NIB Interim Report, January-August 2005
INCREASED LENDING, GOOD PROFITABILITY
The Nordic Investment Bank’s (NIB) ownership base was broadened at the beginning of 2005, when the three Baltic countries, Estonia, Latvia and Lithuania became members of the Bank. As a consequence, a new agreement and new statutes for the Bank entered into force as of 1 January.
Mr Johnny Åkerholm took up the position as President and Chief Executive Officer on 1 April, succeeding Mr Jón Sigurðsson, who had been President and CEO since 1994.
NIB shows good results for the first eight months of the year. Profits for the period increased by 5.2% to EUR 117 million. Net interest income rose to EUR 110 million (Aug. 2004: EUR 109 million). Total assets rose from EUR 16 billion at year-end 2004 to EUR 19 billion. Net liquidity increased to EUR 3,445 million, compared with EUR 2,876 million at year-end. During the period under review, the Bank paid its owners in 2004 a dividend of EUR 55 million for that financial year.
New loan agreements exceeded last year’s level, amounting to EUR 1,747 million (1,031) for the first eight months. Loans disbursed reached EUR 1,378 million (779). This is the Bank’s highest ever level of disbursements. Loans outstanding rose significantly, reaching EUR 11,315 million (10 472).
During the period, 21 (13) borrowing transactions were carried out in 7 (6) different currencies, in an amount corresponding to EUR 1,923 million (1,545). In spring 2005, the Bank launched its fourth global benchmark transaction of USD 1 billion in the form of five-year bonds.
The quality of the Bank’s loan portfolio and its financial counterparties continues to be maintained at a high level. The net effect of credit losses and recoveries was positive at EUR 0.1 million.
The Bank expects to show good profits for the year 2005 as a whole, in line with the first eight months of the year.
Lending in the member countries
In the member countries, the manufacturing and energy sectors were the largest recipients of loans. Most of the loans to the manufacturing sector went to cross-border corporate acquisitions. The financing of environmentally friendly and energy-saving investments in the pulp and paper industry in Sweden and Finland was also significant. In Estonia, Finland, Latvia and Norway, the Bank agreed on loans for the expansion of and improvements in electric transmission networks.
International lending
International lending continues to be dominated by loans to infrastructure investments, especially in the energy, transportation, and telecommunications sectors. Among other projects, NIB participated in the financing of a motorway in Poland, a flood protection project as well as a modernisation project of a paper and pulp plant in Russia and the expansion of mobile telephone networks in the Philippines and Thailand. The largest borrower regions in the international loan portfolio were Asia and Central and Eastern Europe.
Environmental financing
Financing environmental investments is one of the cornerstones of NIB’s lending operations. During the period under review, the Bank granted 16 new environmental loans, totalling EUR 232 million. Of the total loans disbursed, one fifth comprised environmental loans. Important environmental projects concerned, for instance, energy efficiency and wind power plants, as well as emission reduction investments in pulp and paper mills. All these projects have a significant positive environmental impact.
In the period July 2004 to July 2005, NIB chaired the Steering Group for the Northern Dimension Environmental Partnership (NDEP). The aim of the NDEP is to coordinate and streamline the financing of environmental projects with cross-border effects in the Northern Dimension Area. The first NDEP project to be completed was the Southwest Wastewater Treatment Plant in St. Petersburg, which was inaugurated in September 2005. The new plant will make a major contribution to improving the quality of water in the Baltic Sea as the effluent load of untreated and contaminated wastewater will be reduced significantly. Since 2000, NIB has been coordinating the financial structuring of the project and has acted as lead bank for the project financing.
NIB’s financial figures for January-August 2005 are available here (PDF).