter at R$ 668 billion, lower than the R$ 698.5 billion registered at the end of 2020.
Owner’s equity – Owner’s equity reached R$ 113.9 billion as of March 31, 2021, stable in relation to the balance of R$ 113 billion on December 31, 2020. The negative adjustment of equity valuation of R$ 8.9 billion, net of taxes, partially offset the R$ 9.8 billion in net income.
Prudential limits – The basis for calculating the prudential limits established by the Central Bank (BCB), the Reference Equity, totaled R$ 190.1 billion on March 31, 2021 (compared to R$ 194.5 billion on December 31, 2020).
The Basel Index remained comfortable, going from 41.2% at the end of December 2020 to 40.3% on March 2021, above the 9.25% required by the Central Bank.
Subsequent Events – Some initiatives of April 2021 will have an impact on BNDES’ future balance sheets, mainly the sale of Vale S.A. participatory debentures, settled on the 14th, which generated a net cash inflow of approximately R$ 2.0 billion. April also included a new standstill round, which may benefit up to 100,000 micro- and small-sized enterprises, in continuity with BNDES’ actions against the effects of the Covid-19 pandemic.
Sustainability – The relation of 52.5% of the credit portfolio (considering direct and indirect non-automatic operations) to projects that support the green economy and social development reinforces BNDES’ ESG agenda and the commitment to the UN’s Sustainable Development Goals (SDGs). About R$ 5.85 billion disbursed between January and March contributed to stimulate industry, innovation and infrastructure (SDG 9); R$ 4.59 billion to promote decent work and economic growth (SDG 8); and R$ 4.41 billion to expand clean and affordable energy (SDG 7). However, there are disbursements that contemplated more than one of these SDGs.
Project Factory – At the beginning of 2021, the Project Factory had significant advances, reaching 120 initiatives to structure privatizations in March, for R$ 243 billion in value, between grants and planned investments. The most notable advance, already in the second quarter, was the auction for water and sewage supply services in the state of Rio de Janeiro, held on April 30, which is expected to benefit about 11 million residents of the state.
Other highlights of the Project Factory in the period include the auction of Companhia Estadual de Distribuição de Energia Elétrica (CEEE-D), in Rio Grande do Sul; the signing of the contract for the sale of CEB Distribuição (CEB-D), in the Federal District; the contracting of the Petrolina public lighting PPP; and the hearings and public consultations for the Curitiba lighting PPP, for the port of Vitória (CODESA) and for sanitation of Porto Alegre.
Capital Markets and MSMEs – To expand credit to MSMEs – including individual microentrepreneurs – BNDES approved two new credit funds that stimulate financing through non-bank channels in the first quarter of 2021, totaling four funds approved in the program. BNDES has already committed R$ 1.6 billion to these funds (which will provide R$ 2.1 billion to entrepreneurs) and the program has a total budget of R$ 4 billion from BNDES.
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’ actions focus on the socio-environmental 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.