EBRD to scale up investments to deliver even more impact

By Anthony Williams
@ebrdtony


Bank to boost quality and quantity of its operations

The EBRD plans to step up investments across its regions in a drive to deliver even greater impact on the ground in the 38 economies it serves. 

The Bank has agreed with shareholders to continue raising both the quantity and the quality of investments in its current countries of operations. 

After investing €9.7 billion in 2017 and another €9.5 billion in 2018, investments are now set to increase steadily over the next three years. 

In a first stage, the Bank is aiming for investments to top the €10 billion marker in 2019 for the first time in its history.

The EBRD currently invests in emerging economies that extend from central and south-eastern Europe to the Caucasus and Central Asia and which also include Turkey and the southern and eastern Mediterranean region.

An assessment of the EBRD’s capital position has shown that the Bank is well positioned to deliver on its ambitious goal of increasing investments, despite continuing economic challenges in its regions that had a negative impact on profits in 2018.

These factors included adverse conditions across equity markets and currency depreciations in a number of the emerging economies where the EBRD is active. Provisioning charges rose on the back of developments in Turkey, where the economy slowed sharply amid a significant currency decline.

The Bank made a net profit of €340 million in 2018 after €772 million in 2017.  Realised profits before impairment stood at €606 million in 2018, close to the €634 million posted in 2017.

Non-performing loans stood at 4.7 per cent of the Bank’s total loans, compared with a record low of 3.9 per cent in 2017, largely driven by events in Turkey.

The EBRD’s net interest income remained stable at €751 million compared with €754 million in 2017, despite emerging signs of squeezed margins across various markets.

On the back of its solid business model, financial performance, strong capitalisation and high liquidity ratios, all the three major credit rating agencies reaffirmed the Bank’s triple-A rating with stable outlook. The Bank also continues to demonstrate discipline in cost management, with costs in Euros broadly flat compared to the previous year.

“Against the backdrop of a challenging market environment in some of our largest countries of operations, the Bank is continuing to deliver on its transition mandate – and is now in a uniquely strong position to make an even greater impact on the economies we serve,” said Chief Financial Officer András Simor.

The EBRD combines its strong financial investments with support for policy reform and technical assistance in order to maximise the impact of its financing, while working to improve the investment climate in its countries of operations.

It will continue to play an increasingly important role in improving governance in its regions, making economies more resilient with its emphasis on local currency and capital market development, its support for small and medium sized companies and its work to ensure that the fruits of economic progress are fairly shared.

It is building on its green investment portfolio and in line with commitments made at the time of the 2015 Paris Climate Conference it is confident of achieving its goal of dedicating 40 percent of annual investments to the green economy by 2020.