Aug 12, 2011

• Default rate falls from 0.15% to 0.12%

The BNDES registered net income of R$ 5.3 billion in the first half of 2011. This is equivalent to an increase of 47.8% compared to that in the first half of 2010, which totaled R$ 3.6 billion. This is the highest income earned by the institution in the first half of any year.

This is the result of efficient management of a variable income portfolio, profitability for the return on loans and successful credit recoveries. Furthermore, this positive performance was achieved with a drop in the Bank’s default rate, which was already extremely low. The rate fell from 0.15%, in December 2010, to 0.12%.

The leading factors contributing to the BNDES’ performance in 2011 include the Revenue with Reversion of Provision for Credit Risk, of R$ 850 million, and the growth of Income from Shareholding, of R$ 2.5 billion (119.6%).

The Revenue with Provision for Reversal of Credit Losses in the first half was positively influenced by the improvement in the quality of portfolio as a whole, and by credit recovery, in the amount of R$ 470 million.

The growth in the Income from Corporate Stakes (shares) in 2011 resulted mainly from the 79.2% increase in revenue form dividends and interest on own capital, which totaled R$ 2.1 billion in the first half of 2011. There was also a 77.8% hike in the result from share disposals, which grew from R$ 889 million, in 2010, to R$ 1.581 billion, in the first half of 2011. Investment and divestment operations of BNDESPAR, the BNDES’ branch for corporate shareholding, enable trading in the shareholding portfolio.

The positive performance of operations reflects the quality of BNDESPAR’s portfolio.

The BNDES managed to attain financial performance compatible to its development bank activities, reaching a credit portfolio of approximately R$ 376 billion on July 30, 2011. The Gross Financial Intermediation Product presented little growth (2.5%) in the first half of this year, in keeping with the expansion of the credit portfolio. On June 30 this year, some 88.5% of the credit facilities balance was classified as long term (the position on December 31, 2010, was 83%).

Equity position – The BNDES System net worth totaled R$ 65.4 billion on June 30, 2011, corresponding to reference equity (PR) of R$ 101.1 billion, over the R$ 83.1 billion achieved on December 31, 2010. PR growth resulted from heightened capital to the tune of R$ 6.4 billion in the first quarter this year, which leveraged PR by R$ 12.8 billion. Reference equity is the basis applied by Brazil’s Central Bank to define prudential limits that are to be adhered to by all financial institutions. The higher the BNDES’ reference equity, the higher its capacity to grant financing.

The rate establishing whether capital is appropriate (Basel Index) registered by the BNDES system was 22.3%, a comfortable situation compared to the 11% required by Brazil’s Central Bank.

In addition to low default, the Bank portfolio’s quality is made evident by its credit risk profile: some 98.8% of the total credits granted were classified as risk levels AA and C on June 30, 2011, substantially below the the National Financial System average.

The BNDES System’s total assets amounted to R$ 584 billion on June 30, 2011, presenting growth of 3% compared to December 31, 2010.