BNDES Equity Portfolio Blasts Net Income

Brazil’s development bank saw its net income drop 83% in H1 2009 to BRL702m. The BRL3.5bn drop in the value of its equity portfolio to BRL1.3bn is the main contributor to the poor performance in the semester, according to BNDES. Poor market conditions prevented the bank from getting out of its equity positions, it says, noting it only made BRL72m through divestitures in the period compared to BRL4bn in H1 2008. The other main reason was the higher loan provisioning the BNDES had to make during the period, which reached BRL1.1bn, versus BRL400m in the same period last year. The bank says it took a conservative approach to provisions, despite the fact its default rate of 0.18% is well below the Brazilian average. Gross revenues at the BNDES rose BRL2.7bn in the period, from BRL2.1bn in the year-ago period.