The Business Development Bank of Canada (BDC) provided more financing to Canadian businesses in the past year than at any time during its 65-year history: $4.4 billion, an increase of 53% over last year. The sum of BDC’s efforts to support entrepreneurs during the financial crisis and economic downturn is impressive: total assets grew 46%, from $12.1 billion to $17.7 billion. This was reported in BDC’s annual report which contains its financial statements for the fiscal year ended March 31, 2010.
“When the financial crisis and recession hit, many foreign lenders withdrew from the Canadian market, creating an unprecedented shortage of credit for business owners in the country,” said Jean-René Halde, BDC’s President and Chief Executive Officer. “By quickly increasing its support, BDC acted as a shock-absorber for Canadian entrepreneurs.”
Delivering results for Canadian entrepreneurs
The past year was difficult for entrepreneurs. While struggling with the recession, they also endured difficult access to credit. Through its flexible and patient lending, BDC was able to help thousands of Canadian business owners weather the recession. It also took action to support businesses in new ways.
First, BDC delivered programs such as the Business Credit Availability Program (BCAP), a partnership with private sector banks and Export Development Canada to make more than $5 billion of incremental financing available to Canadian businesses. This goal has been met and surpassed. Under this program, BDC alone provided a total of $2.8 billion in financing to entrepreneurs who had viable business plans but limited access to credit due to the economic uncertainty.
Secondly, BDC designed and managed the Canadian Secured Credit Facility (CSCF). The CSCF was created by the Government of Canada in order to increase liquidity in the market and augment investor confidence in term securities backed by loans and leases on vehicles and equipment. BDC purchased $3.7 billion in securities under the CSCF, which enhanced access to credit for businesses and consumers seeking to finance the purchase or lease of vehicles and equipment. BDC’s pricing benchmarks and its willingness to purchase these securities also indirectly facilitated additional purchases of asset-backed security issuances in the Canadian marketplace.
“BDC was entrusted with two large, technically and logistically challenging tasks,” explained BDC’s Chairman John MacNaughton. “By successfully delivering these programs, BDC showed how a development bank can help limit the negative impacts of a financial crisis and an economic downturn. No doubt it can now play a significant role in helping Canadian entrepreneurs strategically adapt to the post-recession marketplace.”
Remaining commercially viable
BDC remained profitable despite the difficult economic environment. Consolidated net income for fiscal 2010 was $6.1 million, compared to $90.6 million last year.
BDC pays dividends to its sole shareholder, the Government of Canada. BDC declared dividends of $14.3 million in fiscal 2010. BDC is a profitable organization and, since 1997, has paid cumulative dividends of $173.5 million to the Government of Canada.
BDC Annual Report Highlights
BDC reports on five business lines: Financing, Subordinate Financing, Venture Capital, Consulting and Securitization.
BDC Financing clients accepted $4.3 billion in new loans through some 8,000 transactions. Income totalled $76.2 million in fiscal 2010, compared to $194 million in fiscal 2009. The closing portfolio, before allowance for credit losses, rose to $13.3 billion from $11.1 billion, a significant increase of $2.2 billion, or 19.7%, over 2009.
BDC Subordinate Financing clients accepted a total of $97.7 million in new financing, involving 68 transactions. Income totalled $10.2 million in fiscal 2010, $3.4 million higher than reported in fiscal 2009. BDC’s Subordinate Financing portfolio reached $193.2 million as at March 31, 2010.
BDC Venture Capital authorized $51.3 million in direct investments and $33.3 million in fund investments, totalling $84.6 million. Canada’s venture capital industry continued to struggle. While BDC’s support became more critical, market conditions negatively affected its results. In fiscal 2010, BDC Venture Capital recorded a loss of $74.1 million, compared with a $106.3 million loss in 2009. The improvement was due to significantly lower net fair value depreciation of the portfolio.
BDC Consulting began 2,504 consulting mandates in fiscal 2010 in order to help entrepreneurs adapt to the economic challenges. Consequently, revenues reached a record high of $28.1 million in fiscal 2010, a 2.5% increase over fiscal 2009. BDC Consulting posted a $4.6 million loss in fiscal 2010, $1.7 million higher than the loss last year.
BDC Securitization authorized a total of $3.7 billion in investments under the CSCF, of which $3.4 billion was disbursed and $0.1 billion was repaid in fiscal 2010. BDC Securitization recorded a net loss of $1.6 million in fiscal 2010 and the portfolio at fair value stood at $3.3 billion as at March 31, 2010.
BDC is Canada’s business development bank. From more than 100 offices across the country, BDC promotes entrepreneurship by providing tailored financing, venture capital and consulting services to entrepreneurs. Visit http://www.bdc.ca/ for more information.
Read BDC’s annual report at here.
For further information: Johanne Bissonnette, Media Relations Manager, (514) 283-7929, [email protected]