May 15, 2020

 In the first quarter of 2020, the Brazilian Development Bank (BNDES) recorded a net profit of R$ 5.5 billion. Results were presented on Friday, 15, together with a balance of the emergency measures that had been announced in early March to face the Covid-19 crisis. These measures have supported the continued activities of companies who currently employ 2.2 million people. BNDES’s performance from January to March is attributed mainly to the generation of R$ 8.5 billion in equity, among which R$ 8.1 billion resulted from divestments made during the period, especially the February public offering of Petrobras shares. This effect was mitigated by the determination of an R$ 1.7 billion credit-risk provision, influenced by revised risk classifications for companies whose sectors have been affected by the Covid-19 pandemic.

Profits from financial intermediation – i.e., BNDES financing – reached R$ 4.1 billion, equivalent to an increase of 10.1% in comparison to the first quarter of 2019. Even in a scenario of lower credit demand, a positive result was made possible by the Bank’s current assets abroad.

 Assets – The BNDES System’s assets had reached R$ 718.3 billion by March 31, 2020, a decrease of R$ 9.9 billion (-1.4%) over the previous quarter. 

 The reduction in the Bank’s equity portfolio, which now stands at R$ 59.2 billion (compared to R$ 111.9 billion by the end of 2019) partly reflects its current divestment strategy (R$ 23.8 billion in sales), in addition to recent market movements – which have led to a R$ 28.8 billion devaluation of its investments in nonaffiliated companies.

 By the end of the quarter, the Bank’s net credit portfolio had reached R$ 442.1 billion, 61.6% of total assets. This amounts to a positive variation of 0.7% as compared to the end 2019 (R$ 441.8 billion). 

 Disregarding operations honored by the Federal Government, defaulting (defined as arrears greater than 90 days) decreased from 0.84% on December 31, 2019 to 0.37% on March 31, below the National Financial System benchmark (3.17%).

Funding sources – The FAT (Worker’s Assistance Fund) is still our main funding source. A total amount of R$ 4.46 billion in Constitutional FAT funding entered the Bank. By March 31, 2020, the fund had entrusted R$ 298.34 billion of its resources to BNDES. Together with the PIS-Pasep, the FAT accounted for 44.4% of the Bank’s funding sources. By March 31, foreign liabilities totaled R$ 36.263 billion, an increase of 26.1% in the quarter, mainly due to exchange-rate impacts.

National Treasury resources accounted for 27.7% of BNDES’ funding sources. The amount owed by BNDES to the Treasury remained stable, reaching R$ 199.29 billion. In the quarter, ordinary payments totaled R$ 3.8 billion. There were no anticipated payments.

Equity – By March 31, our reference equity – which serves as a basis for calculating the prudential limits established by the Central Bank of Brazil – had reached R$ 167.014 billion (compared to R$ 191.684 billion on December 31, 2019). 

By the end of the first quarter, BNDES’s Basel Ratio stood at 35.4%, while its Basel III ratio sat at 25.4%, comfortably above the 9.25% and 5.75% levels required by the Central Bank of Brazil’s resolution 4,783 (from March 16, 2020).

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

 Action against Covid-19 – In addition to financial results, BNDES presented its balance of the emergency actions in the fight against Covid-19, which had been announced on March 22. These initiatives seek to preserve companies’ economic activities during this troublesome period, including small- and medium-sized enterprises. They also entail investments in the healthcare sector. So far, BNDES has approved emergency actions to the tune of R$ 13 billion, supporting companies who employ 2.2 million people.

 In less than two months, 19,000 clients have requested the temporary suspension of payments related to the BNDES financing, a total deficit of R$ 8.7 billion. These companies are estimated to employ 1.62 million people.

 The Bank’s working-capital credit line for micro-, small- and medium-sized companies has already reached R$ 2.3 billion in approvals. Its payroll financing program for small and medium-sized companies has approved 73,000 operations, totaling R$ 1.6 billion.

 This credit line is estimated to have contributed to salary payments for 460,500 people.

 To date, the emergency program – which focuses on the immediate expansion of hospital beds, in addition to medical materials and equipment – has approved R$ 198.2 million in financial resources, which will enable the delivery of 3,126 hospital beds, 500,000 new Covid-19 rapid tests and 1,500 new vital sign monitors.

 The following initiatives are also underway:

• Transference of R$ 20 billion from the PIS-Pasep to the FGTS;

• Saving Lives Matchfunding, a collective financing action which has already raised R$ 9 million (with half of the amount coming from BNDES) in resources for the purchase of materials, supplies and equipment for santas casas and other philanthropic hospitals;

• Public notice for funds selection (with a total contribution of up to R$ 4 billion from BNDES) with the purpose of expanding the access of micro and small companies to credit through nonbank channels, such as fintechs and payment management companies, by means of electronic machines.

Up-to-date information on emergency measures to combat the effects of the pandemic can be found in the “BNDES contra os efeitos do coronavírus” website.

 Service bank – The countercyclical nature of BNDES’s actions during the crisis notwithstanding, it continues to play a structural role in enabling viable infrastructure projects. Four new privatization mandates, formalized in the first quarter of 2020, raised expectations for total investment in the Brazilian economy to R$ 188 billion (compared to R$ 176 billion by the end of 2019), distributed among the 57 initiatives advanced by our “project factory.” In the case of sanitation, the projects are expected to benefit 25 million people, generating investments to the tune of R$ 52 billion.

 Triennial Plan – From January to March 2020, BNDES’s action in the basic and professional education sectors should benefit 64,000 students from municipalities in the states of Tocantins, Pará, Bahia, Rio de Janeiro and Paraná. This number corresponds to 64% of the target for 2020, and 6.4% of the 2022 target, as established by our Triennial Plan. 

 Investments in renewable energy are another highlight of the Triennial Plan. By April, the Bank had financed the generation of 360 MW, 72% of the target for the year and 18% of the target for 2022. In the healthcare field, by March BNDES had completed the delivery of a new SUS unit. The goal is for that number to reach 30 by the end of this year, and 150 by 2022.

 * Percentages valid as of April 1, 2020. Previous minimum limits were 10.5% and 7%, respectively.