José Gomes da Costa (BNB): Diversity of opportunities

José Gomes da Costa, President of Banco do Nordeste do Brasil (BNB)

Banco do Nordeste do Brasil (BNB) is one of the largest regional development banks in Latin America, with the task of acting as the Development Bank of the Northeast Region. Founded in 1952 as a multiple financial institution, it is organized as a mixed capital, publicly traded company, with more than 90% of its capital under the control of the Government of Brazil. Headquartered in Ceará, BNB has been a great engine for the growth of the state's economy and a strengthener of the Micro and Small Business ecosystem. In this interview, José Gomes da Costa, BNB's president, points out the paths to growth, analyzes the investment opportunities environment in Ceará, and details what the bank has been doing to support sustainable development throughout the region.

What is the importance of BNB for the economic growth of the Northeast and Ceará?
Banco do Nordeste is strategically important for the development of its operational area, which includes, as well as the Northeast, part of Minas Gerais and Espírito Santo. Since its creation, 70 years ago, it has financed the region's productive sectors to reduce historical interregional inequalities. Its main funding, the FNE, formed by the transfer of 1.8% of federal taxes (IPI and IR), is one of the main sources of promoting the regional economy. In the last year, BNB injected around 42 billion Reals (about 7.9 billion dollars) in the region where it operates. These are resources that contemplate from the micro entrepreneur to large companies, as well as strategic segments such as infrastructure. In Ceará, I can highlight urban microcredit. The Crediamigo contracts in the state represent 25% of the bank's entire operation. This year we have already exceeded 2 billion Reals (about 377 million dollars) in loans to micro-entrepreneurs in Ceará with this Program, the biggest in Latin America. But we also have a relevant role in supporting small and medium-sized entrepreneurs and in the infrastructure sector, for example.

What are the strengths of Ceará that determine the attraction of investments to its territory?
We have noted a strong demand for resources in the infrastructure sector. We are evaluating the possibility of signing partnerships to support this more promptly. The financing for this sector in Ceará already amounts to 1.5 billion Reals (about 283 million dollars), in 2022, with resources from the FNE, including renewable energy projects, such as wind power. In regard to Ceará’s economic activity segments, commerce and services are the flagship, due to the state's natural vocation in this area. These sectors consume almost 50% of all the credit we make available. Ceará also has a very interesting role in agribusiness, with an emphasis on livestock.

How do you evaluate the support that BNB has given to investors who choose Ceará to expand their business?
Ceará has a large consumer market and a very dynamic economy, which is growing above the national average. Banco do Nordeste's performance follows this dynamism. The development we foster takes place from the private sector, which demands resources from us to be able to invest sustainably in their businesses. In this sense, Ceará, along with Bahia and Pernambuco, is among those we most support, because of the economic strength of these states.

According to official data, BNB's financing in Ceará aimed at Micro and Small Enterprises (MSEs) exceeded 600 million Reals (about 113 million dollars), in more than four thousand credit operations. What is the importance of the MSE sector for the growth of the Ceará economy?
Being the bank for micro and small companies in its area of operation is one of the BNB's strategic objectives, due to this segment's capacity to generate employment and income. The Bank has recently surpassed the mark of 3.5 billion Reals (about 660 million dollars) in contracts with MSEs, and Ceará is responsible for almost 20% of these resources. To support micro and small companies is to collaborate actively with the maintenance and creation of job vacancies. According to data from our Technical Office of Economic Studies of the Northeast (Etene), BNB's credit operations with MSEs generated or helped to keep open more than 122 thousand job vacancies, both formal and informal, during 2021. In Ceará, according to this study, there were 20 thousand jobs generated or maintained by micro and small businesses as a result of BNB financing.

Agribusiness was one of the sectors of the economy whose prospects for BNB support were among the most optimistic, including the creation of the Agribusiness Superintendence. How do you assess the bank's recent actions in this sector?
We expected to make the credit process more fluid, as well as to improve governance, by concentrating issues related to agribusiness in a single department. I believe it was successful. Among the actions, I would list the improvement of internal processes, which resulted in greater agility in granting financing, improvement in products, such as the BNB Agro Card, and the offer of services through digital means, with the use of applications.

What are BNB's views on financial support for the green hydrogen industry?
BNB is a great supporter of innovation and sustainability. Green hydrogen is the fuel of the future, a future already present, due to its capacity to reduce mono carbon emissions and its portability. Ceará has the ideal conditions to produce the renewable energy needed to process green hydrogen from Pecém, the Brazilian gateway to the European consumer lacking this type of energy. There is also a need to supply green hydrogen in the domestic market, to change the energy matrix of industries, just to mention one example. The BNB is ready to support these investments, with the resources from the FNE and from other sources and partnerships currently being structured.

And for 5G?
5G technology for communications is already present in our Region, and BNB has contributed to the installation and increase in coverage. We have in our client portfolio companies that are taking this technology to the city and the countryside. Here in Ceará we have a good example of this. We are encouraging the expansion of this technology, among other things to increase agribusiness productivity. We encourage rural people to install autonomous equipment to help with production. That is, we provide support from the installation of the network to the end user.

The Bank has also been acting in the education area with lines of credit for schools and colleges. Considering the good performance of Ceará in this aspect, what are BNB's expectations for the future of education in Ceará?
Not long ago, we met with businessmen and representatives of education service entities in all the states where we operate to present the BNB +Education strategy, aimed at financing private educational institutions as a way to improve infrastructure, management, and working capital. For the next 12 months, we are allocating 250 million Reals (about 47 million dollars) to these clients. So, our expectations, not only for Ceará, but for our entire area of operation, are for a strengthening of this activity. With education, Brazil can innovate. And innovation generates better lives, drives the economy, and develops any region.

How has BNB been supporting Ceará in the challenge of improving its infrastructure?
The Banco do Nordeste, from January to the end of September, has already invested more than 6 billion Reals (about 1.13 billion dollars) in infrastructure projects. We believe that a region, in order to develop, needs to offer the necessary conditions for companies to produce and sell their products. I can cite the example of Ceará, which received more than 1.5 billion Reals (about 283 million dollars) in this period, but you need to understand that a large infrastructure project has an impact not only on the state where it is installed, but also in neighboring or even more distant states. Just look at the case of energy. Today, Ceará has an important participation in the supply of energy in the Northeast.

Ceará's growth has been designed and built on the basis of sustainability and care for the environment. What is the bank's view of sustainable growth as a pillar for attracting investments based on this premise?
The concern with sustainability, from the environmental, social and governance (ESG) aspects, is a reality for BNB, as well as for any company that wants to be operating today and tomorrow. These criteria are important in evaluating any project. It is already proven that companies that adopt ESG practices make more responsible decisions, reduce risk and tend to have more sustainable returns in the long term. Speaking specifically of BNB, since 2015 the Bank has had a Social and Environmental Responsibility Policy (PRSA) that guides all its activities. Now in 2022, we have gone further: we discussed the elaboration of the new Social, Environmental and Climate Responsibility Policy (PRSAC).

What paths should Ceará take from now on to consolidate its growth by attracting new investments?
Ceará and the entire Northeast region, in addition to parts of Minas Gerais and Espírito Santo, have a consumer market, an entrepreneurial vocation, a strong presence in agribusiness, a consolidated industry, a strong service sector and active trade. These are some examples of the great power that our region has for growth: diversity of opportunities. BNB understands this and invests simultaneously in various sectors and activities. We believe that in this way we can stimulate homogeneous growth to serve the economy as a whole and, above all, generate employment and income.