the brazilian development bank

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The Brazilian Development Bank

April 2009

BNDES: Financing the Infrastructure

Sector

BRAZIL Summit 2009

MAURICIO BORGES LEMOS

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INSTITUTIONAL


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Mission and Vision

Vision To be the development bank of Brazil,innovative, outstanding, and to proactively tackle the challenges of our society.

MissionTo foster sustainable and competitivedevelopment in the Brazilian economy,generating employment and reducing socialand regional inequalities.

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BNDES Highlights

Founded on June 20th, 1952

100% state company under private law

Key instrument for implementation of Federal

Government’s industrial and infrastructure policies

Main provider of long-term financing in Brazil

Emphasis on financing investment projects

Brazilian Export Bank

Equity investor through BNDESPAR

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Group Structure

Finances long-term investments

Equity Participation

BNDES

Finances capital goods purchases and foreign trade

BNDESPAR FINAME

As of Dec 31th, 2008Consolidated Assets

R$ 277.3 billionUS$ 118.7 billion

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InnovationTo support investments, promoting technological innovation and competitiveness.

InfrastructureAccess to electric energy, telecommunications, urban transport, water supply and sanitation, increasing the offer of services ahead of demand to avoid harm to economic growth.

Productive structureTo increase industry production capacity. To make industry and service sectors more effective. To prioritize small and medium-sized companies. To support international business of Brazilian companies.

Exports To promote external sales and reduce imports. Technological investments to increase content value of consumer goods.

Social inclusionConditions and stimuli to intensify social benefits are established for the concession of BNDES credit.

Areas of Activity

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FINANCIAL DATA

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Indicators

Total Assets 118.6

Loans and Interbank Onlending 92.4

Shareholders’ Equity 10.8

Net Income 2.9

Taxes 1.1

US$ billion

As of Dec 31th, 2008

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Ratios

0.86 0.68 0.11Non-performing loans (%)

16.7BIS Ratio(%)

0.41Operational Expenses/Assets (%)

21.47ROE (%)

15,710Shareholders’ Equity

3,202Net Income

174,967 Total Assets

47,085Disbursements

2005R$ million

23.2 1

0.39

36.38

19,092

6,331

52,280

187,475

2006

1 Rise in reference equity (net equity + subordinate debt + hybrid instruments) has increased BNDES’ Basel Index

26.7 1

0.38

24,923

7,314

64,892

202,652

2007

33,23

0.15

0.39

21.17

28,773

5,313

277,294

92,235

2008

17.7 1

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Annual Disbursements

Converted to US dollar on the disbursement dates

12.6 10.9 12.8 11.7 13.8

19.6 20.1

34.0

49.8

2000 2001 2002 2003 2004 2005 2006 2007 2008

US$ billion

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Disbursements by Business Sector

40%

36%

17%7%

49%

34%

9%8%

52%

31%

7%10%

40%

40%

8%12%

43%

39%

6%12%

2004 2005 2006 2007 2008

Industry Infrastructure

Farming and Cattle Raising Trade and Services

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BNDES vs. Multilateral Banks

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

US$ millon BNDES BID BIRD CAF

31/12/2008 31/12/2008 30/06/2008* 31/12/2008

Total Assets 118,655 72,510 233,599 14,272

Shareholders' Equity 10,812 19,444 41,548 4,554

Net Income 2,903 -22.0 1,491 311

Loans Disbursements 49,791 7,149 10,490 5,844

Total Loans 92,422 51,173 99,050 10,184

Capitalization 9.1% 26.8% 17.8% 31.9%

ROA 2.2% -0.01% 1.9% 2.2%

ROE 21.2% -0.05% 6.0% 7.2%

Non performing loans 0.15% 0.00% 0.47% 0.00%

Founded 1952 1959 1945 1968

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Funding 2007 – Capital Structure

As of December 31st, 2008

Others12%

CEF5%

FAT - Workers'

Assistance Fund41%

PIS-PASEP11%

Net Equity9%

Foreign Funding

6%

National Treasury

16%

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INFRASTRUCTURE INVESTMENTS


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• expanding and modernizing the electric sector;

• diversifying the national energy grid;

• developing the natural gas market;

• promoting renewable energies;

• increasing the supply of biofuels;

• evaluating and working on the logistical bottlenecks

surrounding cities and access to ports, aimed at improving

the systems' efficiency; and

• expanding telecommunications systems and contributing

to the development of cutting-edge, nationally-produced,

technological products.

The BNDES' actions in the infrastructure sector are aimed at:

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Disbursements for infrastructure

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

I nvestment funds

Telecommunications

Logistics

Oil & gas

Power

R$ million

2.096

4.000

5.325 5.2034.251 4.419

7.190

9.201 9.343

14.005

19.190

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PAC Projects in the BNDES

Source: BNDES

(02/ 28)

R$ billion %

Power 85.0 51.1 60.1

Electric 60.7 37.7 62.1

Generation 53.8 33.5 62.3

Transmission 6.9 4.2 60.9

Oil & gas 24.0 13.2 55.0

Renewable fuels 0.3 0.2 66.7

Logistic 28.9 19.7 68.2

Highways 5.7 3.7 64.9

Railroads 7.0 2.5 35.7

Merchant Navy and Naval Construction 16.2 13.5 83.3

Urban Development 8.1 4.5 55.6

Public administration 0.3 0.2 66.7

Total 122.3 75.5 61.7

R$ billion

I nvestment Financing BNDES

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Contracted and approved:

Generation of 2,414 MW of electric energy;

Construction of 3,688 Km of Transmission Lines;

Construction of 3,299 Km of pipeline;

Construction of 167 vessels for navigation and to support off-shore activities;

Maintenance and restoration of 522 km of highways; and

Construction of 2,437 km of railroads.

In review:

Generation of 4,966 MW of electric energy;

Construction of 3,979 Km of Transmission Lines;

Construction of 97 vessels for navigation and to support off-shore activities; and

Maintenance and restoration of 2,079 Km of highways.

PAC Projects in the BNDES

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PAC Projects in perspective

Source: BNDES

(02/28)

R$ billion %

Power 28.4 11.5 40.5

Electric 10.7 6.4 59.8

Generation 10.1 6.0 59.4

Transmission 0.6 0.4 66.7

Oil & gas 16.2 4.0 24.7

Renewable fuels 1.5 1.1 73.3

Logistic 42.4 12.6 29.7

Highways 2.0 1.0 50.0

Railroads 28.9 2.0 6.9

Merchant Navy and Naval Construction 11.5 9.6 83.5

Total 70.8 24.1 34.04

R$ billion

I nvestment Financing BNDES

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Jacui

Porto Alegre

Florianópolis

Curitiba

São Paulo

Rio de Janeiro

Paraíbado Sul

Uruguai

Vitória

Belo

Horizonte

Itaipu

Grande

Paranaíba

Paraná/Tietê

Campo Grande

Iguaçu

Tocantins

Belém

São Francisco

Parnaíba

São Luís

Teresina

Fortaleza

Natal

João Pessoa

Recife

Maceió

Aracajú

SalvadorCuiabá

Goiânia

Brasília

Paranapanema

Argentina


INVESTMENT

PROSPECTS

2121

Infrastructure leads the growth investment in coming years

Source: BNDES

2004-2007 2007-2010 2008-2011 2009-2012

I ndustry 281.5 380.2 443.7 450.1

I nfrastructure 185.3 198.0 231.7 319.1

Housing Construction 357.0 470.0 535.0 535.7

Total investments 823.9 1,048.2 1,210.4 1,305.0

I nvestments (R$ billion)

Forecast

2222

Oil & Gas represent more than half of industrial investment

Source: BNDES

2004-2007 2007-2010 2008-2011 2009-2012

I ndustry 281.6 380.2 443.7 450.1

Oil & Gas 147.2 183.6 202.8 269.7

Mining 47.2 52.7 81.3 48.0

Automotive 15.0 17.6 26.4 23.5

Steel 19.8 37.1 31.2 24.5

Pulp and paper 10.4 20.0 27.4 9.0

Petrochemical 6.4 17.6 26.4 23.7

Sugar and alcohol 16.6 20.5 20.5 19.7

Electro-electronics 14.3 15.6 14.0 24.0

Health industry 5.1 4.6 5.1 8.0

I nvestments (R$ billion)

Forecast

2323

Investments in infrastructure are confirmed

Source: BNDES

2004-2007 2007-2010 2008-2011 2009-2012

I nfrastructure 185.3 198.0 231.7 319.1

Electric power 55.0 88.2 101.0 141.1

Telecommunications 58.9 58.8 56.0 77.8

Sanitation 26.0 38.1 48.0 49.4

Highways 30.1 - - 26.7

Railroads 12.2 11.0 19.9 17.0

Ports 3.0 1.9 6.8 7.2

I nvestments (R$ billion)Forecast

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Investment Prospects

The energy sector is highlighted by the high number of projects. In electricity, programs are linked to the government’s investment contracts for the supply of energy.

In oil & gas, investments in oil exploitation are linked to a long-term cycle, which will be sustained by the opening of the pre-salt.

In telecommunications, the on-going development of new technologies requires that companies make large investment, at the risk of losing significant market share.

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Investment Prospects

The existence of major projects already underway means that investments must be maintained at high levels after the period 2004/07.

This is due to the existence of a cycle of robust investments in sectors that account for a significant portion of gross formation of fixed capital in the economy.

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the brazilian development bank

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