BNDES - Brazilian Development Bank

BNDES registers record net profit in 2021 and now has the largest portfolio of infrastructure concessions in the world

Feb 25, 2022

BNDES posted record net income of BRL 34.1 billion in 2021, a volume 65% higher than that recorded in 2020, a result strongly marked by gains from equity interests (BRL30.6 billion) and from financial intermediation (BRL19 .9 billion). Also at the end of the year, the Bank was appointed by the data provider Infralogic as the largest structurer of PPPs, Concessions and Privatizations in infrastructure for concessions among its peers, displacing the IFC (World Bank), the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (ERDB), among others. The Bank ended 2021 with 167 projects in its portfolio, of which 19 have already been auctioned, totaling planned investments of around BRL 383 billion – BRL 109 billion referring to projects already auctioned. The results were presented this Friday (25), by President Gustavo Montezano and other members of the BNDES board.

Annual net income of BRL34.1 billion was also impacted by the sale of shares in Vale, Klabin and JBS – which contributed with net income of BRL6.0 billion, BRL1.0 billion and BRL1.0 billion, respectively – and income from dividends/JCP, accumulating BRL 7.3 billion (net of taxes) – with emphasis on Petrobras, Copel and Eletrobras. The positive equity result, which totaled BRL4.3 billion in the year – basically from JBS – also contributed to the good performance, as well as the reversal of the provision for losses on investments in Petrobras (net effect of BRL3.5 billion) and the sale of debentures from Vale (BRL 2.1 billion).

The recurring result, which excludes divestment operations from the equity portfolio and provisions for credit risk, among others, was BRL15.8 billion in 2021. The indicator increased by 96.9% when compared to 2020 (BRL 8.0 billion), reflecting the higher income from dividends/JCP and the increase in the product of financial intermediation, which also demonstrates the consistency of the credit portfolio of the Bank.

Sustainability – At the end of 2021, 53.5% of BNDES credit operations (considering direct and indirect non-automatic operations) were linked to projects that supported the green economy and social development. In the year, disbursements for initiatives of this nature totaled BRL7.8 billion and BRL10.0 billion, respectively.

About 83% of disbursements (BRL 53.5 billion) in the year contributed to the Sustainable Development Goals, established by the UN, totaling almost 180 thousand operations. In all, the generation of 1,730 MW of wind energy was made possible – enough to supply 3.3 million homes – 3,197 km of natural gas distribution network were implemented and 2,142 cisterns were built in rural public schools, among other Deliverables to Society.

Considering the BNDES' environmental legacy since the signing of the Paris Agreement in 2015, the BNDES' financial support enabled, among other results, the planting of 1.8 million seedlings and 830 thousand hectares of forests. In these seven years, the operations financed by the institution avoided the emission of approximately 74.4 million tons of carbon dioxide, equivalent to approximately 28 years of emissions from the vehicle fleet in the city of São Paulo.

Fábrica de Projetos – BNDES' recognition by Infralogic as the largest structuring of PPPs, concessions and privatizations in infrastructure in the world among its peers, is the result of the work implemented by Fábrica de Projetos. Currently, the portfolio has 148 projects under structuring and 19 projects auctioned, totaling planned investments of around BRL 383 billion. It has been increasing the attraction of private capital for the viability of projects that would have difficulty being funded solely by public resources and is part of the current strategy of acting in the development of the national economy as a multi-product bank.

The main example of success in this field in 2021 was the concession auctions for the four sanitation blocks in Rio de Janeiro, which raised BRL 24.8 billion and are expected to generate BRL 32 billion in investments. In addition to these, Amapá made the integrated concession of basic sanitation in its 16 municipalities, with BRL 3.2 billion in investments and the state of Alagoas auctioned two more blocks, with emphasis on Block B, integrating 34 cities in the Agreste and Sertão Alagoanos, won for BRL 1.2 billion (goodwill of +37,551%). All these auctions were structured by BNDES and provide for the universalization of water and sewage services for around 17 million people, in addition to investments in depollution and urbanization of underserved areas.

In all, in 12 months, 7 sanitation assets, 3 electric energy assets and 1 natural gas asset were auctioned, mobilizing BRL 92.5 billion between investments and grants.

Quarterly financial result – In the last quarter of 2021, BNDES recorded a net income of BRL7.7 billion. The performance was strongly influenced by the result with equity interests, mainly income from dividends/JCP (BRL 3.2 billion, net of taxes) - especially Petrobras -, positive result from equity in the earnings (BRL 1.1 billion) - basically JBS –, in addition to the sale of shares, – also of JBS –, contributing with a net income of BRL 1.0 billion. In addition to generating a positive return, these operations contributed to reducing the risk of the Bank's equity portfolio to fluctuations in the capital market.

In 2021, the financial intermediation product reached BRL 19.9 billion, an increase of 55.2% compared to 2020, impacted by the result from the sale of debentures, by the increase in the average balance of cash and cash equivalents, resulting from the partial monetization of the equity portfolio (investment divestitures) and the increase in the SELIC rate, which remunerates cash, including the effect of interest rate derivatives.

Assets – The assets of the BNDES System totaled BRL 737.2 billion on December 31, 2021, a decrease of 5.3% compared to December 31, 2020, mainly due to early settlements of BRL 63.0 billion to the National Treasury.

Portfolio – The loan and onlending portfolio, net of provisions, totaled BRL439.5 billion, representing 59.6% of total assets on December 31, 2021 and remained at the same level as in 2020 (a decrease of 1.7 %). The effect of the appropriation of exchange variation and interest was offset by the net return of the portfolio in the year. Total disbursements, including debentures, other credit assets, variable income and non-refundable transactions, amounted to BRL64.3 billion in 2021.

Delinquency - Delinquency (+90 days) remained low, 0.19% on December 31, 2021, lower than the National Financial System's delinquency rate (2.30% on the same date). The good quality of the loan and onlending portfolio was maintained, as 91.3% of operations were classified at the lowest risk levels (between AA and C) as of December 31, 2021. This percentage was slightly lower than that recorded by the National Financial System, of 91.9% on September 30, 2021 (last information available).

The renegotiation rate reached 15.17% on December 31, 2021, due to renegotiations under the Standstill – Electric Sector emergency program, for hydroelectric plants above 50 MW of installed capacity, which reached 6.34% of the gross portfolio . Disregarding the effects of Standstill – Electricity Sector and Standstill COVID-19, the renegotiation index was 1.66%.

The equity portfolio totaled BRL66.6 billion as of December 31, 2021. The position represents a decrease of 14.5% compared to December 31, 2020, due to the sale of shares that took place throughout 2021 (BRL 16.4 billion). The equity portfolio (management valuation) at fair value on December 31, 2021 was BRL77.9 billion.

Sources of funds – As of December 31, 2021, FAT and the National Treasury accounted for 51.9% and 18.6%, respectively, of BNDES funding sources.

The amount owed by BNDES to the National Treasury totaled BRL 124.4 billion on December 31, 2021, representing a 36.3% reduction in relation to the position on December 31, 2020. The decrease was due to early settlements, in the amount of BRL63 billion, in addition to ordinary payments of BRL12.8 billion.

FAT remained the BNDES' main creditor. In 2021, BRL 22.2 billion in resources entered, and the balance of the fund with the Bank was BRL 347.4 billion on December 31, 2021.

Liabilities with external funding totaled BRL33.4 billion on December 31, 2021, a decrease of 5.7% compared to the balance on December 31, 2020, mainly due to contractual amortizations.

Shareholders' equity – Shareholders' equity reached BRL127.0 billion on December 31, 2021, an increase of 12.4% compared to the balance on December 31, 2020. Net income of BRL34.1 billion was mitigated by the negative equity valuation adjustment, net of taxes, of BRL11.4 billion, in addition to the payment of interim dividends/JCP of BRL8.7 billion.

Prudential limits – Basis for calculating the prudential limits established by the Central Bank (Bacen), the Reference Equity totaled BRL 190.3 billion on December 31, 2021 (compared to BRL 194.5 billion on December 31, 2020) .

The Basel Ratio remained comfortable, ranging from 41.2% at the end of December 2020 to 40.2% in December 2021, above the 10% required by the Central Bank. The decrease is due to the prepayment of Eligible Instruments to Principal Capital, in the amount of BRL13.5 billion, negative equity valuation adjustment of BRL11.4 billion and payment of interim dividends/JCP of BRL8.7 billion , mitigated by the net income of BRL 34.1 billion in the period.

Financial statements from BNDES and its subsidiaries are available on the BNDES Investor Relations Portal.

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. Its 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, the Bank acts in an anti-cyclical manner and assists in the formulation of solutions for the resumption of economic growth.

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