Interim Report January – August 2004
INCREASED PROFITS
NIB shows good results for the first eight months of the year. Profits for the period rose to EUR 111 million, which was an 11% increase compared with the corresponding period last year. Net interest income rose to EUR 109 million (corresponding period in 2003: EUR 102 million).
NIB’s total assets amounted to EUR 16.9 billion, compared with EUR 16.7 billion at year-end 2003. Net liquidity rose to EUR 3,189 million, compared with EUR 2,744 million at year-end. During the period under review, the Bank paid its owners, the Nordic countries, EUR 41.3 million in dividends out of profits for year 2003.
New loan agreements entered into by the Bank during the period amounted to EUR 1,031 million (1,029), while loans disbursed amounted to EUR 779 million (910). Loans outstanding amounted to EUR 10,472 million on 31 August 2004, compared with EUR 10,522 million at year-end 2003. NIB’s clients made considerable prepayments during the period under review. This was the case for NIB’s lending both within and outside the Nordic countries.
During the period, NIB carried out 13 borrowing transactions in 6 different currencies, in an amount corresponding to EUR 1,545 million (2,759). Call options on a total of EUR 630 million previously issued bonds were not exercised, thus bringing the total borrowing during the period to EUR 2,175 million. In the spring of 2004, the Bank launched its third global benchmark loan of USD 1 billion in the form of five-year bonds.
The quality of the Bank’s loan portfolios and of its financial counterparties remains at a high level. Reversals of previously made provisions for possible loan losses were larger than new provisions made during the period. The net effect was a positive contribution to the Bank’s profit of EUR 3.3 million.
The Bank is expected to show good results for the year 2004 as a whole, with a return on equity in line with the first eight months of the year.
New member countries
NIB’s ownership base will be broadened at the beginning of 2005, when the three Baltic countries, Estonia, Latvia and Lithuania, will become members of the Bank. Representatives for the Nordic and Baltic countries’ governments signed a new Agreement on NIB in February 2004. The Agreement is to be ratified by all eight countries, and means that Estonia, Latvia, and Lithuania will become members of NIB on an equal footing with NIB’s present five members: Denmark, Finland, Iceland, Norway, and Sweden. As a consequence of the new ownership structure, NIB will have new Statutes. Ratification is in progress, and has already been concluded in three of the countries.
Nordic lending
The energy sector was the largest recipient of Nordic loans during the period under review. Among other investments, NIB financed investments in hydro- and geothermal power stations in Iceland, in a bio-fuelled power station in Austria, as well as investments in environment-friendly energy production in Norway and Sweden. In Finland and Denmark, the Bank financed improvements of the electrical transmission networks.
International lending
International lending continues to be dominated by loans for infrastructure investments, particularly within the energy, transportation, and telecommunications sectors. Among its loans, NIB has financed investments for the expansion of Tunisia’s mobile telephone network, as well as for improvement in Rumania’s state-owned power network.
The Bank’s Project Investment Loan facility (PIL) was increased from EUR 3,300 million to EUR 4,000 million on 1 July 2004. New guidelines for the PIL guarantees became effective at the same time. The increase provides greater possibilities for the Bank to grant loans to countries that are not members of NIB.
Environmental financing
NIB places a great deal of importance on financing of environmental projects. During the period, the Bank granted nine new environmental loans, totalling EUR 145 million. Of total loans disbursed during the period, almost 15% were environmental loans. One of the Bank’s loans was granted for investments that will result in reduced emissions of pollutants into water and air at a Swedish pulp factory. NIB also granted a loan for investments in a new sewerage system in Reykjavik.
Within the framework of the so-called Ladoga programme, loans were granted to several projects, e.g. projects within the pulp and paper industry. The Ladoga programme is an environmental investment programme for the area around lakes Ladoga and Onega in north-western Russia. The programme is mainly geared toward large private companies within the paper, pulp, and metal industries in the area. NIB launched the programme at the end of the year 2003 within the Northern Dimension Environmental Partnership (NDEP). In July, NIB assumed the chairmanship of the Steering Group for NDEP, whose aim is to coordinate and streamline the financing of environmental projects with cross-border effects within the Northern Dimension’s area. NDEP has established an investment programme of almost EUR 2 billion. Projects corresponding to half of this amount are already in the process of being implemented.
NIB’s interim report for January – August 2004 is available here. (PDF)
Key figures (in EUR million)
| 1-8/2004 | 1-8/2003 | 1-12/2003 | |
| Net interest income | 109 | 102 | 155 |
| Profit | 111 | 100 | 151 |
| Loans disbursed | 779 | 910 | 1,841 |
| New loan agreements | 1,031 | 1,029 | 1,859 |
| New debt issues | 1,545 | 2 759 | 3,258 |
| Profit/average equity (%) | 9.9 | 9.5 | 9.5 |
| 31 Aug 2004 | 31 Aug 2003 | 31 Dec 2003 | |
| Loans outstanding | 10,472 | 10 323 | 10,522 |
| Total assets | 16,908 | 17 303 | 16,666 |
| Net liquidity | 3,189 | 3 802 | 2,744 |
| Number of employees | 152 | 147 | 147 |