BNDES’ profit in 2009 climbs 26.8% and hits R$ 6.7 billion

The BNDES posted profit of R$ 6.7 billion in 2009 representing a 26.8% rise compared to R$ 5.3 billion in 2008. Three positive factors contributed to last year’s performance: income from financial intermediation, declared dividends from BNDESPAR investments, and a reversal of provisions for civil lawsuits.

The main positive impact on profit was gross income from financial intermediation, which rose from R$ 3.9 billion in 2008 to R$ 5.8 billion in 2009. This is the outcome of expressive growth in portfolios handling credits and bonds, as well as securities.

Expansion in financing operations stemmed from recent capital injections made by the Brazilian Treasury throughout 2009, which totaled R$ 105 billion. With this, a greater number of operations managed to offset the reduced spreads charged by the BNDES in financing transactions.

Another positive factor was the reversal, in 2009, of provision for lawsuits as a result of an appellate court decision in favor of the BNDES. Therefore, amounts that had been provisioned as losses were then accounted as part of the positive result.

Gross income from disposal of investments declined from R$ 4.6 billion in 2008 to R$ 1.2 billion in 2009 due to a halt in stock sales efforts in the first half of 2009 because of the adverse market environment. Such efforts were resumed in the second half of the year.

Provisions for credit risk totaled expenditures of R$ 6 million in December 2009. In 2008, the BNDES recorded revenues from reversals of R$ 445 million. This increased provision resulted from the downturn throughout the year and downgrading the risk rating of some clients. However, it did not affect the Bank’s high-quality credit portfolio or its low default level.

Moreover, the BNDES has always taken a conservative attitude towards provisioning for credit risk. So much so that renegotiations have given rise to reversals of provisions and recovery of credits in the past years. This also took place in 2008, but it is not expected to continue in the forthcoming years due to depletion of credits are expected to be renegotiated.

Balance – Shareholders’ equity totaled R$ 27.6 billion, representing a reference equity of R$ 54 billion, up from the R$ 42.5 billion posted on December 31, 2007. The reference equity is the standard employed by the Central Bank when setting cautionary limits to be followed by all financial institutions. The higher the Bank’s reference equity, the greater its capacity to grant loans.

In 2009, the BNDES presented a capital adequacy index (Basel Index) of 17.5%, which is a comfortable indicator compared to the 11% required by the Central Bank. The public sector risk index totaled 25.2%, which is well below the 45% limit set by banking laws.

Total assets amounted to R$ 386.6 billion in 2009, representing growth of 39.4% compared to 2008. Profitability on average shareholders’ equity hit 25.47% in December 2009 (23.95% in December 2008).

Default credits totaled 0.20% of the total portfolio. Worthy of note is the good quality of the financing portfolio. Out of the BNDES’ credits, 97.7% are rated between C and AA risk levels. In private banks, this proportion is 90.1%, and in public banks, 92.3%.

The face value of BNDESPAR’S investment portfolio as of December 31, 2009, amounted to R$ 92.9 billion, representing 174.7% of its book value. This is 148.9% higher than the first nine months of 2009 and 109.6% over 2008, demonstrating the progressive recovery of the stock market.

The BNDES played a key role in the quick recovery of economic activity by promoting disbursements of R$ 137 billion to production sectors. Most disbursements were assigned to long-term projects, which will boost the supply capacity within the Brazilian economy as well as the infrastructure services, at costs compatible with the competitive trend in the Brazilian economy.

The BNDES managed to post financial performance that is consistent with its activities as a development bank, reaching a credit portfolio of R$ 280 billion. Thus, its participation in the supply of credit to Brazil’s economy climbed from 7% to 20% between late 2008 and late 2009.