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BNDES reported a huge loss of R2.17 billion ($680.9 million) through the first six months of the year as it prepares for a surge in loan defaults.
The reported figure was R5.7 billion lower than a R3.5 billion profit in the first half of 2015, marking the first time the bank reported a first half loss. Mounting interest rates are expected to have contributed to the rise in defaults. The bank increased rates in five consecutive quarters since the start of 2015.
The Brazilian development bank wrote off significant chunks of its investment portfolio with bankruptcies rife as the Brazilian economy struggles.
It has announced plans to sell equity positions in companies in order to begin an early repayment of funds to the Brazilian Treasury in an attempt to shore up the country’s fiscal deficit. The repayments are expected to stifle lending as budgets shrink.