UPDATE 1-Brazil's BNDES swings to profit in 1st half; loan provisions rise
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SAO PAULO, Aug 14 (Reuters) - State development bank BNDES, Brazil's main source of long-term corporate lending, returned to profit in the first six months of the year after gains in the value of investment arm BNDES Participações SA's portfolio offset a ramp-up of loan loss reserves and declining loan book growth.
BNDES said on Monday that profit came in at 1.34 billion reais ($419 million) in the period through June 30, compared with a loss of 2.17 billion reais a year earlier. The bank did not release full quarterly results.
Its foreign loan book swung to a positive result this year as revenue from local credit transactions and fees from managing certain credit funds fell. Provisions jumped 15 percent to 4.726 billion reais as BNDES added additional loan reserves of 1.4 billion reais in the wake of rising defaults.
Bolstering profits, the bank's investment arm known as BNDESPar delivered income of 1.42 billion reais in the year through June, from a loss of 4.92 billion reais a year earlier. It will mark to market the value of JBS SA stock it holds before year-end, to avoid ensuing volatility.
BNDESPar is the second largest shareholder in JBS, whose controlling family was ensnared in a massive corruption scandal. It led the company to refinance over 20.5 billion reais of maturing loans with banks.
Executives at Rio de Janeiro-based BNDES will discuss results on a conference call later Monday. ($1 = 3.2004 reais) (Reporting by Guillermo Parra-Bernal; Editing by Jeffrey Benkoe)