BDC delivers strong results as entrepreneurs' financial health improves
MONTREAL--As Canada's economy emerged from recession and the flow of private sector credit available to small business gradually improved, the Business Development Bank of Canada (BDC) continued to provide strong support to Canadian entrepreneurs.
In fiscal 2011, BDC clients accepted a total of $3.3 billion of financing. BDC also authorized $95.3 million in venture capital investments, $150 million in asset-backed securities and started 2,300 consulting mandates. Consolidated net income reached $346.7 million. This was reported in BDC's annual report which contains its financial statements for the fiscal year ended March 31, 2011.
"Close to half of our profitability this year is attributable to the reduction of the amount of money we set aside for potential losses, which means that our clients' financial positions have improved since last year," said Jean-René Halde, BDC's President and Chief Executive Officer. "We are delighted with what our profitability tells us about the rising financial health of our clients."
Supporting entrepreneurs through a tentative economic recovery
This past year, the Canadian economy emerged from recession and began a slow, uneven recovery with modest growth. Entrepreneurs' optimism about their firms' prospects and business investments gained momentum, reflecting stronger financial positions and easing credit conditions.
However, while entrepreneurs were shifting their operational priorities from recession to recovery, they were worried about a lack of capital to finance day-to-day activities or longer term, strategic projects. BDC responded with the new Economic Recovery Loan, a pre-approved working capital loan for clients. More than 3,700 clients took advantage of the opportunity.
Lending activity returns to pre-recession levels
In fiscal 2010, deteriorated credit conditions had seen BDC lend more money to entrepreneurs than at any other time in its history. Similarly, as credit conditions improved, fiscal 2011 saw the dollar volume of BDC's lending activities return to pre-recession levels. BDC clients accepted $3.3 billion in financing compared with $4.4 billion in 2010 and $2.9 billion in 2009.
"Private sector financial institutions now have more liquidity available for business financing, which is good news for Canadian entrepreneurs," said Jean-René Halde. "This also means that BDC did fewer deals this year than last year, when the economic crisis was at its most severe. This is to be expected given our complementary mode of operation."