Transcript BNDES Highlights

Perspectives for the Brazilian Economy
and the Role of BNDES
Andre Carvalhal
Head of International Capital Markets
June 2010 – São Paulo
BNDES Highlights
 Founded on June 20th, 1952
 100% state-owned company
 Key instrument for implementation of Federal Government’s
industrial and infrastructure policies
 Support to micro, small and medium-sized companies
 Main provider of long-term financing in Brazil
 Emphasis on financing investment projects
 EXIM activities
 Equity investor through BNDESPAR
Group Structure
As of Dec 31, 2009
Consolidated Assets
R$ 386.6 billion
US$ 222.0 billion
BNDES
Finances long-term investments
BNDESPAR
FINAME
BNDES Limited
Equity Participation
Finances capital goods
production and purchases
Internationalization
of Brazilian companies
Main Instruments
Financing of:
• Complete business projects
• Export of goods and services
• Machinery and equipment
Equity Investment
• Stocks and debentures
• Venture Capital
• Seed Capital Funds
• Private Equity Funds
BNDES vs. Multilateral Banks
US$ millon
Total Assets
BNDES
IBRD
31/12/2009
222,050
84,006
275,420
15,887
15,867
20,674
40,037
5,287
3,868
794
3,114
235
71,589
11,424
18,564
5,292
162,917
58,049
105,698
11,687
Net Income
Loan Disbursements
30/06/2009*
CAF
31/12/2009
Shareholders' Equity
Total Loans
IDB
31/12/2009
Capitalization
7.1%
24.6%
14.5%
32.9%
ROA
2.3%
1.0%
2.4%
2.4%
ROE
25.0%
4.0%
8.0%
6.2%
1952
1959
1945
1968
Founded
IDB = Inter-American Development Bank
IBRD = The International Bank for Reconstruction and Development (World Bank)
(*) Unlike other institutions, 12-month fiscal year ends June 30th
CAF = Corporación Andina de Fomento
Capitalization = Shareholders’ Equity / Total Assets
ROA = Return On average Assets
ROE = Return On average Equity
Perspectives for the Brazilian Economy
 The Brazilian economy can grow much faster than the average
in developed countries
 Investments will be driven by four main sectors: oil & gas,
electric power, logistics and housing
 Opportunities for intensive strategies in innovation and social
and environmental sustainability
 Main challenges: increase aggregate investment/GDP rate,
and boost competitive progress in the manufacturing industry
GDP may grow 5% p.a. in the 2010-2014 period
GDP: Annual Real Variation (%)
6.5
5.5
4.5
3.5
2.5
1.5
0.5
-0.5
5.7
6.1
5.1
5.0
4.0
2.8
3.2
2.5
-0.2
Average Average
1984-93 1994-03
2004
2005
2006
2007
2008
2009
Average
2010-14
*
* 2009 and Avg 2010-14: BNDES' Forecasts.
Sources: IBGE and BNDES.
Source: IBGE.
Investment has strong growth path
Forecast of Investment Ratio 2009-2012 (% of GDP)
22,0
21,2
21,0
20,2
Forecast
20,0
19,0
17,4
18,0
17,0
18,6
18,7
16,4
16,7
16,0
15,0
2006
2007
2008
Source: BNDES. Elaborated by: APE/BNDES
2009
2010
2011
2012
BNDES was responsible for 37% of
total credit increase since sep/08
BNDES Approvals and Disbursements1 (US$ billion)
85.2
90
Dis burs ements
80
A pprovals
66.3
70
60
50.6
68.8
88.2
71.5
50.5
50
34.1
40
30
20
19.3
10.9
13.1
22.3
33.1
23.5
13.6 12.9
10
0
2003
2004
2005
2006
2007
2008
2009
2010*
*last 12 months up to January 2010
Source: BNDES. *considering the average exchange rate for each year
Disbursements by Business Sector
7%
11%
30%
52%
2001
7%
8%
12%
14%
35%
30%
46%
48%
2002
2003
Industry
Infrastructure
5%
17%
5%
7%
9%
7%
36%
2004
12%
14%
8%
6%
5%
39%
35%
40%
43%
46%
2007
2008
2009
33%
40%
38%
40%
12%
50%
53%
2005
2006
Farming and Cattle Raising
Trade and Services
2009 Operations
Number of Operations
Disbursements
390,729
112,997
29%
US$ 72 billion
23,711
6%
28,725
7%
225,296
58%
individuals
micro and small
45,558
64%
2,632
4%
medium
Petrobras
13,026
18%
547 1%
3,776
5%
large
6,055
8%
other
Exchanged to US dollar on disbursement date
Equity Investment Portfolio
• Equity investments: evaluation uses lowest value among acquisition cost or
market value
• Market appreciation valued at US$ 53 billion as of Dec 31st, 2009
US$ million
Stock
Book Value
Market Value
Profit
Eletrobrás
2,483
4,322
1,839
Vale
2,131
7,857
5,726
676
14,410
13,734
10,123
17,686
7,563
4,008
9,076
5,068
19,421
53,351
33,930
Petrobras
Other listed companies
Investment in unlisted companies *
Total
(*) estimated value based on projections of economic value
Investment Outlook: Positive Prospects
Sectors
US$ billion
2005-8 2010-13
Growth
(%)
Infrastructure
111
152
6.5
Industry
191
271
7.2
Total
302
423
7.0
US$/R$ = 1.80
Source: BNDES Forecast
Investments in Infrastructure were not
affected by the crisis
US$ billion
Sectors
Growth
2005-2008
2010-2013
% year
Electric Power
38
51
6.4
Telecom
37
37
0.2
Sanitation
12
22
11.7
Railroads
9
16
13.2
Roads
23
33
7.8
Ports
5
14
22.9
Infra
111
Source: BNDES
152
6.5
Investment in Industry: Domestic-led sectors
have already recovered from the crisis
US$ billion
Sectors
Growth
2010-2013
171
% year
Oil and Gas
2005-2008
112
Mining
29
25
(3.1)
Steel
15
20
5.7
Petrochemical
5
17
28.9
Vehicles
12
17
7.3
Electronics
8
12
6.7
Pulp & Paper
10
10
0.5
Industry
191
271
7.3
Source: BNDES
8.8
Challenges for Infrastructure
PAC (Growth Acceleration Program)
2014 World Cup
2016 World Olympics
Pre-salt
Environmentally sustainable projects
PAC Program
PAC Investments: 2007 - 2010
BRAZIL AGENDA
US$ billion % of Share
ENERGY:
SOCIAL & URBAN:
LOGISTICS:
Focus on infrastructure:
PAC (Growth Acceleration
Program )
TOTAL
157.8
98.1
33.5
55
34
12
289.4
100.0
Source: Presidency of Republic (www.pac.gov.br)
FX: 1.7412 (Dec.09)

ENERGY
 Electric Energy
- Generation
- Transmission
- Distribution
 Oil & Gas
 Renewable Energy

LOGISTICS
 Highways
 Railroads
 Ports
 Airports
 Waterways
 Merchant Marine

SOCIAL & URBAN
 Electricity for Everyone
 Sanitation
 Urbanization
 Subways
 Water Resources
BNDES is an Important Supporter of PAC
BNDES Portfolio in PAC
US$ billion % of Share
ENERGY:
SOCIAL & URBAN:
LOGISTICS:
TOTAL
56.5
5.0
15.5
73.4
6.5
20.1
77.0
100.0
FX: 1.7306 (Apr.10)
BNDES in PAC
% of Share
• 327 projects:
73.4
- Supported Projects: US$ 57.3 Bn
6.5
- Eligible Projects: US$ 13.1 Bn
20.1
• 17 Prospective Projects: US$ 6.7 Bn
100.0
Disbursements by Region
SouthEast
20%
CenterWest
5%
Northeas
t
24%
Interregional
27%
South
8%
North
16%
PAC 2
• US$ 883.3 billion in investments as of 2011:
 US$ 532.7 billion in the 2011-2014 period and US$ 350.9
billion after 2014:
 US$ 633.3 billion for energy
 US$ 60.5 billion in transport, including railways and the
High-speed Train (TAV)
 Assorted social investments:
 US$ 10 billion in urban mobility
 US$ 12,8 billion in the Citizen’s Community program
 My House, My Life (MHML)  goal of 2 million homes
 Other programs include A Better City, Water for Everyone
and Electricity for Everyone
US$/R$ = 1.80
2014 World Cup
• For the 2014 World Cup, FIFA requires investments to the
tune of US$ 6.4 billion
• BNDES ProCopa Programs
• Arenas
 Up to US$ 2.7 billion to build and remodel stadiums
and urbanization investments in surrounding areas.
• Tourism
 Up to US$ 556 million to build, remodel, expand and
modernize hotels.
US$/R$ = 1.80
2016 Olympics
Brazil has a great opportunity to improve its urban
infrastructure and generate employment
Investment in: transport, urban mobility, hotels, tourism,
communications, security, stadiums and electric energy:
 US$ 16 billion in investments in the Olympics will
produce an impact US$ 56.8 billion by the end of 2027*
 All these investments will have relevant impacts on a
wide array of production chains as well as on the
expectations of the private sector.
*government’s forecast
US$/R$ = 1.80
Pre-salt
 Pre-salt - Great opportunity for Brazil: growing long-term
demand for the complex goods and services supply industry
 Strategic goals for the goods and services supply industry:
 Competitive and sustainable expansion of its supply capacity
 Developing higher aggregate value segments
 Generating higher-skilled employment
 Maintaining the steady increase in local goods & services
The BNDES will foster investments throughout the entire
oil and gas production chain, aiming at building a
competitive global supplier of goods and services in
the Oil & Gas sector.
Impacts from Petrobras investments on the
production chain (2009-2013)
US$ 111.6 bn in investments may generate industrial
production of almost US$ 202.2 billion
Machinery and Equipment
Transport Equipment (especially
Ship-building)
Metals
Other production sectors
Trade
Services
Direct Effect
43.1
Total
In US$ billion
Indirect Effect
Total
8.3
51.4
28.1
11.0
9.1
13.2
7.1
6.8
19.9
36.9
8.6
34.0
34.9
30.9
46.0
21.9
17.1
111.6
90.6
202.2
 Total investments represent 22% of the pre-salt. Therefore, such impacts
are still underestimated and have room for growth.
Source: Petrobrás and IBGE. Elaborated: APE/BNDES
US$/R$ = 1.80
Brazil’s Long Term Challenges
 Resume and qualify long-term planning (energy, logistics,
environment, IT infrastructure, ...)
 Promote and stimulate domestic savings in order to provide
long-term funds for investment (banks and capital market)
 Develop capacity for innovation and competitiveness in the
manufacturing industry, and promote global presence of
Brazilian companies (vs. significant challenge due to exchange
rate appreciation)
 Increase opportunities for social mobility (job expansion,
development/improvement in education) and reduction of the
inequality in income distribution
 Promote innovation and development of renewable energy
sources
 The Brazilian Government, specifically the BNDES, is
committed to supporting investments, particularly in energy and
infrastructure
Thank you!
Brazilian Development Bank - BNDES
To contact us:
www.bndes.gov.br/english/