May 15, 2014

• Results remain stable and the 0.01% default rate is a record low

The Brazilian Development Bank (BNDES) registered a net profit of R$ 1.56 billion in the first quarter of 2014. The amount is stable in relation to the same period in the previous year, R$ 1.59 billion, and it was sustained through financing and investment projects.

The positive performance reflected the good result in the fixed-income segment, which participated with over 90.4% of the Bank’s profit in the first quarter of 2014. Primarily comprising credit and on-lending operations, the segment achieved the R$ 3.1 billion mark in the first quarter this year, reflecting a R$ 500 million increase (up 17%) when compared to the same period in 2013.

This growth is in step with increasing credit and loan operations in the local currency, highlighting the BNDES’ Investment Maintenance Program (BNDES PSI), an instrument to stimulate production investment in Brazil.

The credit and on-lending portfolio presented a R$ 12.5 billion (2.2%) expansion in the quarter, stemming from growth in operations carried out at the time.
 
Results in the variable income segment showed a R$ 200 million (57.3%) reduction compared to the first quarter in 2013, which caused its stake in the BNDES’ quarterly results to drop from 8.2% to 3.7%. The performance is associated with the result from divestment.

The 1Q2013 was positively affected by divestments, with an excellent return for the Bank. In the first quarter of 2014, however, under the burden of the unstable capitals markets, there were no significant divestments.

Results from treasury operations reached R$ 200 million. For the BNDES to meet its disbursement budget, managing the treasury portfolio includes monetizing public binds in which its available cash in invested.

In relation to other revenues and expenses, which include administrative, tax expenses, among others, it is possible to verify a R$ 129 million (6.4%) reduction between quarters owing to the R$ 113 million drop in tax expenses, including taxes on profit.

Default – Despite the uncertainties in the financial and capitals markets, the BNDES system’s default rate is at a record low, reflecting the strength of its credit and on-lending portfolio. The percentage was only 0.01% in the quarter, lower than the 0.04% registered in the same period in 2013. The average default rate for the National Financial System, according to the Central Bank, was 3% in March 2014.

Low default and the credit profile reflect the consistency of the BNDES’ operational policies. Above all, it is the result of the successful management of the BNDES’ credit portfolio, which seeks to harmonize reduced interest rates and compatible deadlines with long maturity projects.

Financial position – The results presented in the 1Q2014 were higher than those in the same period in 2013. The net worth of the BNDES System totaled R$ 54.6 billion, against the R$ 46.8 billion in the previous year. The reference equity (PR) increased to R$ 97.3 billion, against the R$ 85.3 billion obtained in the 1Q2013.

The Basel Index for the BNDES System reached 17.1%, well above the 14.7% in the 1Q2013 and the 11% required by Brazil’s Central Bank.