EBRD invests at record level in 2011 as Triple-A rating is reaffirmed

By Anthony Williams
@ebrdtony

The EBRD made a record level of investments in 2011, providing strong support to a region that continues to face risks, especially from persistent economic tension in the eurozone.

It provided financing of just over €9 billion across countries stretching from south-eastern and central Europe to central Asia, up slightly from the level invested in 2010. The total number of individual loans and equity investments remained strong at 380.

The Bank is entering 2012 in robust form, bolstered by a capital increase to which all major shareholders, including all the G-8 nations, have subscribed and by solid earnings despite extremely challenging market conditions.

The EBRD expects to report realised profits in excess of €800 million for 2011, benefiting especially from strong net interest income. The net profit of the Bank will be lower, primarily due to the impact of lower equity valuations resulting from the general decline in the region’s equity markets. The Bank continued to have a low level of non-performing loans, just 2.6 per cent of total loans, down from 2.9 per cent in 2010.

Backed by a further increase in reserves and a reaffirmation of the Bank’s triple-A rating and stable outlook from all three major international rating agencies, the Bank is well placed to continue delivering a high level of investments to support the process of economic modernisation across its countries of operations. The Bank remains very well capitalised, with a core Tier 1 capital ratio in excess of 20 per cent and a low debt/equity ratio as a result of its 1:1 gearing.

“The EBRD has a very strong capital base and enjoys the full backing of its shareholders and the confidence of the investment community. In 2012 we will continue to provide high levels of support to our countries of operations in an increasingly uncertain economic environment,” said Manfred Schepers, the Bank’s Vice President, Finance and Chief Financial Officer.

EBRD investments in 2011 continued to reflect the Bank’s strategic priorities. These included a 10 per cent increase to €1 billion in funds flowing to the EBRD’s Early Transition Countries,* of which more than half was to micro, small and medium sized enterprises, and close to  €1 billion to the Western Balkans.

A continued focus on energy efficiency led to an increase of the Bank’s financing under its Sustainable Energy Initiative by 21 per cent to €2.6 billion, nearly a third of the Bank’s total investments in 2011.

The bank continued to support all key economic sectors. Thirty per cent of investments in 2011 were in the diversified corporate sectors, 32 per cent went to the financial sector, with a priority on the small and medium-sized enterprise (SME) sector, and 38 per cent of total investments were in the energy and infrastructure sectors.

In 2012 the EBRD will implement its expansion and initiate its investments into the southern and eastern Mediterranean (SEMED) region, in response to a call from the international community to provide support for emerging Arab democracies. At the end of 2011, Jordan and Tunisia became new EBRD members and have joined existing shareholders Egypt and Morocco in seeking to benefit from EBRD support.

* Armenia, Azerbaijan, Belarus, Georgia, Kyrgyz Republic, Moldova, Mongolia, Uzbekistan, Tajikistan and Turkmenistan.