Financial Report 1S 2017

Financial Report

1S 2017

3

Disclaimer

This material is a presentation of general information of the Development Bank of Minas

Gerais (BDMG). These are summarized information without intending to be complete, and

should not be construed as a recommendation.

This presentation is strictly confidential and may not be disclosed to any other person. No

declaration or any warranty are given to the accuracy, adequacy or completeness of any

information presented. This presentation was prepared exclusively for information purposes

and should not be construed as a solicitation, offer or invitation to buy or sell any securities

and should not be treated as investment advice. This presentation should not be used as the

basis for any agreement.

This presentation contains forward-looking statements, which are only estimates and are not

guarantees of future performance. Investors should be aware that such forward-looking

statements are and will be, as the case may be, subject to many risks, uncertainties and

factors relating to the operations of BDMG that can cause their actual results to differ

materially from forward-looking information contained in this presentation. Although BDMG

believes that the estimates and considerations reflected in the forward-looking information in

this presentation are reasonably based on currently information available to BDMG’s

management, BDMG can not guarantee future results or events. BDMG won´t update any of

the information contained herein, including, but not limited, to forward-looking information, and

information contained in this presentation are subject to change without notice to recipients of

this presentation. Still, past performance is not indicative of BDMG of future results.

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Institucional

1 INSTITUCIONAL

The Minas Gerais Development Bank (BDMG) is a

financial institution founded in 1962 and controlled by the

State of Minas Gerais, with the purpose of promoting the

state's economic, financial and social development.

For more than 50 years BDMG has actively participated

in the development of Minas Gerais. In its history, it has

focused on generating opportunities and sustainable

regional growth.

Its actions are distributed throughout the territory of the

State and serve various sectors of the economy -

industry, agriculture, agribusiness, commerce and

services. In addition to these sectors, BDMG finances

infrastructure and urbanization projects in the cities of

Minas Gerais.

It operates with its own resources and as financial agent

of BNDES, Funcafé, Finep, Fundação Renova, BNB

among others besides being the financial agent of the

Development Funds of the State of Minas Gerais.

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Corporate Structure

1 INSTITUCIONAL

General Management

Audit

HR General Management

General SecretariatCommunication Management

Ombudsman

Business BoardCarolina M. do Vale Duarte

Executive Director

Analyzes and Studies

Management

Financial and Credit BoardRogério Sobreira Bezerra

Executive Director

Risk and Corporate

Management BoardMarcela Amorim Brant

Executive Director

Audit Committee

Structured Operations

General Management

Planning

General Management

Board of Directors

Consultancy

General Meeting of

Stockholders

Board of Directors

Executive Board

CEOMarco Aurélio Crocco Afonso

Diretor Presidente

Vice-PresidencyLuiz Guilherme Piva

VP Director

Fiscal Council

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1 INSTITUCIONAL

Stockholders

89,72%9,32% 0,95%0,01%

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Rating

1 INSTITUCIONAL

Moody's Standard & Poor's

Global Scale Global Scale

Local Currency Local and Foreign Currency

Long Term B1 Long Term B-

National Scale National Scale

Long Term Baa3.br Long Term brB+

Short Term BR-3

Outlook Outlook

Negative Stable

Dec 12, 2016 Aug 18, 2017

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BDMG has a portfolio of 21,908 clients in all regions of Minas Gerais: from small entrepreneurs

to large companies, from rural producers to municipalities.

Outline

1 INSTITUCIONAL

BDMG reaches 89%

of Minas Gerais’

municipalities

Disbursement of

BRL 878 MM

between 2010-2017S1

in bordering states

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Mission

Promoting sustainable and competitive socioeconomic development

of Minas Gerais, generating more and better jobs and reducing

inequalities.

Vision

To be recognized as a strategic actor in the process of economic and

social development of Minas Gerais.

Value

Ethics

Transparency

Commitment to the society of Minas Gerais

Planejamento Estratégico

2 STRATEGIC GUIDELINES

10

The Strategic Planning 2016-2021 defined as main directives the intentionality in the actions,

supporting projects that mean improvement of Minas Gerais competitiveness and productive

restructuring, environmental sustainability, regional and social development.


STRATEGY

2017A BANK THAT ONLY BDMG CAN BE

INTENTIONALITYFINANCIAL

SUSTAINABILITY


Highlights – ENVIRONMENTAL SUSTAINABILITY

12

Highlights


SOCIAL-ENVIRONMENT

66 cabs financed

BRL 8,3 million disbursed

HYBRID TAXI

DISBURSEMENT FOR ENVIRONMENT AND SANITATION

BRL 29.8 million lent for environment projects, 83%

higher than in 2016.

BRL 4.3 million for sewerage projects

BDMG was granted a

golden seal in

August, 2017.

SUSTAINABILITY

GAS EMISSION

INVENTORY

ELETRIC MOBILITY

The platform is expected

to be launched in

September, 2017.

Workshop of application

in green finance.


Highlights – INNOVATION

14

Highlights


INNOVATION REFERENCE CENTER IN

MINAS GERAIS

EQUITY INVESTMENT FUNDS INNOVATIONONLINE PORTAL OF INNOVATION

• Provision of an online platform to connect

innovation actors (concluded)

• Development of shared database (in

progress)

• Accession of BDMG to IRC

• Holding of events to discuss about

innovation in Minas Gerais

• BRL 40 million lent for innovation

projects, 13% higher than the same

period in 2016.

• Implementation of a new methodology

for monitoring and effectiveness of

projects.

• Structuring of a new Equity

Investment Fund in progress.

• Contribution of BRL 2 million in

Equity Investment Funds

• Analysis of new companies

by the funds

• Participation in 8 Investment Funds

INNOVATION

In collaboration with BNDES, FAPEMIG

and FINEP, BDMG offers the following

lines: Pró-Inovação & Proptec, MPME

Inovadora and Inovacred.

LINES OF CREDIT


Highlights – REGIONAL AND SOCIAL PROGRAMS

16

Highlights


REGIONAL AND SOCIAL PROGRAMS

MICRO AND SMALL

HEALTH AND EDUCATION PUBLIC SECTOR

• BRL 97.2 million lent to micro and small

companies, 7% higher than in 2016.

• BRL 8 million lent to companies situated in

cities with low human Development Index.

• BRL 49.5 million disbursed,

105% higher than in 2016.

• State schools PPP: public

consultation concluded in June.• State schools PPP: public

consultation concluded in June.

• BRL 48.7 million disbursed.

• BRL 59 million for

municipalities which have

mining as a main activity

2. STRATEGIC GUIDELINES

Highlights - SOCIAL-ENVIRONMENT

18


SOCIAL-ENVIRONMENT

The BDMG advises the State Government and Municipalities in the

structuring and modeling of Public-Private Partnerships and, alternatively,

companies participating in bidding/auctions.

Highlights

BDMG: modeling of PPP

Status: Bidding in

1st sem. 2017.

PPP STATE SCHOOL


Status: Bidding’s result approved in Dec,

2016.

Concession BH-TEC Building 2


Status: Bidding in 2017

PPP Fhemig Hospitals

PPP Expansion of Sanitary Sewage

System of Divinópolis (COPASA)

PPP Expominas II State of Minas Gerais

PPP COPANOR North COPASA

PPP Multiservice Network City Hall of

Belo Horizonte.

PROJETOS FINALIZADOS


Highlights

MODERNIZATION & SOCIAL-ENVIRONMENT

BDMG is active in the granting of Project Finance to SPEs for PPP projects and concessions, as well as for

large industrial deployment and expansion projects.

Bridge Loan (2013)

Long Term Loan (2013)

Long Term Loan

Concession Additive

(2015)

Project: PPP Schools

Belo Horizonte

2013 to 2015

Partner

Long Term Loan

(2016)

Debentures (under

analysis)

Project : Concession BR-

050/GO/MG

2016

Long Term Loan

(2016)

Project : Construction of

Unimed Hospital in JF

2016

PartnerPartners

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Highlights – AGRIBUSINESS

21

Highlights


AGRIBUSINESS

• BRL 200 million of limit approved

• BRL 23.4 million disbursed

• BRL 115 million in ongoing operations

BRL 139 million raised in LCAs and

approval of project BDMG Rural

• BRL 6.9 million in contracted

operations

• New credit policy under discussion• BRL 5.9 million disbursed

• Negotiation with Cresol in progress

• Edital published

TECNOLOGICAL MODERNIZATION FAMILY FARMING


Highlights – STRATEGIC SECTORS

23

Highlights


STRATEGIC SECTORS

MEDICINES

PPP FUNED

BIDDING

OTHERS

SECTOS

VENTURE

CAPITAL

FUND

CEMIG

SUPPLIERS Strategy developed for

medium and big

companies.

Business visits started.

Proposal for

action.

Internal operation

in progress.

Participation of the

BDMG in the fund

under analysis.

Public hearing held

in May.

4 companies

registered.

PMI studies in

progress.

Proposal of

action in

electric

mobility

approved in

June. Discussion of new sectors for acting.

HORIZONS SECTORS

1S17/1S16

- 26%

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3 OPERATIONAL PERFORMANCE

1S17/1S16

- 1%

Disbursement Average Ticket

BRL Million BRL Thousand/Customer

367

475

255

212

628

467

0

100

200

300

400

500

600

700

3Q2016 4Q2016 1Q2017 2Q2017 1S2016 1S2017

232

294

237

185

213 210

0

50

100

150

200

250

300

350

3Q2016 4Q2016 1Q2017 2Q2017 1S2016 1S2017

1,042 1,084 1,0761,147

23,11522,546 22,204 21,876

10.000

12.000

14.000

16.000

18.000

20.000

22.000

24.000

,000

,500

1,000

1,500

2,000

2,500

3,000

3Q2016 4Q2016 1Q2017 2Q2017

New Customers Active Customers

New Customers & Active Customers

25

3 OPERATIONAL PERFORMANCE

1S17/1S16

- 2%

1S17/1S16

7%

4. FINANCIAL PERFORMANCE

Loan Portfolio and Other Assets

Total Assets and Loan Portfolio

BRL Million

27

4 FINANCIAL PERFORMANCE

1S17/1S16

-2%1S17/1S16

2%

Shareholders’ Equity and

Shareholders’ Equity/Total Assets Ratio

BRL Million and %

28


1S17/1S16

7%1S17/1S16

4%

Financial Intermediation Income,

Commissions and Fees

29


1S17/1S16

36%

BRL Million

30


Loan Portfolio by Fund Category

% Loan Portfolio BRL Million

31


Loan Portfolio Maturity

BRL Million (position in 6/30/2017)

32


Loan Portfolio Concentration

% Loan Portfolio

60% 60% 61% 61%

47% 47% 47% 48%

21% 21% 21% 20%

3Q2016 4Q2016 1Q2017 2Q2017

100 Largest Clients 50 Largest Clients 10 Largest Clients

33


Loan Portfolio by Sector

% Loan Portfolio

34


Loan Portfolio by Enterprise Size*

% Loan Portfolio

NOTE: *Size classification criteria adopted by the Central Bank (follows the Complementary Law 123/2006 and Law

No11.638/2007): MSE (Gross Revenue <= R$3,6 MM, Medium (R$ 3,6 MM < Gross Revenue <= R$ 300 MM); Large

(Gross Revenue > R$ 300 MM).

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Active Portfolio Guarantee

Position in 6/30/2017

36


29%34%

19%10%

20% 24%

20% 16%

12% 11%

1S2016 1S2017

1,6992,030

1,113571

1,172 1,406

1,172 928

703 669

1S2016 1S2017

AA A B C D-H

Loan Portfolio by Risk Level

68%

LOANS

% Loan Portfolio BRL Million

68%

LOANS

37


Delinquency Rate Evolution > 90 Days

% Loan Portfolio

38


Loan Losses Provision

% Loan Portfolio

Nonperforming Loans Expenses

BRL Million

39


1S17/1S16

127%

40


Interbank Investments

Marketable Securities

Values in BRL Million 2016 S1 2017 S11S 2017/1S 2016

(%)

Financial Treasury (Notes and Bills) 262 295 13%

Interbank Deposits 12 12 0%

Foreign Currency Investments -

Total 274 307 12%

Values in BRL Million 2016 S1 2017 S11S 2017/1S 2016

(%)

Financial Treasury (Notes and Bills) 684 635 -7%

Debentures 26 34 32%

Investment Fund Quotas 15 41 175%

Derivative Financial Instruments 62 25 -60%

Total 822 776 -6%

4. FINANCIAL PERFORMANCE

Funding and Capitalization

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Funding

Values in BRL Million 1S 2016 1S 2017 1S 2017/1S 2016 (%)

BNDES 2.014 2.228 11%

FINAME 1.482 1.421 -4%

Funcafé 36 96 167%

FINEP 45 81 80%

BNB 23 19 -17%

Outros 13 16 23%

Total 3.616 3.861 7%

Current 684 908 33%

Non Current 2.929 2.953 1%

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Funding

Values marked to market (MtM)In BRL million and %

Financial Bills

Agribusiness Credit Bill

44


Capital Evolution

Values in BRL Million S1 2016 S1 2017

Capital Increase 0 12

Profit Reserves 7 8

Asset Evaluation Adjustment (196) (119)

Dividends and Interest on Capital 9 (39)

Net Income 10 (36)

Basel Index 15% 15%

ROAE 0,6% (2,0%)

ROAA 0,1% (0,5%)

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BRL Million

Reference Equity

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Operational Limits And Basel Index

Statement of the calculation of the reference equity and

Capital Ratios (BRL millions)S1 2016 S1 2017

Owner’s equity 1,614 1,722

Reference equity level I (RE level I) or Principal capital (PC) - (a) 1,610 1,689Capital allocated to transactions with the public sector - (b) 700 700

Reference equity (RE) - (a-b) 910 989

All risk-weighed assets (RWA) 6,607 6,454

Credit risk (RWAcpad) 5,614 5,752Market risk (RWAmpad) 507 204Operational risk (RWAopad) 485 499

Part of the capital to cover for the non-negotiable portfolio

interest rate risk (RWA RBAN)3 34

Minimum reference equity 764 793

Basel Index (RE/RWA) 14% 15%

4. DESEMPENHO ECONÔMICO E FINANCEIRO

Results

48


Net Income

BRL Million

49


Main Variations of Total Assets 1S 2017

BRL Million

50


Main Variations of Liabilities and Equity 1S 2017

BRL Million

THE DEVELOPMENT BANK

OF MINAS GERAIS S.A.

Investor Relations

+55 (31) 3219-8551

[email protected]

www.bdmg.mg.gov.br/InvestorRelations

Financial Report 1S 2017

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