BANCO BNP PARIBAS BRASIL Louis Bazire
description
Transcript of BANCO BNP PARIBAS BRASIL Louis Bazire
April 21, 2023
BANCO BNP PARIBAS BRASILLouis Bazire
Brazil: Stable and Foreseeable
April 21, 2023
Marcelo Carvalho Head of Latam Economic Research [email protected]
Agenda
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Brazil – A comparison with other BRIC economies
Brazil – Stable and Foreseeable Investors want to finance the next expansion cycle in Brazil Medium and long term scenario – a positive growth outlook Short term scenario – “Brazilian Quarterly Outlook: Reaping Rewards” Inflation – convergence toward targets Fiscal and monetary policy outlook – Tug of war Political landscape – elections in October 2010.
Forecasts
Brazil: A comparison with other BRIC economies
4
BRIC economies: General characteristics
Brazil Russia India China
8514 17075 3287 9561
1574 1229 1313 49088121 8662 1122 3678194 141 1170 1334
Agriculture 7 5 17 11
Industry 28 37 26 49
Services 65 58 56 40
12.0 23.0 19.0 29.0
2009
External openness (%) (I + X) / (Pib x2)
GDP breakdown by sector
(%)
Land area (thousands sq km)
GDP (USD Bn)GDP per Capita (USD)Population (Mn)
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BRIC economies: real GDP growth varies
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-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Brazil Russia India China
1991-1999
2000-2009
2004-2007
Average real GDP growth rates
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Brazil Russia India China
Annual average
Sources: BNPP, national statistics
BRICs: Investment and Saving rates are still relatively low in Brazil
• Differences in investment rates, also in saving rates
Saving rates
0
10
20
30
40
50
60
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
per
cen
t o
f G
DP
Brazil Russia India* ChinaSources: National Statistics, BNPP calculations
* India : fiscal years
7
Investment rates
0
10
20
30
40
50
60
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
pe
rce
nt
of
GD
P
Brazil Russia India* ChinaSources: National Statistics, BNPP calculations* India - fiscal years
What has changed within BRICs since 2003?
• All BRICs have become global players on both economic and geopolitical fronts
– With similarities and differences in the globalisation process
• Similarities in the process, even if differences in the magnitude
– Increase in potential growth: increase in saving and investment to GDP ratios, but to a lesser extent for Brazil
– Increase in globalisation: trade and financial integration and Foreign Direct Investment
– Decrease in country risk(1) : increase in foreign exchange reserves, decrease in external public debt
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(1) In the narrow sense: sovereign risk and transfer risk
What has changed within BRICs since 2003?
Differences in terms of growth sustainability
• Brazil: Higher potential growth, probably sustainable
• India: New model of growth (more linked to manufactured goods), sustainable under certain key conditions
• China: Current growth model not sustainable in the medium term
• Russia: Growth still highly dependent on oil price
Differences in terms of external financial vulnerability
• China: Very low external financial vulnerability
• Brazil: Strong decrease in external financial vulnerability
• India: Moderate decrease in external financial vulnerability– Large companies still depend on the financing in foreign currency
• Russia: No decrease in external financial vulnerability– Even if the problem of external public debt has been solved, large private companies have
become overindebted, mainly in foreign currency. Dollarization of the economy is still high.
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What has changed within BRICs since 2003?• Similarities and differences: quantitative illustration
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Brazil Russia India China
2003 2008 2003 2008 2003/04 2008/09 2003 2008
External public debt/GDP (%)
21.7 4.2 25 2 8.6 4.8 3.2 0.8
External private sector debt/GDP (%)
21.3 15.5 18 27 13 14 8.5 9.0
Foreign exchange reserves (USD billion)
49 193 73 413 108.8 242.6 408 1 946
Inflation rate (average) (%)
9.3 5.9 12 12.5 5.5 8.4 1.2 5.9
Public debt/GDP (gross) (%)
70.4 64.3 30 5 86 76.8 28.8 21.9
Domestic credit total/GDP (%)
23 38 28 45 63.9 81.0 147.9 122.5
Saving/GDP (%) 16.5 17.1 29 31 29.8 37.3 43.4 51.3
Invest./GDP (%) 15.8 18.9 20.5 25 27.6 39.0 41.2 43.2
Sources: IIF, National statistiques, BNP Paribas calculations
BRICs: Summary
• Brazil: from moderate GDP growth (2.5%-3% per year) with high vulnerabilities to slightly higher growth (4%), more sustainable and less vulnerable
• Russia: no significant changes during the decade: fairly high growth (3%-6%) but still very vulnerable to commodity prices and financial shocks
• India: from fairly high growth (5%-6%) with vulnerabilities to high and more sustainable growth (7%-8%)
• China: very high growth relatively stable (roughly 10%) and not too much vulnerable(1). But the growth model relying on exports and investment may not be sustainable in the medium-long term
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(1) Low vulnerability to external financial shocks, high vulnerability to downturn in the global business cycle
Conclusion: What next in the medium term? (3)
Brazil: Probably the best “mix” within BRICs in terms of growth potential and risks
• GDP growth potential is accelerating progressively to 4-5% per year but probably not to 7-9% as India or China
– The process of acceleration has started recently (saving, public and private investment, financial intermediation, decrease in real interest rate …). The pursuing of this movement, notably for infrastructure investment, is key to consolidate this evolution
• Nevertheless, Brazil’s growth has become more sustainable and less vulnerable to external shocks than that of China and, to a lesser extent, that of India
– From 1994-2007(1), Brazil has solved huge problems of macro economic imbalances, established credible economic policies, strongly increased its State and corporate governance, diversified its export base (both on a geographical and sector point of view) and reduced its external financial vulnerability
• Even if is GDP growth potential considered closer to that of Russia, its sustainability is higher and its vulnerability is much lower
– Notably in terms of export diversification, State and corporate governance, monetary policy capability, financial sector robustness and external financial vulnerability
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(1) Particularly since 2003-04
BNP PARIBAS GROUP IN BRAZIL
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BNP Paribas in Brazil: A group of 2.328 employees
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– Since 1998 – Employees:
35– Intern: 7
Asset Management
Personal Finance
Since 1998
Employees: 1619
Since 1999
Employees: 341
Insurance
Since 1998
Employees: 38
Intern: 1
Wealth Management
Since 2006
Employees: 50
Equipment Solutions
Corporate & Investment Banking
Since 1950
Employees: 254
Intern: 36
São Paulo
Rio de Janeiro
Curitiba
Belo Horizonte
Brasilia
BNP Paribas Brazil: 4th Largest Foreign Bank by Total Assets
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2006 20072007 20082008 2009
Total Assets 7,500 15,400 26,391 14,245
Net Worth 626 792 983 993
Net Income 77 176 266 250
ROE 12.2% 22.2% 27.1% 25.2%
Financial Highlights of Banco BNP Paribas Brasil SA (R$ million)
Brazil-National Scale (since 28 Oct 2008)
AAA
1950 1996 1999 2001 2006 20082010
1981-95 1998 2000 2007 2009
Minority stake in Banco Cidade Launching of Asset
Management and Cetelem Activities
Merger of BNP and Paribas in Brazil
Acquisition of local asset management activities of UBS, ABC and IAMEX
Representative Office in Brazil
Establishment of a wholly owned
subsidiaryLaunching of Cardif
activities
Implementation of a reinforced organic
growth strategyLaunching of Arval
activities
Cetelem acquired Banco BGN, specialized in
consumer credit (Total Assets BRL 2
Billion)
Evolution of Group BNP Paribas Presence in Brazil
Cetelem and MasterCard
parternership
BNPP Acquired Fortis
Launching of Securities Services
Activities